Yes, Legal Pot Does Cost More Than Black-Market Pot (for Now at Least)

Jacob Sullum

Colorado's state-licensed pot stores opened last week, and already they are running out:

The two operational pot shops in Pueblo collectively sold $87,000 of marijuana on Jan. 1, per the Pueblo Chieftain, and store owners say if demand persists anywhere near the current high, they'll be sold out in the very near future. Likewise, Toni Fox, owner of the 3D Cannabis Center in Denver, told the Colorado Springs Gazette that a sellout is imminent. "We are going to run out," she said on Thursday, Day 2 of legal-recreational-marijuana sales. "It's insane. This weekend will be just as crazy. If there is a mad rush, we'll be out by Monday."

None of this is a surprise to Fox. "I would think that I would be able to sell out of the cannabis that I had every day, because the demand is going to be so great," she told me a year ago. "When recreational opens up and there's a limited supply, I don't have a problem resetting my prices to street value and hopefully making a profit finally." The stores are charging as much as $70 for an eighth of an ounce, compared to $20 or $25 per eighth for medical marijuana before recreational sales became legal.

The problem, as I explained last month, is that the short-term supply of legal marijuana is fixed. All that's available is repurposed medical marijuana, which was grown under a six-plant-per-patient quota. Demand will continue to exceed supply at least until marijuana from the first plants officially grown for the recreational market is harvested this spring.

The high prices are exacerbated by new taxes: a 15 percent excise tax, plus a special 10 percent sales tax. Denver, which is where three-quarters of the marijuana stores are located, is imposing its own special sales tax of 3.5 percent. All of that is in addition to standard sales taxes, which in Denver total 8 percent.

Black-market dealers do not collect any of those taxes, of course. Nor are they burdened by Colorado's regulations or cultivation limits. The upshot is that prices for legal marijuana are, counterintuitively, higher than prices for black-market marijuana—a situation that critics of the hefty taxes imposed by Colorado and Washington have been predicting for months. One black-market dealer tells The Pueblo Chieftan he sells high-quality marijuana for $225 to $300 an ounce, compared to $400 or more charged by state-licensed stores. "People will get real tired of paying the taxes real fast," he says. "When you can buy an ounce from me for $225 to $300, the state adds as much as $90 just for the tax."

Prices in the legal market should go down this spring as marijuana grown especially for recreational sales becomes available. But the extra cost imposed by regulation and taxes will remain a problem, especially since voters authorized the state legislature and the Denver City Council to raise their special sales taxes as high as 15 percent each. Politicians say the taxes are necessary to pay for the strict regulatory enforcement that will keep the feds at bay. But if a robust black market persists after legalization, that regulatory regime will be largely irrelevant.

Comments

[T]

All of this will come as a complete surprise to the Colorado legislature, I’m sure.

I’d run for office but the lobotomy apparently required seems a bit much.

[Brandon]

So…Strong to Texas. Thoughts?

[Hugh Akston]

You’re commenting on the wrong blog?

[robc]

Im interested in who Louisville gets to replace him.

[Brandon]

I’m thinking Tuberville is probably ready for a new challenge.

[robc]

Rumor Ive heard is Franklin from Vandy.

Im not sure I buy it.

And, of course, a subset of fans want Petrino back.

[Brett L]

Leave the SEC for Louisville? Is L’ville going into a better conference?

[robc]

ACC next year.

School that will never win the SEC East for a school that might be able to sneak into the ACC title game occasionally?

I see that.

[Brett L]

Yeah, I couldn’t remember if L’ville was part of the ACC rejiggering. That actually does make sense. If Duke can make it, anyone can. Also, good for their historically strong basketball program.

[Brett L]

Probably the best pick available since Fisher, Saban, and Briles weren’t. UT and TAMU now both have black head coaches. Which doesn’t matter but its interesting. God knows the fans don’t give a shit as long as they win.

[Night Elf Mohawk]

They were available. Briles wanted the job without an interview, which wasn’t happening, for example.

