Are recreational marijuana prices in Denver headed sky high?

Since the 2009 "green rush" boom of medical dispensaries, Denver pot smokers have enjoyed a steady decline in the price of their cannabis in both the medical and black-market economies, dropping from $50 or $60 an eighth to as low as $25. With the heavily regulated industry of legal recreational marijuana, though, it's looking like prices are climbing back up. This may be temporary, or it may be the new standard. We caught up with a few soon-to-be-open recreational shops to get the details on what shoppers can expect after the first of the year.

"We want to do something that's comparable and fair to markets outside of Colorado," says Toni Fox, owner of 3D Cannabis Center, which will be one of the first dispensaries to begin selling recreationally on January 1. "We're looking at what an eighth costs on the street in Iowa. We don't want to do any drastic increases and overprice the product with that excruciating 36 percent tax. We're going to start our pricing structure at $35 to $40 and $50 an eighth -- and that's pre-tax. It's close to what we're charging medicinally, but our medicinal prices always included tax. We're still deciding if we're going to have that 15 percent excise tax on the wholesale side as a line item on the receipt, or if we're going to just absorb that into our base price."

Fox says that the final math on 3D prices is looking to be around $50 to $65 an eighth, after taxes, which is consistent with the prices we've heard from Northern Lights, which will also be opening on January first and says its prices will average around $50 an eighth. That's about the same price that Denver Relief, which won't open its recreational shop until February, will be charging.

"Between the demand -- which will be much greater than supply -- and the additional tax burden, it would not surprise me to see eighths that go for $25 in a medical environment go for $50 in social," says Denver Relief co-owner Kayvan Khalatbari. "My guess is Denver Relief will sell social-use eighths between $50 and $60 when we are able to do so in February."

So while most tourists headed to Denver to purchase legal marijuana won't notice too much of a difference in prices here compared to what they're used to in surrounding states, home-town smokers may be driven to either continue purchasing their marijuana on the black market -- where it currently bounces between $25 and $35 an eighth -- or simply go out and apply for a medical marijuana card, the price of which will drop to $15 early next year.

"It's all supply and demand," says Fox. "Once I can produce more cannabis, our prices should go down. I don't think there's going to be a lot of wholesale available on the retail side for a few months, and we can't cultivate our retail plants until January 1. So I can transfer my medical grow over, but that's only roughly 1200 plants. After the 1st, I can grow 3600, and then the prices will definitely go down."   As the months roll on we'll be keeping a close eye on these marijuananomics to see if the initially inflated prices will begin to sink once the industry gets a little more settled. The recreational shop owners we spoke with believe that, just as in 2009, prices will soon plummet.

"I think as more social licenses get up and running and more larger, efficient facilities are built that we will see prices below what we see for medical now," Khalatbari explains. "The technology and best practices being implemented now are going to change this game dramatically. We won't recognize this industry twelve months from now."

From our marijuana archives: Marijuana: Buying pot at Civic Center Park in 2004 -- and at the end of 2013

Follow me on Twitter at @JosiahMHesse.

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