A new study from Rand's Drug Policy Research Center suggests that marijuana costs could be slashed as much as 80 percent, and pot use could increase by as much as 50 percent, if Californians pass the legalization measure on their November ballot. Such momentous changes could drastically shake up the marijuana market -- and could point to similar developments here if Colorado were to pass its own legalization initiative.
While Colorado's medical marijuana industry seems to be enjoying unchecked growth, the industry is far from a normal free market. Demand is artificially limited by the number of people able to obtain a medical-marijuana card, not to mention the complications associated with marijuana still being prohibited federally and tied to the risks the black market.
That scenario could change drastically once pot is legalized, suggests the Rand study. California pot, now running for between $300 and $450 per ounce, could drop to about $38 an ounce after all the additional expenses and limitations are removed. The drastic price drop, plus the removal of legal risks, could expand pot use between 5 and 50 percent statewide.
It's not hard to imagine similar shifts could occur in Colorado if pot gets legalized here. But would this be a good thing? On one hand, patients and recreational users would clearly appreciate the drastically reduced pot prices. But the other players might not be so happy about the change. For one thing, the state would likely enjoy less tax revenue, a benefit many activists have been touting as a major reason to legalize weed.
The price drop could also be difficult for dispensaries. Thanks to new state law, these businesses, now called medical marijuana centers, are required to pay thousands of dollars in licensing fees and go through an expensive inspection process. If the cost of marijuana were to plummet, would it still make financial sense to jump through all those hoops? If not, the industry could wither.
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Still, all of these developments are likely a long way off. As of now, there's no concrete plan to put a legalization measure on Colorado's November ballot -- so the free market will have to wait.