[Brett L]

Fisher and Saban both signaled through contract extensions that they were not interested. I think Strong is going to be a good hire. Better than Briles, anyways. The guy can obviously coach, and seems to do okay at recruiting.

[nova3930]

And a bottle of Jack costs more than a jar of shine, at least in my neck of the woods, but people pay the difference, at least in part to avoid spending time in the chokey. I suspect you’ll see the same in CO for weed…

[sarcasmic]

It’s easy to tell the difference between legal and illegal booze.

How do you tell the difference between legal and illegal weed?

[robc]

It’s easy to tell the difference between legal and illegal booze.

???

[Brett L]

I assume he assumes everyone keeps their legal liquor in the store bottles with tax stamps. Whereas I know several people who keep both in jars. And the shine I’ve seen is certainly not going to smell any different or taste any worse than cheap booze from the liquor store.

[sarcasmic]

One is in a bottle with a brand name and a tax stamp, the other is not.

[UnCivilServant]

And those bottles of “Grey Goose” actually contain Smirnoff, Skoda and Skyy because the bottles don’t go away when emptied and look better on the shelf (Not the ones on the liquer store shelf, but those at home. Source – anecdotal from a liquer store manager)

[robc]

Brand name and tax stamp doesnt necessarily mean its legal in the state you are in.

I see this all the time in the beer world. Beers that arent legally distributed to KY are being sold here. One place that I wont name is notorious for it. The owner drives to other states and buys kegs.

Hence my ???. Its a lot of work to tell if something is truly legal or not.

[Michael S. Langston]

The law in most states is to important from any brewery requires significant investments in licensing fees.

Which prevents small state breweries from expanding, as usually distributors will pay the fees, but not for small breweries due to the risks inherent in launching a new product.

[Episiarch]

A bottle of Jack is also usually much better than a bottle of shine, which is not necessarily the case with the “legally produced” weed. There’s so little risk in buying “illegally produced” weed from the dealer you’ve been buying from for years, why would you ever pay the tax for the “legal weed”?

The more benign a black market (and let’s face it, the MJ black market is pretty mellow), the more competitive it is, because it’s so easy and not-dangerous to participate in. And it’s not like they’re applying a small tax; they are taxing the shit out of the legal stuff. Therefore, it’s going to continue losing out.

[Scruffy Nerfherder]

A bottle of Jack is also usually much better than a bottle of shine

I suggest you stop making shine in your ’86 Chevy’s radiator.

[John]

I would say there is a small risk to buying weed illegally and the consequences of that risk are huge. All it takes is one unlucky day when you are there when your dealer gets busted and life sucks.

There are more than a few people rotting in prison because they were at the wrong place at the wrong time. Sure, you were just there buying. The police will hopefully believe that when your scumbag dealer fingers you as part of the operation in return for a lighter sentence. The more people you rat out, the lighter they will go and it isn’t like the DA or the cops will give a shit if you are lying.

I would think the weed from the dealer would have to be pretty damned good and the price really cheap to justify taking that risk when you can buy the stuff legally.

[Episiarch]

You’re wrong, John. First of all, I’m pretty sure that under legalization a buyer (especially of a relatively small amount) would face no consequences (it’s the seller that would get hit). Also, weed busts were already the police’s lowest priority here. Since it’s legal to possess it, the only way you could get busted was actually in the act of handing it over; you couldn’t get in any trouble coming to or leaving the buy.

The risks are quite low, so people will avoid the taxes, which are quite high.

[John]

First of all, I’m pretty sure that under legalization a buyer (especially of a relatively small amount) would face no consequences (it’s the seller that would get hit).

For sure, and when the seller fingered you to add to his list of people he is ratting out, you wouldn’t, at least according to the cops be just a buyer anymore. Don’t kid yourself, that kind of shit really happens. There are plenty of people rotting in prison for distro because they happened to be in a drug house when it was busted and the cops assumed everyone there was part of the operation and someone was happy to say that was the case in return for a lighter sentence.

Also, weed busts were already the police’s lowest priority here.

Which is encouraging provided your dealer only sells weed and hasn’t for whatever reason pissed off the police and given them a reason to fuck with you. That is probably true, but not certain.

