Althouse: The economics of legal(ish) marijuana in Colorado and Washington.

November 13, 2012

The economics of legal(ish) marijuana in Colorado and Washington.

It won't be cheap for users. And it will be hard for the producers — or the states (with their taxes and fees) — to make money.

62 comments:

edutcher said...: Looks like Mexico still has the edge.; 11/13/12, 12:06 PM
Shouting Thomas said...: I disagree with the premise of the article.

Truly good pot is hand tended with loving care. Growing in bulk really doesn't work.

This is an important health issue. The lower grade the pot, the more the user has to smoke to produce the same high. This means, the lower the grade, the higher the health risk.

So, no, growing pot in large quantities has some issues that you might not automatically suspect.; 11/13/12, 12:09 PM
Bryan C said...: And it exists entirely at the pleasure of Obama's Justice Department. One day you're a shopkeeper. The next you're a federal felon.; 11/13/12, 12:10 PM
mccullough said...: LOL. No one is going to buy the "legal" pot. It's tough to set up a legal market to compete with a black market. Why would anyone pay those prices and taxes for the state's ditch weed>

Not to mention that the federal government will be all over any state or local government that tries to issue a "license" to sell pot.

Decriminalize marijuana is the best solution. Give a $250 fine to anyone possessing an ounce or less.; 11/13/12, 12:12 PM
madAsHell said...: Somewhere, Sandra Fluck is calculating how much free weed she requires...; 11/13/12, 12:14 PM
Nonapod said...: Truly good pot is hand tended with loving care. Growing in bulk really doesn't work.

I'm not so certain quality is such a big deal to most potential consumers. When you look at something like beer for example, you have home brewers, so called "craft" and micro brewers of various sizes, and the big guy Budweiser. There are aficionados who prefer the really well made homebrewed stuff to even the best microbrews, but generally very good beer can be produced en masse and there certainly is a market for it.; 11/13/12, 12:22 PM
Sydney said...: And it exists entirely at the pleasure of Obama's Justice Department. One day you're a shopkeeper. The next you're a federal felon.

Also true of the banking and medical industry now.; 11/13/12, 12:22 PM
Franklin said...: Why are Republicans trying to take away our access to affordable marijuana?; 11/13/12, 12:40 PM
Ruth Anne Adams said...: Hash(ish).; 11/13/12, 12:48 PM
Ruth Anne Adams said...: This comment has been removed by the author.; 11/13/12, 12:48 PM
Clyde said...: Off topic, but they're talking about John Kerry as the possible new Secretary of Defense. I guess that Jane Fonda must have been unavailable.; 11/13/12, 12:49 PM
Unknown said...: The largest part of the benefit of legal weed will come from harm reduction. Maybe we can stop some of the insane destruction our own law enforcement is inflicting on the country.

I don't know how hopeful to be about this. There is a truly deadly drug coursing through the veins of the justice system now and that's power. The difference between police and an occupying army is becoming obscure. And they like it that way. I hope the harm reduction isn't too little too late.

If I want good weed I'll either pay the tax or follow the moonshiner's tradition. Just a step back from the police state. That's all I hope for.; 11/13/12, 12:53 PM
Mary Beth said...: I'm not so certain quality is such a big deal to most potential consumers. When you look at something like beer for example, you have home brewers, so called "craft" and micro brewers of various sizes, and the big guy Budweiser. There are aficionados who prefer the really well made homebrewed stuff to even the best microbrews, but generally very good beer can be produced en masse and there certainly is a market for it.

That's a matter of quality of taste more than intoxication potential.; 11/13/12, 1:05 PM
ndspinelli said...: Nonapod, Shouting is correct. The California dispensaries have probably the highest quality cannabis in the world. The growers compete like any business. It takes a lot of craft to grow organic, powerful cannabis. It has to be indoor and there is a lot of expense. The health factors of smoking can be eliminated by using a vaporizer. Then there are edibles and drinkables. They have cannabis honey to put in tea. There are cannabis suckers, which many chemo patients use, cannabis soda, lemonade. And of course, brownies, cookies, etc. You can also buy cannabis butter to make your own edibles.; 11/13/12, 1:09 PM
Paul said...: "Truly good pot is hand tended with loving care. Growing in bulk really doesn't work.'

