By Dave Anderson:
Mark Kleiman passes along some interesting data regarding the licit versus illicit cost of high end marijuana if California effectively legalizes weed next month with Prop. 19:
Just as important, �medical� cannabis sells at more or less full dope-dealer prices, while if Prop. 19 were allowed to take effect without Federal interference the retail price of high-grade weed would (according to RAND) be about $40 an ounce, more than an 80% discount compared to the current $300. At that price, California cannabis would flood the nation.
A significant fraction of the post-Prop. 19 pot would be in open, commercial production where the owners would be able to use significant capital, machinery, technology and manpower to efficiently grow weed. Napa Valley would be a decent analogy of a fully capitalized intoxicant production region. Kleiman thinks that large scale commerical grows would be under significant legal pressure as the federal government will see overt quasi-licit growing as purely drug trafficking. In that scenario, most of the price drop that one would expect to see from increasing capitalization of an industry as well as increasing scale would disappear. Instead, the more probable mostly licit growing option would be 25 square foot 'personal patches.'
If most of the licit gorwing is for "personal" consumption on plots that are large enough to supply several Cheeches and Chongs on a daily basis, the price level will be higher as the mostly licit growers will not be benefiting as much from economies of scale, learning by doing and intensive capitalization of the product. Instead of Napa Valley as a relevant comparison for intensive, niche agriculture and intoxicant production, we would be seeing home-brewing as a relevant comparison.
That would leave most of the price decrease in high end weed due to the evaporation of the local cops security premium. The risk of moving enough weed to supply a dozen daily stoners goes from felony charges to mainly worrying about moving and parking violations. If distribution at the street level is mostly legal and risk free, the black market has no advantage in providing that service. The black market will still have a role in marijuana distribution and production, especially interstate distribution but the black market will see a significant revenue squeeze if Prop. 19 passes.
Boy I really feel old now - I remember in the early 70s an ounce was referred to a a nickle bag, it cost $5.00.
ReplyDeleteGood stuff, or skank ass stuff for $5, Ron?
ReplyDeleteOk, Rand is clearly out of their depth on this issue...or it's writing for an agenda rather than honest research. Marijuana has been functionally decriminalized in California since 1996 and the price hasn't dropped, but we're supposed to believe that full decriminalization will drop the price of an ounce to $40? Further, CA prices are either not at all or not significantly lower than prices in the rest of the country.
ReplyDeleteAlso, Prop 19 sets specific area limits for personal cultivation. These will likely not be followed by most, but it negates the RAND suggestion that the whole Napa Valley will become cannabis farms...and completely neglects to mention that if a Napa farmer tore out the grapevines and planted cannabis, then the DEA would be there in days to confiscate the property. (And especially at the prices RAND is quoting, nobody would risk the property value to grow dope.)
I also take issue with the hypothesis that the drop in price will correspond with an increase in use. The price is what it is because that's what the market will support; realistically, demand probably still outstrips supply. And i seriously doubt that many Californians don't smoke weed because it's too expensive.
Crikes, the freemarketeers have the tremendous example of what a nearly free market actually looks like and they don't even know what to do with it.