Legalization could slash the price of pot 80%
California’s cash crop could become dirt cheap if the state legalizes marijuana.
Researchers associated with the Rand Corp.'s Drug Policy Research Center said Wednesday that not much is certain about the potential impact of Proposition 19 except that the price of California’s choicest weed could plunge more than 80%, down from $300 to $450 per ounce to about $38.
“That’s a significant drop,” said Beau Kilmer, co-director of the center. “We’re very clear about the fact that the price will go down.”
The implications of such a drop would be profound. Kilmer and four other researchers who analyzed marijuana legalization said consumption would rise, but they could not determine with any certainty by how much. “We cannot rule out increases of 50% to 100% or perhaps higher, but we just don’t know,” he said.
Such a low price could also affect pot prices across the nation, encourage marijuana tourism in the state, increase the amount of pot shipped out of state, disrupt the smuggling of marijuana from Mexico and stimulate an underground market designed to avoid high taxes that might be imposed.
Rand, the Santa Monica-based nonpartisan research institute, had five prominent drug policy experts spend about six months examining what might happen to marijuana use and tax revenues if Californians approve the measure on the November ballot or the Legislature passes a bill introduced by Assemblyman Tom Ammiano (D- San Francisco) that would legalize pot and impose a $50-per-ounce tax.
The report called “Altered State?” is the most scholarly examination of the issue so far. It is likely to be scrutinized and cited by both sides in the debate.
“The uncertainty and the potential chaotic nature of what could happen here just totally derails this initiative,” said Roger Salazar, the spokesman for Public Safety First, one of four opposition committees that plan to fight the initiative. “Outside of the prices going down there is nothing else that is certain here and certainly not worth having the state of California become the first entity in the world to completely legalize production and sales of marijuana.”
Stephen Gutwillig, the California director of the Drug Policy Alliance, said: “The current system is loaded with the certainty of mass arrest, racist enforcement and boondoggle law enforcement expenses to the tune of hundreds of millions of dollars,” he said.
The report noted that it was impossible to predict tax revenues from the initiative, which leaves that decision to cities and counties, but concluded that revenues from a statewide $50-per-ounce tax could range from $650 million to $1.49 billion.
To calculate the price drop, researchers looked at the cost of growing marijuana in a 1,500-square-foot house. The researchers concluded that the wages paid to employees who tend the crop would slip from as much as $25 per hour to no more than $10, just a little above what nursery laborers earn.
The report is likely to make it even harder for legalization advocates to persuade the state’s growers and suppliers, particularly in the Emerald Triangle, to support the initiative. The triangle area includes Humboldt, Mendocino and Trinity counties.
Dale Gieringer, director of the state chapter of the National Organization for the Reform of Marijuana Laws, who has also looked at the issue, said the calculated price drop sounded reasonable, but he said it would not occur overnight. “It will descend slowly, is the likely scenario,” he said. “If you took it out of the statute book and dealt with it like parsley, yes, it would plummet.”
He acknowledged that consumption would probably increase if Proposition 19 passes, but said it is half the level it was in the late 1970s. “Fads come and go, drugs come in and out of fashion,” he said. “I think we’re in for a short-term increase in marijuana consumption regardless of whether the initiative passes.”
Researchers also looked at estimates of the cost of enforcing marijuana laws in California, which range from $200 million to $1.9 billion, and put it at “probably less than $300 million.” They also concluded 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, finding that the research is inconclusive.