Granted, how much legal marijuana will be purchased for is impossible to know and will vary from state to state and even town to town. But the eventual answer is an important one and depends on a myriad of factors.
A recent study by the Colorado Futures Center attempted to answer the question, at least when it comes to legal marijuana sales in Colorado.
Researchers estimate that in 2014, 642,772 Colorado residents, or about 12.5% of the state population, will take advantage of pot’s newly legal status. Analysts assumed each person would smoke or otherwise “use” 3.53 ounces of marijuana annually, for a total of 2,268,985 ounces (about 142,000 pounds) per year.
Of course, estimates are just estimates, and they could be way off. But the numbers do serve as a baseline for trying to figure out what the legal market will look like. If demand outstrips supply, prices will go up. If supply can keep up with demand, prices can be kept lower. This is why marijuana in a legal market will be priced lower – all other things being equal – than marijuana in the black market, since there will be much fewer supply disruptions in the legal market.
In the Colorado Futures Center study, they estimated a price of $185 an ounce. If this is the price for medical-grade marijuana, then that is a great price indeed, being less than 7 dollars a gram. If that is the price for what many cannabis users refer to as “regs,” then the black market will be able to undercut that price, not just in Colorado, but in most places in the U.S.
According to the study, this is the price they estimate for lower-quality bud, but this estimate is based heavily on the supposed price for black market marijuana in Colorado, a number that is elusive at best. And these numbers don’t take into account the real game-changer when it comes to the price of legal weed: taxes.
Let’s say there is a 25% tax on marijuana in a hypothetical legal market. That makes a $185 ounce a $231 ounce in an instant. Black market drug dealers will easily be able to sell lower-quality marijuana for well under that price. This will keep the black market, and all the violence and criminal activity associated with it, alive and well.
Time will tell what the free market decides is a fair price for legal cannabis in Colorado, Washington and elsewhere. But if it is not less than the price on the black market, then some of the advantages of legalization will be muted.