Rand Study: Prop 19 Will Crash Pot Prices, Increase Consumption

Marijuana prices will drop by as much as 80% if Prop 19 passes in California this November, according to a study by the Rand Corporation‘s Drug Policy Research Center. Pot consumption will also increase.

The Santa Monica-based, nonprofit research institute predicted the cost of marijuana, which runs between $300 and $450 per ounce, could plunge to about $38 by eliminating the expense of compensating suppliers for the challenges of operating in the black market.

The researchers were not certain how much that decline in price might spur use, but noted that one typical estimate is that a 10% drop in price increases use by about 3%. Other factors, such as the elimination of legal risks, could also increase usage between 5% and 50%.

Moving pot out of the shadows will crash the price, as there will no longer be an illegality premium. Growers will be able to pay workers a little more than regular nursery workers make — ten bucks an hour — instead of the $25 they must pay now.

Additionally, marijuana ‘idealists’ are likely to be discouraged by the proposal from my Assemblyman Tom Ammiano, who would tax pot fifty bucks an ounce. With the Rand-predicted price drop, more of marijuana’s consumer cost would be going to taxes.

The report notes that Ammiano’s proposed tax is about 10 times the rate of state tobacco taxes. That high tax creates an incentive for tax evasion that is more financially rewarding than smuggling marijuana from Mexico to California and it could also encourage smokers to turn to the highest-potency marijuana to get more bang for their buck, the researchers concluded.

Researchers also looked at the estimates of the cost of enforcing marijuana laws in California, which ranged from $200 million to $1.9 billion, and put it at “probably less than $300 million.” They also conclude that it is not possible to determine whether increased use would lead to more drugged driving accidents and to more use of harder drugs, such as cocaine, saying the research is inconclusive.

Ah, the ‘gateway’ — always hard to predict, always hard to measure, even in a world where pot is legal.

Comments are closed.