Legalization’s Impact on the Value of Cannabis

The monetary value of cannabis is obviously going to depend on the location at which it is produced and subsequently sold.  Ten years ago the price of cannabis was still location dependent, but now legalization in select states has had a unique impact on the prices of pot products.  In states where it is recreationally or medically legal, the value of bud grown from local growers is lower then it ever has been.  This is because they need to undercut the legally operating dispensaries in order to remain in business.  The addition of legal suppliers along with the original black market growers means supply is growing.  While demand remains as high as it always has been, the expanding number of suppliers will continue to lower weed’s value.  For those states that have not experienced recreational or medical dispensaries, there has been little to no impact.  A lot of the marijuana that is grown in legal states by caregivers or individuals is being transported to these states in order to maximize profits.  For example, a top-shelf $1800 pound in a state like California can easily be resold for $3000-4000 in places like New York or Florida.  That discrepancy is only for wholesale prices. If it were broken down into smaller quantities, the difference in value would become much more apparent.

Many growers like myself are hoping that the demand for high-quality craft cannabis will survive the transition to commercially grown weed.  It’s not going to be feasible to give 5,000 plants the individual attention they need in order to maximize potency and flavor.  Small-time growers have much more control over the environment and are better able to prevent insect outbreaks and nutrient deficiencies.  On top of that, many of the people entering the industry have the required financial investment but no previous experience in the illegal culture.  Those who have been operating in the shadows for years and dominating the market will always have the obvious advantage of experience.

The one that will benefit most from the legalization movement will 100% be the consumers.  Outside of being protected from prosecution, they now have the ability to produce their own marijuana or purchase cannabis from a variety of suppliers at a cheaper price.  While the price of legal cannabis is sometimes cheaper then what consumers were paying during prohibition, high-quality buds still sell for a premium.  That provides an opportunity for black market growers to re-claim the connoisseur market.  For now, they are still able to attract customers because they can compete with prices and taxes being charged at retail locations.  Those new to cannabis and those unable to identify characteristics of a desirable strain will be attracted to dispensaries.  Lacking connections among local growers means they will pay whatever their local shop charges.

The immediate impact on legal prices of marijuana will be undesirable.  When Washington opened its doors to anyone over the age of 21, they were charging over $30 a gram.  Those prices are unheard of by those who have been purchasing weed for any amount of time.  Despite the price, the lines stretched long and far the first few weeks of legal sales.  The new feeling of walking into a nice shiny retail location is priceless for some it seems.  Being able to participate in that moment of history after 70 years of prohibition, is what drove people to wait in line and pay high prices.  I would love to take a survey amongst cannabis consumers in states with dispensaries and ask them whether their source is a retail location or local grower/distributor.  Black markets certainly still exist, but it would be great to understand the exact magnitude legalization has had on the cannabis community.

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