There's a county a bit north of me called Mendicino that puts paid to your silly statement. I don't smoke any more for years now but have gigged up there with potheads with, shall we say "pedigree", and they will attest to the potency of the production weed that is available by the shopping bag at some of these parties. They are connoisseurs and not easily impressed.

Maybe Woodstock is behind the curve in this, like everything else. People called it We're-stuck when I was there. LOL.; 11/13/12, 1:11 PM
Darrell said...: Pot? Sure.

But when will tampons be available is States with a Republican governor? And condoms?; 11/13/12, 1:11 PM
Shouting Thomas said...: Maybe Woodstock is behind the curve in this, like everything else. People called it We're-stuck when I was there. LOL.

My friends call it "Wood-stuck," because once you're here, you're soon broke, you can't make any money, and you're doomed.

I'll be happy to make the trip out to northern CA to check out the production weed, but I'm basing my experience on carefully homegrown Oregon stuff.; 11/13/12, 1:13 PM
garage mahal said...: Remove marijuana from the federal Controlled Substance Act and allow the states to decide how they want to regulate it.

Done.; 11/13/12, 1:19 PM
Paul said...: Pot growing has been perfected as an art out here, a few plants or hundreds. So many people are now growing a couple of plants for a years supply as it's pretty much legal. They are like wine connoisseurs with there various strains with subtle distinctions in taste and quality of the high.; 11/13/12, 1:23 PM
Paul said...: "Remove marijuana from the federal Controlled Substance Act and allow the states to decide how they want to regulate it."

Better yet get the government out of it entirely. Why do you just naturally assume it needs government regulation?; 11/13/12, 1:25 PM
Rusty said...: The people who grow and distribute it have gotten very good at avoiding any type of regulation.
What in the world makes you think that is going to change.; 11/13/12, 1:27 PM
Bryan C said...: "Decriminalize marijuana is the best solution. Give a $250 fine to anyone possessing an ounce or less."

A fine for the non-possession of marijuana?

Justice Roberts, is that you?; 11/13/12, 1:44 PM
Bryan C said...: "Remove marijuana from the federal Controlled Substance Act and allow the states to decide how they want to regulate it."

Agreed. The benefits of federalism in action.

And take pseudoephedrine off the list at the same time, please.; 11/13/12, 1:54 PM
Nonapod said...: The California dispensaries have probably the highest quality cannabis in the world. The growers compete like any business. It takes a lot of craft to grow organic, powerful cannabis. It has to be indoor and there is a lot of expense. The health factors of smoking can be eliminated by using a vaporizer. Then there are edibles and drinkables. They have cannabis honey to put in tea. There are cannabis suckers, which many chemo patients use, cannabis soda, lemonade. And of course, brownies, cookies, etc. You can also buy cannabis butter to make your own edibles.

I don't doubt that's true. My whole point with the beer analogy is that I don't believe very high quality is as important to a majority of consumers as you might think. I think most of then will be happy with inexpensive pot that isn't necessarily super duper high quality, but isn't ditch weed either, just good enough.; 11/13/12, 1:55 PM
garage mahal said...: Why do you just naturally assume it needs government regulation?

It should be regulated the same way we regulate tobacco, alcohol, and gambling IMO.; 11/13/12, 2:09 PM
cryptical said...: It should be regulated the same way we regulate tobacco, alcohol, and gambling IMO.

