Medical Marijuana

Legal Pot is Cheaper Pot

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Poor potheads, rejoice: You have new research on your side. According to a new RAND Corporation study on California's Proposition 19, a ballot measure that would lift legal restrictions on marijuana, legalizing pot could dramatically reduce its price. From the press release:

Legalizing the production and distribution of marijuana in California could cut the price of the drug by as much as 80 percent and increase consumption, according to a new study by the nonprofit RAND Corporation that examines many issues raised by proposals to legalize marijuana in the state…Based on an analysis of known production costs and surveys of the current price of marijuana, researchers suggest the untaxed retail price of high-quality marijuana could drop to as low as $38 per ounce compared to about $375 per ounce today.

What's less clear is whether the tax revenues the measure's supporters promise would materialize:

While the state Board of Equalization has estimated taxing legal marijuana could raise more than $1 billion in revenue, the RAND study cautions that any potential revenue could be dramatically higher or lower based on a number of factors, including the level of taxation, the amount of tax evasion and the response by the federal government…RAND researchers caution there are many factors that make it difficult to accurately estimate revenue that might be generated by any tax on legal marijuana. The higher the tax, the greater the incentives would be for a gray market in marijuana to develop, researchers say.

 Full study here. Read Brian Doherty's report on the state of the medical marijuana market in Los Angeles here.

(Link via Mike Riggs.)

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  1. We needed a study to tell us this? Seems pretty obvious.

  2. legalizing pot could dramatically reduce its price.

    Flies are insects.
    Pac-man is a game.
    The square root of 9 is 3.

  3. The higher the tax, the greater the incentives would be for a gray market in marijuana to develop, researchers say.

    A pack of cigarettes costs about 20 cents to produce, they sell for $12+ in NYC and yet I bet 99% of the smokers in NYC don’t grow their own tobacco, and I’ll further bet less than 10% have ever even tried to buy cigarettes on the gray market or avoid the taxes.

    Not an endorsement of sin taxes, blah, blah, blah, SLD.

    1. Not that I disagree, but tobacco plants aren’t cannabis plants. Since Tobacco is already legal, few people have bothered to learn how to cultivate their own plants in their homes. Cannabis is clearly a different story. Regardless, growing your own weed would be kind of a pain-in-the-ass for the average user, not to mention the capital required (lamps, fertilizer, irrigation etc).

      1. maybe I should read a post down before replying. Threaded comments and their discontents.

    2. Growing, harvesting and curing tobacco involves a lot of back breaking labor. Reefer, not so much.

      Still I’d rather buy and pay a reasonable sin tax than grow my own. Raise the tax too high and all sorts of fraud and tax evasion will occur. People in NY don’t grow their own tobacco, but they do buy smokes smuggled in from Virginia and North Carolina by the truckload.

      1. And we promise the sin tax will be reasonable…

      2. The amount of labor to grow tobacco for personal use would not be very back breaking.

        Homebrewing isnt back breaking labor either and few people do it. And even I probably only brew half the beer I drink.

        1. Less than half, actually.

  4. SF, to be fair, there isn’t a pre-existing culture of surreptitious tobacco growing outside the main supply chain.

    1. I agree with that, but isn’t it likely that the legalization of pot will either be accompanied by the legalization of boutique and personal growing or keeping that an illegal activity?

      It’s all opportunity costs. Growing quality marijuana requires some skill and time and equipment. If the calculation of those costs is less than the tax, why grow it yourself? (Especially if it is still illegal to do so?) If it is still illegal, paying the premium of illegality for someone else to grow it for you would have to be less than the cost of the tax even after you factor in the risk of arrest.

      Since it has been illegal so long, I won’t guess what it would cost to produce a “pack” (whatever the eventual unit of sale is) of marijuana plus profit for the grower, but I think the level of taxation that would make extra-legal production or tax evasion attractive would have to be extremely high.

      1. Weed (fully legalized, not the dystopian medicalized weed) will be similar to beer and wine and/or spirits. You may be able to grow small amounts for your own consumption, but it will be regulated just like the aforementioned products, and the sale and production of any kind of scale without having some kind of license will still be illegal.

        It’s possible it could be regulated more heavily than that, like distilled spirits are, but probably if there becomes some sort of standardized test for potency.

        It’s also entirely conceivable that the price won’t go down, due to the regulation and taxation that will be applied to the pot-growing industry. However, the extraneous costs of the drug war will be reduced so dramatically, it wouldn’t matter.

        It will still be illegal for children under 21 to use or purchase it, and all kinds of interesting new ways of testing for intoxication while driving will enter the fray.

    2. Still though — assuming you like to smoke pot — would you rather plunk down a $50/oz tax on top of market value, or spend hundreds of dollars on equipment and modifications and then wait 10-12 weeks for the first harvest? Even with a high tax, it’s still the path of least resistance.

      1. For argument, assume an ounce is currently $80, assume legalization will cut price 80% or $64. With a $50 tax the product still only costs $62. That is still a net gain of $18. My concern would be government agents taking your info.

