Pot prices plunge in Washington State

The harvest is in, and ounces of 10%-THC cannabis are selling for $200 at commercial retail outlets in Washington. (Figure roughly 70 joints to the ounce, and at least 3 stoned hours per joint, so the cost of intoxication is roughly $1 per hour.) That price is fully competitive  with both the illicit market and the medical market.

This was utterly predictable, as I know because my RAND colleagues predicted it. So much for the argument that Washington’s taxes were too high.

What is also predictable is that prices will continue to drop, both in Washington State and in Colorado, unless the authorities start to limit production volume. $200/oz. would be a fairly reasonable price target; anything much lower than that risks a big increase in heavy use and underage use. (Of course there’s no way to keep the stuff from leaking from adults, who are allowed to purchase, to minors, who aren’t.)

Falling prices are also bad news for all the folks who thought they were going to get rich selling a newly legal product at the old, illegal prices. No such luck.

 

 

 

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

8 thoughts on “Pot prices plunge in Washington State”

  1. I understand from Pat Ogelsby that legislatures are actually pushing for a tax rate cut at the moment, so they will feel fiscal pain for that.

    I don't think a target price can be guessed at in terms of ounces — you intoxication metric is better. You could buy $200/ounce pot before legalization but it was 1/2 the potency.

    1. You CAN get 4-7% THC mexican brickweed delivered to your door right now for $75/oz or less in Missouri all day long, and 20+% sensimilla has been going for about $10/gram ($280/oz) here where prohibition is still full-force. Don't see much in the 10% THC range around here, but $200/oz would seem to me a bit high pricewise for illicit 10% weed here in the Bible Belt where legalization is still a ways off. If this represents a price plunge in legalized WA, the only conclusion I can reach is that the prices were artificially held unrealistically high before the plunge.

      1. I can get legal, tested, and taxed outdoor cannabis wholesale ranging from 15% to 25% THC at prices that a black market/medical
        grower could not compete at or break even.

        Now. As much as I could possibly sell. One grower with multiple licenses co-op grew at least 6000 lbs of
        flower and gallons and gallons of oil. There are like 3-4 similar outfits. There are at least 20,000 lbs of unsold flower and more being
        produced every month. Prices are going to drop even more and most likely increase consumption. Substitution for alcohol?
        Who knows?

        Many folks are going to go bankrupt, especially large tier 3 indoor growers.

        Hope you RAND folks are watching this carefully.

  2. Mark,
    You would be very (un)surprised how many folks in the industry did not read the BOTEC analysis, RAND papers, or
    even your recent marijuana book. I mean, very smart people investing alot of money and having out of whack pro forma
    numbers on false assumptions.

    I was very much caught off guard by the ferocity of market forces in basically, an agricultural commodities product, like marijuana.
    I thought it would have been a least a year before prices drop substantially, rather than 4-6 months and prices are still dropping.
    Ad valorem taxes on pot are not really that big of a deal with falling wholesale prices.
    I am not too worried about the black or medical market (soon to be folded into I-502).
    The problems are actually the costs of regulation, banking, insurance, payroll, and no 280E. These factors are giving me
    pause. I am starting to feel that the folks selling shovels and pans are making the money in this new gold rush.

    Like you said before, there will be more tears, than joy in this industry.

  3. Ahem. As one of the less-holding folk who hang around here… why am I supposed to be glad that the medical price is so high? I have no idea what a sick person would need per day … but I have a sneaking suspicion that most insurers are not covering this. (or are they?) Shouldn't the price for sick people be *lower?* Yes, I know it has to be more regulated and whatnot, but still. It has the power to relieve suffering and help people eat to gain strength. We shouldn't be in the way of that.

  4. Are gas prices guaranteed to stay low? Sounds like growers are not feeling very profitable . I predict a thinning of the heard and higher prices and a very strong black market.

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