[Episiarch]

All I can tell you, John, is that the guys who actually sell weed here that I know aren’t exactly super worried about it. They are careful, of course, but it’s just not taken overly seriously. Obviously a prosecutor could fuck your shit up if they wanted to, but when isn’t that the case?

[John]

See below. Once busting them is helping to enforce the government monopoly, that might change.

And I largely agree with you. The risk is pretty small. I just would hate to take it since the stakes are so huge. I guess if the legal stuff were really bad and horribly expensive I would. But if the legal stuff is good and just somewhat more expensive, why take any chance you don’t have to?

[Warty]

Not respectable middle-class white people like Epi, though. Wait, are guineas white?

[Lord Humungus]

no.

[Warty]

IT WAS A RHETORICAL QUESTION

[John]

And Epsiarch, I suspect weed busts will become a bigger priority once doing them enforces the government monopoly. Gambling busts are not generally high on the priority list until the government licenses a legal casino.

[Warty]

The ATF never busts moonshine buyers, do they? Or maybe they do, I don’t know. I’d be shocked if the state revenue goons behaved that much differently.

[Episiarch]

That is something I am worried about, John, because yes, if the scumbag politicians think too much of their tax revenue is being diverted to the black market, they’ll tell the cops to increase enforcement. We’ll see what happens when the legal weed sales really get going.

[Hugh Akston]

Doesn’t most illegal pot come from the Mexican Cartels? I wouldn’t characterize that as benign.

[sarcasmic]

Mexican comes from Mexico. Most decent weed is grown domestically.

[Episiarch]

I don’t know about everyone, but myself and my friends all buy from boutique dealers who have multiple strains tailored to different likes. I wouldn’t go anywhere near Mexican cartel weed. And the local boutique guys aren’t out shooting each other.

[BakedPenguin]

…multiple strains tailored to different likes…

Artisinal weed.

[waffles]

Pretty much. Well the differences aren’t too subtle. It’s more like comparing gin, rum, and bourbon than it is comparing a cabernet and a pinot noir.

[waffles]

But that doesn’t mean increased acceptance will allow for tailored likes to be further refined.

[waffles]

or won’t. Silly me

[A Secret Band of Robbers]

My lungs don’t handle smoke so well, so I only use edibles. How much am I missing in terms of differences in strains?

[waffles]

I can’t say. Edibles make me feel truly intoxicated so I tend to avoid them. It’s a whole ‘nother thing. Edibles typically aren’t made with a particular strain and instead just shoot for a thc or cdb content. Lots of food science goes into those potreprenuers preparations.

[sarcasmic]

Home-brewed beer is often on par with the commercial stuff. Why would distilled spirits be any different? (I’ve never had the opportunity to try illegal booze so I’m only speculating)

[T]

Home brewed beer can’t kill you, for one thing. Bad shine can.

More seriously, distilling is a bit more complicated than brewing. And your quality control comes in on the back end as well. What you do with it after distilling the stuff is just as important as what you do during.

[sarcasmic]

I’m just saying that if someone is going to go through all the trouble, don’t you think they’d try to make something good?

[John]

No. There is a whole culture around rot gut moonshine. If you want the aged good stuff you buy it. If you for whatever reason think the clear stuff is great or have some cultural affinity for it, you buy the moonshine.

Look at it this way, if moonshine were generally preferable to aged whiskey, companies would happily dispense with the expense of aging the stuff and mostly sell moonshine. But since the stuff tastes like shit and most people greatly prefer the aged stuff, not many companies bother to make legal moonshine.

[sarcasmic]

But since the stuff tastes like shit and most people greatly prefer the aged stuff, not many companies bother to make legal moonshine.

There’s another reason. It’s illegal. That’s right. It is against the law to sell whiskey that hasn’t been aged. That’s why they don’t sell it. At least until very recently.

Like I said, I prefer replies from people who know what they are talking about.

[John]

There’s another reason. It’s illegal. That’s right. It is against the law to sell whiskey that hasn’t been aged.