It's all about the revenue. If they thought there was a buck in it they'd be all hot to regulate potpourri...; 11/13/12, 2:24 PM
Will said...: And it will be hard for the producers — or the states (with their taxes and fees) — to make money.
This will be doubly true for Colorado. The amendment that passed directs the legislature to create an excise tax on marijuana and use it to fund school construction. However, it directly conflicts with another amendment, TABOR -- the Taxpayers Bill of Rights. That requires all new taxes or tax increases to be passed by a popular vote, after passing a 2/3 vote in the legislature.
I don't doubt that the legislature will pass the tax, but I do have some doubt that it'll pass on the statewide referendum. The net result will be that dope will not be taxed like booze, but like shoes.
More here. Basically, even if you favor legalizing marijuana, this bill was a disaster, and since it is enshrined in the state constitution, it will be nearly impossible to fix.; 11/13/12, 2:27 PM
Peter V. Bella said...: If marijuana has the same deletrious effects as cigarettes- so the scientists and medical professionals tell us- why is legalizing another health hazard so important to some? Get high, get cancer, heart disease, or emphysema, and die sooner.

Some people make no sense.; 11/13/12, 2:29 PM
Mr Evilwrench said...: Why should tobacco, alcohol and gambling be regulated?; 11/13/12, 2:30 PM
Rusty said...: cryptical said...
It should be regulated the same way we regulate tobacco, alcohol, and gambling IMO.

It's all about the revenue. If they thought there was a buck in it they'd be all hot to regulate potpourri...

That's all it is. When the price of tobacco products went up I noticed a lot of small farmers in Wisconsin grew their own tobacco.

My point is that since the infrastructure is already in place to avoid regulation, regulation will continue to be avoided.
The illegal growers of marijuana have proven to be even more resourceful that than the illegal producers of moonshine at avoiding the law.; 11/13/12, 2:44 PM
FleetUSA said...: Ah, as with most businesses the government knows how to regulate and tax it to death.; 11/13/12, 2:45 PM
Dear corrupt left, go F yourselves said...: Here's something for libtards to chew on.
Colorado's Governor - John Hickenlooper(D) - campaigned against legalized pot.

His former GOP rival, Tom Tancredo(R), campaigned FOR IT.

chew.; 11/13/12, 3:00 PM
Alex said...: Interesting how garage picks & chooses where he wants state control of things.; 11/13/12, 3:02 PM
Lyssa said...: My whole point with the beer analogy is that I don't believe very high quality is as important to a majority of consumers as you might think. I think most of then will be happy with inexpensive pot that isn't necessarily super duper high quality, but isn't ditch weed either, just good enough.

Right - I can't think of any consumable that is on the market where, even though there are some craft/high quality versions available, mass produced low quality but good enough doesn't rule the market. Wine, beer, cheese, bread, heck, even clothing all fits that model.

The pot experts here are mostly middle aged folks with disposable income. Legalized or not, the majority of use will still be by young people barely getting by.; 11/13/12, 3:06 PM
Toad Trend said...: "Decriminalize marijuana is the best solution. Give a $250 fine to anyone possessing an ounce or less."

Decriminalizing marijuana is the best solution. Give a $250 fine to anyone possessing an ounce or more.

//fixed; 11/13/12, 3:08 PM
Larry J said...: I have two young grandchildren in Colorado. As a result of the election, their futures are screwed but at least they'll be able to buy pot to numb their pain.; 11/13/12, 3:40 PM
Chris Lopes said...: "And it exists entirely at the pleasure of Obama's Justice Department."

^This, very much this.^ I knew when I voted for Amendment 64 that the people talking about added tax revenue were (pardon the pun) just blowing smoke. Any large scale production/distribution system that was overt enough to be taxed would be overt enough to invite the DEA to drop down from the sky. As long as there is reasonable fear of Federal enforcement, setting up an open pot industry is going to be problematic at best and impossible at worst. The best that can be hoped for here is non-enforcement at the local level.; 11/13/12, 4:00 PM
Michael said...: So there we were back in the late sixties happily smoking low quality cheap Mexican weed, munching and laughing. Along comes the helpful Govt with a program to kill the Mexican stuff with paraquat (sic?). Presto, the botany geniuses go to work and over night almost we have exceptionally high quality and expensive weed. Weed that would put you down. Weed that was not laugh inducing.

