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Cheap and Cheerful: the Price of Cannabis Has Gone Down Thanks to Legalisation

  • While the decriminalisation of cannabis use was under way in the United States, numerous researchers pointed out that the new regulations would lead to an increase in both its price and use. Two years later, the exact opposite has turned out to be true: lower prices thanks to legalisation.
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In 2014, the United States entered a marijuana regulation process that has left its mark in Colorado, Oregon, Alaska and the District of Columbia over the last two years. The advantages of such decriminalisation measures are various, one of them being the plummeting of cannabis prices as shown by a study made by BDS analytics.

It is simply a matter of supply and demand. The appearance of a legal market in which to compete has led dispensaries to offer their product at lower prices, contrary to what was being predicted last year.

Although it is also true that legalisation did entail a price increase, this happened right after these standards were adopted. It was probably caused by the uncertainty that had overtaken the cannabis industry and its participants. However, when the entrepreneurs involved realised that, if they kept prices high, people would continue to purchase marijuana illegally, they began to configure the competitive market surrounding the industry and allowed prices to decrease.

This is not the first time the United States has witnessed a lowering of prices following the legalisation of something. The same had happened years before with the alcohol, its price having trebled on account of Prohibition.

In addition to legalisation, availability has also been cited as a price-reducing factor. On the one hand, prices in such states as Massachusetts remain high since continuing restrictions on medical cannabis limit the available quota. On the other hand, in those states which, like Colorado, have advanced in legalisation, the price of cannabis has averaged $5.77 per gram, as was seen at the last 4/20 celebration.

The study also indicates that, contrary to the claims of those contrary to legalisation, cannabis use among minors has not increased; quite the contrary. The implementation of the relevant preventive measures has made it possible to continue making progress in decriminalisation while use among minors still declines.

Other factors have also influenced this lowering of prices. These include the impact of new technologies, which reduces production costs; the constant sophistication of the business; and the international debates on marijuana legalisation.

Cannabis regulation is therefore good news, not least in economic terms. While there has been a frenzied atmosphere of change and atmosphere, legalisation is expected to continue bringing joy to entrepreneurs and users alike.

23/05/2016

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