First, some moonshine is aged. Second, “aged” doesn’t mean aged like bourbon. All the aged requirement means is you age it some. It doesn’t mean you have to age it so much that it is no longer clear or has lost the taste of moonshine.

Beyond that, the unaged stuff is illegal. Yet, there is no black market for it outside of a few places. That is because it sucks and doesn’t fit most people’s tastes. If it did, there would have long ago been a big black market for it. If there is a demand, there will be a market.

[sarcasmic]

Yet, there is no black market for it outside of a few places.

Most of those places are dry counties.

If there is a demand, there will be a market.

Like I said. Dry counties.

[A Secret Band of Robbers]

How about this: distillation is a process well suited to mass manufacturing’s economies of scale. It takes a lot of product to run a pot still efficiently or fill an oak cask.

Still, the Kiwis have legalized home distilling and they manage alright.

[sarcasmic]

How about this: distillation is a process well suited to mass manufacturing’s economies of scale. It takes a lot of product to run a pot still efficiently or fill an oak cask.

I looking into what it would take to turn an all-grain beer, minus hops, into distilled alcohol. Turns out I really wouldn’t save any money. Risk totally outweighs reward.

[robc]

Very small scale distilling is taking off.

I know the guys making the (legal) equipment for the micro-distillers.

[kinnath]

There is a growing market for white “moonshine” in the commercial market. The reviews are generally unfavorable.

[BakedPenguin]

New Zealand legalized home distillation a few years ago.

Armageddon did not follow.

[robc]

if you for whatever reason think the clear stuff is great or have some cultural affinity for it, you buy the moonshine.

Isnt that the textbook definition of better?

[John]

Isnt that the textbook definition of better?

In your opinion sure. The point is that since few people have that opinion there will never be a big market for moonshine as long as aged bourbons and whiskeys are available, which was my point.

[robc]

But macro doesnt matter when determining “better”. I personally prefer a well-aged bourbon, but someone who LIKES shine is also correct.

“Better” is entirely micro.

[sarcasmic]

We’ve gone from the mere existence of a market to a big market. My how those goalposts tend to move when Tulpa is around.

[John]

No sarcasmic, we have gone from “no one but a few people will ever buy that stuff” to “no one but a few people will ever buy that stuff”.

Can you go fuck yourself? Really, just go fuck yourself or at least find a new move than STRAWMAN AND GOAL POSTS

How did you all of the sudden get so fucking tiresome? You weren’t always like that. What happened?

[A Secret Band of Robbers]

I assumed you two were trolling each other by mutual arrangement.

[sarcasmic]

What’s tiresome is someone making a simple comment, and then you jumping in with counterarguments to assumption after assumption, expecting people to defend things that they never said.

If you quit being an ass, I’ll quit pointing it out.

[A Secret Band of Robbers]

If I’m not mistaken, all Scotch whisky was distilled in primitive conditions not much different than moonshine shacks until the 1880s. The difference was that Scottish distillers had the option of paying taxes and selling their product legally if they wanted to.

[Brett L]

Eh. Don’t use corncobs (or other high cellulose materials) and throw away the first 1% (by still volume) that comes off the ‘still. and you’ll never have any methanol. Ever.

[Scruffy Nerfherder]

I find the booze tastes better when it hasn’t been fouled by tax stamps.

[John]

Because distilling spirits is harder and takes a lot more time than brewing beer. It takes a few weeks to brew good beer, there is of course the odd Stout recipe that takes a year or whatever, but that is the exception.

Distillation is a lot harder than fermentation. You have to get the temperature exactly right to boil off the right alcohols and leave behind the bad ones. If you fuck it up badly enough, you can produce a form of rubbing alcohol that will blind you. That is unlikely but it is possible.

Beyond that, whiskeys are generally aged. Most home distillers are not interested in putting a barrel in their garage for five years. So you end up with the clear unaged stuff, which even if it is made well sucks compared to the aged stuff.

[sarcasmic]

I’m sorry. I should have specified that I wanted a reply from someone who knew what they were talking about.

[John]

Since you hardly ever know much of anything about any subject, how did you plan to tell the difference?