So, once again, what could go wrong?; 11/13/12, 4:24 PM
jimbino said...: I am a Coloradan who does homebrew with plans to do homebammy.

Rumor has it that you don't have to smoke the bammy, as Alice B. Toklas pointed out.

I voted against the Colorado legalization proposition, not because I'm against pot, but because I'm against further funding of public "education."; 11/13/12, 6:16 PM
Unknown said...: I am sure all levels of law enforcement will make sure Coloradoans get it hard for making their racket more transparent.; 11/13/12, 7:21 PM
Guildofcannonballs said...: I am sure all levels of law enforcement will make sure Coloradoans get it hard for making their racket more transparent.; 11/13/12, 7:21 PM
Guildofcannonballs said...: The idea a state might attempt to engage in Federalism, in 2012, is Death Wishish.

Obama will soon understand why Colorado needs to be punished like California.

These "drug dealers" will feel the full force of the federal law enforcement mechanism.; 11/13/12, 7:24 PM
Revenant said...: It won't be cheap for users. And it will be hard for the producers — or the states (with their taxes and fees) — to make money.

My understanding of the Colorado law is that it allows users to grow several plants at home.; 11/13/12, 7:28 PM
Guildofcannonballs said...: You ignorant not-Obamas think you know how to make profits?

Look at the fucking DEA.

Drug Courts.

FBI.

Task Forces A1 through Z999999999999.

IRS.

Now, you fuckin' fucks, think it through your reptile brains, and tell me you know more about profit than Barack Obama?

And if any asshole uses the definition of profit, then, again, I will repeat, stupid, you JUST DON'T GET IT.

Chicago won.

The Mob won.

Forever; It's over.; 11/13/12, 7:29 PM
Revenant said...: "Why do you just naturally assume it needs government regulation?"

It should be regulated the same way we regulate tobacco, alcohol, and gambling IMO.

He didn't ask if you thought it *should* be regulated -- he asked why it *needs* to be regulated.

Regulation of tobacco, alcohol, and gambling doesn't benefit smokers, drinkers, and gamblers. It benefits people who want to skim money off those industries (by selling favor and favorable regulations), and benefits those people who dislike those industries (by making them more expensive for consumers and harder for new entrants to start up in).

They ARE regulated. They absolutely don't need to be.; 11/13/12, 7:31 PM
reformed trucker said...: "low quality cheap Mexican weed"

Life is too short to smoke shitty Mexican ditch weed. I won't even waste my time with garbage anymore.

"Weed that would put you down"

Then don't smoke a bale; a few hits will suffice. ;)

If it were legal, I would take a shot at growing my own. I already brew some kick ass ales, and the smokes I make are better than mass produced garbage. Cut out the middle man, and do your own quality control. Way cheaper also! :); 11/13/12, 7:47 PM
Panachronic said...: Washington resident here. I can tell you with a great deal of confidence that the only tangible consequence to the passage of I-502 is going to be a flood of DUI cases. Indeed, I've been telling anybody who will listen that the true purpose was to pass a jobs bill for DUI attorneys.; 11/13/12, 7:49 PM
Guildofcannonballs said...: Blood Into Wine on Flixnext; 11/13/12, 8:08 PM
Hepworth said...: "LOL. No one is going to buy the "legal" pot. It's tough to set up a legal market to compete with a black market. Why would anyone pay those prices and taxes for the state's ditch weed>"

I don't see how legalization can will rid of the black market. The excise tax in Washington is 25%, and imposed on the wholesale sales from producers to distributors. Remains to be seen what Colorado will do, but it will also be an excise tax. That means that by the time its sold at retail, the tax is supposed to have been paid and "built into" the price to pass it along to the consumer. But why is the average Joe going to pay for the drug with the built in price, when he can still get it froom his regular dealer tax free? And there doesn't seem to bay anyway to police the drug once it's in Joe's hands, i.e., no way to tell whether a producer paid the excise tax on the specific gram that Joe is in possession of.

