Is the Fall in Marijuana Prices in the USA a Problem?

Over the last few years in the USA, regulations have been passed to legalize marijuana for medicinal and even recreational purposes in states such as Washington. Despite the fact that legalization has meant a victory for marijuana users in the region, things have not been quite so easy for growers. One grower recently told Associated Press agency that last year they had sold each gram of marijuana for 21 dollars (around 18 euros) and that they are now selling it for four dollars (3.5 euros).

It is likely that prices will not just continue to fall in Washington; the phenomenon could also affect Colorado and Oregon. Having said that, the main victim will be the black market itself.

If prices continue to fall, the market in Washington will be able to compete with the illegal market in California, and Washington could end up exporting to other states.

The taxes in Washington and Colorado are based on prices (taxes fall along with prices). However, in order to eliminate the black market, measures such as specific taxes, not based on price but quantity, could be taken in order to tackle illegal marijuana, according to Mark Kleiman, professor of Public Policy at the University of California.

Meanwhile, in Oregon a tax has been placed on every ounce; however Kleiman does not believe that this will be enough to stop prices from falling dramatically. Furthermore, given that the tax is the same regardless of the cannabis crop, it may encourage growers to have worse quality produce as they pay the same taxes on it. This could have negative repercussions on the product itself and cause adverse reactions.

The professor believes that the ideal tax system would consist of a tax per milligram of THC (tetrahydrocannabinol), instead of per ounce of cannabis. He also thinks that the tax should rise as market prices fall, in order to ensure that the consumer pays a consistent price, around 10 dollars (almost 9 euros) per milligram with a 10% THC level.