[mad libertarian guy]

It couldn’t be more obvious that the people commenting have no experience with any shine at all.

Shine is the only liquor I will ever buy again.

[Scruffy Nerfherder]

So you end up with the clear unaged stuff, which even if it is made well sucks compared to the aged stuff.

Bah, good shine that’s been aged for a few months with Damson plums is hard to beat.

[John]

Blah. Not the same as aging it in a barrel and then having some guy who spent years learning his craft mixing it with other barrels to produce an ideal taste.

Yeah, some people love the shit. But some people love squirrel too. But I doubt squirrel will ever be in the same demand as good steak. Same goes with moonshine.

[mad libertarian guy]

But I doubt squirrel will ever be in the same demand as good steak.

Just wait until the apocalypse. When steak can’t be had, people will kill over squirrel. Fortunately squirrel is actually pretty good.

Any do you really have the belief that shiners don’t also often spend decades honing their craft just because it’s illegal?

[John]

Sure they do. MLG. And you are dead wrong. I have the shit. It is not hard to find in the SE and there people who are into it. There is no accounting for taste. You love it, good for you. But you are kidding yourself if you think that it will ever be as appealing generally as aged bourbons and such.

They legal bourbon and whiskey makers spend years and tons of time aging their product because in the view of the market the aging improves it.

Maybe the guys are Makers Mark and Jack Danial’s are wrong and are missing out on the opportunity to make moonshine that is aged a bit but not very long but I doubt it. I am thinking they know their product and their market.

[A Secret Band of Robbers]

Look at what the goals of small-scale producers are. Distillers don’t have much of a legal intermediate between selling mason jars and becoming a Jim Beam subsidiary, so they don’t have much incentive to invest heavily in their craft. Some do, sure, but they’re not expecting much of an ROI.

[sarcasmic]

But you are kidding yourself if you think that it will ever be as appealing generally as aged bourbons and such.

Who made that argument? Oh yeah. No one. You’re arguing with yourself again.

[A Secret Band of Robbers]

lololol, silly sarcasmic! Belgian sours aren’t going to replace commercial macrobrews!

[UnCivilServant]

The moment you throw wood in the mix, you’ve ruine dthe alcohol.

[John]

The moment you throw wood in the mix, you’ve ruine dthe alcohol.

So every single bourbon, whiskey and scotch in the world is “ruined” alcohol?

That is one opinion. But I doubt you will find much support for it outside of a few places along the Blue Ridge.

[UnCivilServant]

So every single bourbon, whiskey and scotch in the world is “ruined” alcohol?

Yup, pretty much. I still don’t know how people convince themselves it’s “good”. The only answers I’ve gotten so far amounted to “Acquired taste” which is abusing your taste buds until they stop registering the problems.

[A Secret Band of Robbers]

You’re the worst.

[JPyrate]

Its not really ruining it. Though it does impart a flavor, soaking a distilled ethyl alcohol product in wood chips, peat moss, or storing it in charred wood barrels is part of the filtering process. To remove methyl, and fusil alcohols. =)

[sarcasmic]

and then having some guy who spent years learning his craft mixing it with other barrels to produce an ideal taste

Real men drink single malt.

[John]

and then having some guy who spent years learning his craft mixing it with other barrels to produce an ideal taste

Real men drink single malt.

I would normally not be this pendantic, but you have been for whatever reason such an insufferable prick this morning, you deserve it.

SINGLE MALT DOES NOT MEAN SINGLE BARRELL YOU FUCKING HALF WIT.

Single malt means it was done with one grain in one distillery rather than from several distilleries. It has nothing to do with barrels.

Single barrel, which is what I was referring to, differs from other bourbons because it comes from a single barrel. Every barrel in a barrel barn produces a slightly different taste depending on where it is in the barn. The ones on the outside are exposed to greater temperature variation and thus get absorbed in and out of the wood more than those in the center. If you take all of the bourbon from a single barrel, your flavor will be slightly different than from another barrel in a different spot. If it is not single barrel, the distiller has blended the various barrels to produce on consistent and hopefully ideal taste.