Sure, some producers will pay the tax, and some people will buy from the licesned retailers. But the black market won't cease to exist. To combat that, the state could try to create something analagous to the current cigarette stamps, and impose a penalty on Joe for being in possession of the drug without a stamp. But given the nature of the drug, once Joe makes one legal purchase, he can just buy from his unlicensed dealer and put it in the licensed bag.; 11/13/12, 8:17 PM
Guildofcannonballs said...: Liz Cheney is not only my Ronald Reagan/William F. Buckley Jr., but also more other.

So there's nothing but that.; 11/13/12, 8:19 PM
Guildofcannonballs said...: It's Liz v. Hill.

Americans have climbed, and will climb more, but have climbed a lot, in 2016, and Cheney climbing is much better than Clinton climbing.

Liz Cheney and Sarah Palin are my hero's along with William F. Buckley Jr.

None would accept me for my unAmerican UnBuckley emotionalism, but I though that would win over the mediocures.

As me, now and forever, thankfully.; 11/13/12, 8:22 PM
Guildofcannonballs said...: The choice, between Cheney and Palin, is not one to take lightly.

These woman, who have accomplished more than most any, ever, are not intriguing only yet also beautiful, morally and otherwise.; 11/13/12, 8:55 PM
coketown said...: As with Obamacare, it would have been nice if the left had shot holes in the pie-in-the-sky projections put forth by each plan's proponents (Jesus H. Christ--so much alliteration! Where's my bong?)--

Anyway, shot holes in these projections before the initiative went into effect. You know: "Oh, it turns out instead of running a $100 billion surplus over ten years, the plan will actually add $700 billion to the deficit. We should have checked our numbers twice before making absurd predictions. Sorry!"

And: "Oh, it turns out instead of raising $25 million a year, it won't raise nearly as much because we're not setting up a market-driven supply chain, and people don't want to pay black market prices for our dehydrated ditch weed."; 11/13/12, 8:57 PM
Peter V. Bella said...: Anyone can grow marijuana. It is not difficult to grow as house plants. What taxation are they thinking about? The object was never taxing and regulation. It was legalization. People will just grow their own and never pay one dime in taxes.; 11/13/12, 9:03 PM
Craig said...: The law means that when you get busted by the local authorities instead of going to jail or prison you can register as a user, retailer, wholesaler or producer so the next time you get busted they can hit you up for taxes and if you can't afford a chauffeur they can jail you for DUI. The law, as I understood it in reading the voter pamphlet before voting for it, authorizes the state liquor control board to administer it. The liquor control board had a state monopoly on hard liquor which went all the way back to Prohibition. They lost that monopoly in the midterm election two years ago.; 11/13/12, 9:39 PM
Guildofcannonballs said...: Having been warned by a pre-Just Say No Nancy, how could Ronnie do what he did?

I know you can't comprehend, and most times ones says that phrase days past Dylan.

So we's be spellin's us in at oughtin' an' dat' too.; 11/13/12, 10:21 PM
bagoh20 said...: If there is any way to screw up a vibrant working market, the government will find it. It's like they're all high or something, and they think fucking up the day for strangers is fun.; 11/13/12, 10:33 PM
Guildofcannonballs said...: Now if you say "latter being the key" or "ladder being the key" there is something.; 11/13/12, 10:48 PM
Guildofcannonballs said...: Because there is a war on woman, there is.

Sink your heads, and just settle down a bit, and get it.

There is a war on women.

Why, or more precisely, exactly HOW, did that war end?

That war isn't done.

That war is ongoing.; 11/13/12, 11:32 PM
McTriumph said...: People that believe legalized pot is going to be a laissez faire proposition are foolish. It will go the way of moonshine, very low limits on personal growing, limits on transport and very high taxation. The revenuers will be all up in every growers ass, let the graft begin.; 11/15/12, 7:27 AM
Unknown said...: growing marijuana is the best thing for indoor weed and I really like this blog because in this blog their are so many important things about indoor weed and specially about marijuana.; 11/17/12, 3:35 AM
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