        1. Do we really want the government to get the idea that a 300% tax is ok?

          1. Tobacco is already at 1000%.

        2. Cool, where do I score that $80 weed? We’re lucky to find it for anything less than $400.

          1. Oklahoma City. Regular grade = $50 ounce.

          2. Makes we wish I had bought a lot of pot in the seventies when you could get it for $15 an ounce.

      2. It’s legal to brew your own beer, in quantities pretty well in excess of what an average beer drinker would regularly consume on a daily basis – but very few do it.

        1. I think this is the correct analogy. A few will, most won’t bother.

          1. A decent quantity of high quality mj can be produced by “hobby gardening”. Growing/curing quality tobacco is not an easy task for the home gardener.

      3. If you could get your hands on high quality female cuttings all you’d have to do is plant it in your yard. Buy weed until the harvest then it’s all gravy after that. If you got a pound a piece from 3 plants you’d have an ounce a week for a year.

  5. whether the tax revenues the measure’s supporters promise would materialize

    Give the assholes what they want. They didn’t say “Free me.” They said “Tax me.” Raise the rate until the take is more than they said it would be, and make the penalty for evading it life without black-framed glasses.

    1. Um, the “assholes” have been saying “Free me” for decades now. The fact that nobody listened until “tax me” became part of the message isn’t exactly a surprise, and shouldn’t be blamed on the reformers.

    2. Unfortunately, it is difficult to make laws that only affect assholes. There are plenty of non-assholes who want legal cannabis.

  6. Legalizing the production and distribution of marijuana in California could cut the price of the drug by as much as 80 percent

    Lets see a plant that is easier to grow then tomatos and is priced per ounce close to the per ounce value of gold.

    Yeah i think it would go down a bit.

    1. That close to the “per ounce value of gold” mightve been true when we were in high school in the 90’s Josh, but gold is around $1200/oz nowadays.

      Now let the State of California use weed as its source of tax revenue, and maybe the comparison will become true again….

  7. While the RAND Corporation is on the case, perhaps they could go ahead and explain how drug legalization would wring the violence out of the business. Then go ahead and explain how the War on Drugs is just a smoke screen for a racist policy of making criminals of young black men.
    Dreaming….

    1. Re: David E Gallaher,

      perhaps they could go ahead and explain how drug legalization would wring the violence out of the business.

      It did it for alcohol when Prohibition was repealled.

  8. My wife has a large potted hibiscus plant in the back yard. I told her to be careful or the local po-leece might come crashing in and uproot it and take us away in handcuffs. After shooting our cats, of course (we have no dogs).

  9. I wonder if cannabis retailers will pop up all over the California border the same way fireworks stands dot the border of any state with liberal laws sitting next to a state with restrictive laws.

    1. I’ll be interested in buying some real estate in Blythe.

  10. Once a niece expressed interest in getting high.

    I told her I would actually hook her up, but first she had to spend an entire evening with some really stoned folks.

    1. Probably works better than any PSA.

    2. Now THAT is some good mentoring. Don’t scare the shit out of them, BORE the shit out of ’em.

  11. So how likely is this to actually pass?

    1. In a year when the electorate will be relatively white, wealthy, and conservative? I’d say the chances of passage are 30%…and I’m feeling optimistic today.

      1. If the California electorate this year will be all that conservative, one would also expect that the Republicans will sweep the state-wide offices, and maybe take control of the legislature. But if you believe that, you have simply not been watching California politics for the last couple of decades.

        1. Here in Santa Cruz CA, it is hard to see evidence of either a shift to the right or the much-touted “anti-incumbent fever.” In the June primary, progressively aligned incumbents clobbered the opposition — many ran unopposed. In a special primary to replace State Senator Maldonado, who has ascended to the Lt. Governorship, Santa Cruz County voted for the Democrat, bucking the district trend that strongly favored the GOP.

  12. for years the rand corp has stonewalled legalization and is anything but non-partisan.

    50% + support cali mmj, in a fair race the ballot would win.

    frankly take all your phony tra la la law and stick it.

    we’re taking over.

  13. in addition:

    the winning strategy for cali ballot is to register as many young people as possible.

  14. Mr. President, in a recent study by the BLAND corporation it was concluded that we would have 10 to 20 million users tops!

    Perhaps some of our deeper mine shafts could be used for suh cultivation of ziss pot.

  15. “…whether the tax revenues the measure’s supporters promise would materialize”

    Perhaps tax revenues will not increase by all that much. Depends on how high the taxes are set. And even then, it will take a while for the mechanisms to get put in place to collect them.

    But the reduction in spending on enforcement will be significant. And that kicks in immediately.

  16. the RAND study cautions that any potential revenue could be dramatically higher or lower based on a number of factors, including the level of taxation, the amount of tax evasion and the response by the federal government

    The last one is easy to handle, the governator would just need to use the CA national guard.

    1. You mean call them back from Iraq and Afghanistan?

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