[Scruffy Nerfherder]

I’m not into the mystique of it. The proof of the pudding is in the tasting. If you haven’t had some good Franklin County shine, you don’t know what you’re missing.

[sarcasmic]

Bah, good shine that’s been aged for a few months with Damson plums is hard to beat.

Midnight Moon appeared on the shelves around here recently, and I tried the cranberry shine. Pretty damn good. Though it takes a lot of sugar to cover up the lack of aging.

[mad libertarian guy]

Black cherry shine is where it’s at.

[Scruffy Nerfherder]

Though it takes a lot of sugar to cover up the lack of aging.

The extra distillation step makes a hell of a difference. I’ve had some Serbian shine made with elderberries that was awesome, and some form the same maker who went one less step that sucked balls.

[Lady Bertrum]

Doesn’t the CO law (or, perhaps it’s WA or CA) allow individuals to grow for their own personal use? If so, and expense is an issue, why not get a plant of your preference and grow your own? Is it difficult?

[Episiarch]

Colorado’s rules do allow for growing your own, but Washington’s do not (I’m pretty sure I’m correct here).

But that’s still moot. Take me, for instance; I hate dealing with plants and have whatever the opposite of a green thumb is. Even if it were legal to grow my own, I’d have to buy the equipment, create a space for it, and take care of it, none of which I want to do. I’d much rather buy it, even if it’s a low-risk illegal purchase.

[mad libertarian guy]

If so, and expense is an issue, why not get a plant of your preference and grow your own? Is it difficult?

Growing pot that is worth a damn is a much more difficult process than just throwing a seed in to the ground and watering it on occasion. And growing good pot in any kind of real quantity is even more difficult. You need the right space with the right equipment and more than a little know how.

[Lady Bertrum]

Hmm. I’ll take your word for it but I do wonder if it’s all the difficult. I grow heirloom tomatoes in containers which is also more involved than throwing seeds in dirt. You need good soil and the right amount of sunlight and water, but after doing it for a few years, I’m quite good at it. If it were legal in Jersey, I’d give growing pot a try just for giggles.

[mad libertarian guy]

For large amounts of killer pot, you need to be able to control various factors. Humidity (which changes at different times of the growth cycle), CO2, temperature, light, even the acidity of the water you’re using all need to be manipulated to be in a particular range in order to have a favorable outcome.

Sure you can throw a seed of good genetics in a pot of dirt and probably end up with a fairly small amount of pretty good weed, but to get good amounts of the truly killer stuff, you need to work at it.

[Michael S. Langston]

Some strains are specific to outdoors though and do grow good product with less intervention (in the right climate anyway).

& while possibly a little expensive to start – hyrdo isn’t that hard to deal with – though seeds are definitely an expense.

[JPyrate]

@ sarcasmic If you are ever buying tax free shine just ask your guy if he knows what a reflux still, and activated charcoal are. If he does not, seek your tax free hooch elsewhere. Here is a good book if you have an interest on the subject. =) http://www.amazon.com/Alaskan-…..0967452406

[Brett L]

Buy (or get) some oak chips about half a cup per quart of shine. Wrap them in foil and put them in the oven at 400F for 40 minutes. Dump these in your shine. Put up somewhere for 6 weeks, giving the container a shake or swirl every couple days.

Mmm. Decent whiskey.

[Hugh Akston]

I wonder how long all those Colorado municipalities that banned pot sales after 64 passed will be able to resist the siren song of this tax revenue.

[HazelMeade]

It kind of makes sense – you pay a premium to get a legal product that comes with police protection, returnability, and with a certain reliable standard of quality and purity.

People who can afford to are going to prefer the legally purchased weed over the black market product, as long as the price difference isn’t too large. The trick is not over-taxing and regulating it beyond that point.

[Scruffy Nerfherder]

you pay a premium to get a legal product that comes with police protection

Once again, how is the government different from a legalized mafia?

[sarcasmic]

The mafia is more honest.

[Hugh Akston]

The mafia is okay with horse slaughter?

[Floridian]

Once again, how is the government different from a legalized mafia?

The mafia doesn’t act like it is doing you a favor?

[UnCivilServant]

Or when it does, they actually do you a favor.

[DesigNate]

I’d say a 35.6% tax qualifies as over-taxing.

[mad libertarian guy]

Politicians say the taxes are necessary to pay for the strict regulatory enforcement that will keep the feds at bay. But if a robust black market persists after legalization, that regulatory regime will be largely irrelevant.

The regulatory regime is ALREADY irrelevant.

Black market pot prices may not have regulatory and tax burdens built in to their pricing structure giving them what seems to be an undue advantage, but they are NOT selling at a competitive advantage to legal pot shops. Built in to black market prices are the costs associated with remaining undetected. Having to procure space and remain undetected costs lots of money. There is no valid excuse for legal pot costing more so that they can remain in compliance with regulatory and tax burdens when illegal pot producers can charge substantially less while paying handsomely for not getting caught.

When doing business costs more legally than doing the same business illegally (particularly when the legal ramifications are as high as they are), your tax and regulatory structure has already failed you.

[Invisible Finger]

I’d be more interested in re-sale of pot. I mean, I’m sure resale of Bud Light is somehow illegal, but if you occasionally sell your neighbor a couple bottles of beer because they don’t want to drive 6 miles to the store I don’t think all but a handful of cops plus prosecutors are going to make hay of your massive distributorship.

So unless they somehow find a giant stash, black market sales, especially boutique kinds, aren’t going to look much different from a legal-weed resale.

The next 5 or 6 years are going to be the tough ones as the existing zealots get weeded out (sorry for the bad pun) like the old probies. But long-term weed is going to be just like the beer market, and yes that means weak weed will probably be the weed of choice for the bulk of the market, and the shitty advertising that goes along with it.

So let’s make this thread something useful, like coming up with brand names.

[derpules]

So all the OWS “tax the hell out of it” people are bitching because their weed is too expensive? Clearly this is a market failure.

[MP]

But if a robust black market persists after legalization, that regulatory regime will be largely irrelevant.

This statement is a a wee bit overblown. The black market for cigarettes has not caused them to exit the retail market. While the black market’s existence is predicated on the high regulatory costs, there’s still sufficient disincentives to engage in illegal activity to keep the regular retail market intact. Additionally, the sheer availability and ease of access associated with the retail market give it a huge advantage over the black market, even when there’s a price discrepancy.

This is really just a type of Laffer Curve issue. There is a regulatory level that maximizes revenue while minimizing black market affects. That level is a LONG way from being discovered.

Call me when CO pot shops start having inventory clearance sales.

[John]

^^THIS^^

It just depends on how much they want to regulate it. If they regulate it such that all the weed they sell legally is shit and really expensive, then the black market will overtake the legal market. If they don’t do that, it won’t.

[mad libertarian guy]

Sort of.

Your cigarette issue is different than weed, however, because the default status for each is different. People have to search out illegal cigarette vendors and ENTER the shady world of the black market. For most people remaining legal involves the least resistance because it’s the same process they’ve always undergone, just more expensive. Buying from a cheaper, black market alternative requires and amount of work that most people just aren’t going to voluntarily do.

The same is for pot only in reverse. The default is buying it through an already robust and fully fleshed out black market supplier. Do you think people are going to voluntarily pay substantially more money to buy from a shop when buying the from the guy they have always bought it from is cheaper? It won’t last much longer than the novelty of being able to buy it legally from a store.

[John]

Do you think people are going to voluntarily pay substantially more money to buy from a shop when buying the from the guy they have always bought it from is cheaper?

Some will and some won’t. How many depends on how onerous the regulation is and how robustly the police enforce the government monopoly.

But people who don’t smoke weed but decide to do so now that it is legal, will almost certainly go to the legal dispensaries.

The black market competes with the legal one. If the legal one is allowed to produce a good product at a decent price, the black market will lose out. The legality gives the regular market a decent but not complete competitive advantage.

[mad libertarian guy]

But people who don’t smoke weed but decide to do so now that it is legal, will almost certainly go to the legal dispensaries.

Agreed.

But it seems to me that the number of people who will decide to now smoke pot just because they can (as a habit rather than as an “I guess I’ll try it this one time since I’m visiting Colorado) is about as high as those who would decide doing heroin would be okay if made legal (I.e., very few).

The black market competes with the legal one. If the legal one is allowed to produce a good product at a decent price, the black market will lose out. The legality gives the regular market a decent but not complete competitive advantage.

I agree. But the “decent price” is at issue here. Most pot smokers I know will smoke about an ounce a week. Paying $90+ per week just to say they’re legal (when they’ve been doing all along illegally, and likely without much hassle) doesn’t seem to me to be a decent price, and not that great an incentive to buy legally, which means that the advantage they could have is erased.

Beyond legalization, the only thing the government can do is fuck it up. If they want the benefits of having a legal market (significantly reduced violence involved in the black market), then they need to dispense with the “we’re gonna tax the fuck out of it” attitude they currently have. They would get a much larger income if they taxed it at normal sales tax rates and let the rest be.

[SugarFree]

Most pot smokers I know will smoke about an ounce a week.

FFS. I can usually get six months out of an ounce.

[MP]

But it seems to me that the number of people who will decide to now smoke pot just because they can

I suspect you’re a bit too close high volume users to really see the casual user perspective. As SF states, an ounce a week can be a lot.

Again, look at the alcohol perspective. Casual drinkers will have maybe a few a week. It takes me a long time to go through a bottle of whiskey. So with MJ in play, maybe a J a week, or every other week. There’s still finding the occasion to do it around kids and work and whatnot. And it’s too fucking cold to go outside right now anyhow (good luck getting permission to be inside). AND…this is a population that likely did smoke in the past, but the legal barriers simply made it too much of a hassle. But now…?

Again, we’re simply a LONG way from seeing what the right regulatory balance is.

[Invisible Finger]

But every pot smoker today has already bought on the black market. It’s today’s 5-year old that decides to buy 13 years from now rather than pinching some of his Dad’s stash that will be making a decision; for current smokers the decision is to enter the “legal” market since the illegal market served them all the time before.

[Invisible Finger]

I remember my liquor store days: the Popov Vodka half gallons and the Smirnoff Vodka sold like crazy on sale but the Stoly never went on sale. (I lived in the poorer side of the county.)

[Dave Krueger]

…a 15 percent excise tax, plus a special 10 percent sales tax….

Hahahaha! And this differs from organized crime how? Except maybe organized crime might not demand as big a cut.

[Warty]

For fun sometime, challenge a Normal to explain how government differs from organized crime. It usually is a good time.

[Episiarch]

That’s simple, Warty. Government is different from organized crime because people think it is. I mean, there are documents and shit!

[John]

There is no difference. All the government is is the mafia you create in hopes that it treats you better than the ones that it is replacing.

[sarcasmic]

Government lets you choose from a list of lawyers to become its leaders, which makes everything it does legitimate. If the mafia gave you a list of guidos to choose from to be its leader, then it would be legitimate as well.

[A Secret Band of Robbers]

They also need to write down their rules, and provide you with a different mafioso they chose for you to bring your complaints to, so that you can be sure they’re following their own rules (unless they have a good reason not to.)

[Hugh Akston]

You don’t vote for mobsters Warty. Government is totes legit because democracy!

[UnCivilServant]

The difference is, the mafia tends to weed out the most incompetent among itself, or keep them too low to cause trouble by the nature of the culture.

Government doesn’t do that.

[Brandon]

Considering the ridiculous lines outside of almost every shop, I’d say it doesn’t really seem to matter if legal costs more than black market. Now, if you want to talk about stupidly restricted supply for legal, that’s another issue. But cost itself doesn’t seem to be hampering demand, even if it’s just for the novelty.

[Invisible Finger]

I take no information from the long lines other than people are conditioned to think it’s cool to stand in line for a new phone.

[Monkey's Uncle]

Apparently the price of weed is too damn high and what difference at this point does it make?

My take is that the markets, black or otherwise, will adjust as they tend to do.