Marijuana Prices will Plummet by as Much as 80% Says Rand Corporation

If legalized in California, marijuana “prices will fall to levels below those ever studied,” says the Rand Corporation, a well respected think tank. The organization, which describes itself as trying to  “improve policy and decision making through research and analysis,”  released a paper today describing a nightmare world for Humboldt County in which prices fall by as much as 80%. This will only be slightly mitigated by a large increase in consumption.  The paper was an attempt by the group to lay out for policy makers and voters what California’s Proposition 19 could mean if passed.

The Prop. 19 initiative will be the first of its kind to allow people to cultivate cannabis legally.  While it would only allow private grows of a 5×5 area, there is the possibility of commercial grows being allowed by individual cities and counties. These grows could be extremely large (see AgraMed which intends to pump out 58 pounds per day) and flood the market with low priced pot.  Researchers for Rand say the “untaxed retail price of high-quality marijuana could drop to as low as $38 per ounce compared to about $375 per ounce today.

If these numbers are true, Humboldt and the whole Emerald Triangle could face some very unpleasant facts this next year. Admittedly, the Rand Corporation has based its numbers on a variety of assumptions any one of which could be wrong and could radically change the outcome. Still, this is another reason for Humboldt and its growers to focus on how to move forward as the world shifts beneath their feet.

—————————-

Here is another local blog discussing the same numbers.

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45 Comments
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Ben
Guest
Ben
13 years ago

My guess is that the price will fall under $1.000. This will not pay PG&E bills and the residential indoors will close. So will the diesel scenes as the price of diesel is unaffected by the pot industry, except perhaps locally. The used generator business is a thought. The warehouse grows in the cities have industrial PG&E rates and could survive.
When you look at an $800 a pond product , it is obviously profitable in commercial greenhouses. Equipment has existed for many years to light deprive flowers like chrysanthemums. Think of the lily farm in Arcata… That could be a money maker. I have an older commercial greenhouse book that even includes clone rooms for flowers.

suzy blah blah
Guest
suzy blah blah
13 years ago

To extend that analysis a bit for Rand –80% more people will be thrown in jail for transporting the cheap pot from CA to other states.

Staff
Member
13 years ago
Reply to  suzy blah blah

so true!

suzy blah blah
Guest
suzy blah blah
13 years ago

To extend that analysis a bit for Rand –80% more people will be thrown in jail for transporting the cheap pot from CA to other states.

Staff
Member
13 years ago
Reply to  suzy blah blah

so true!

charlie brent
Guest
charlie brent
13 years ago

if this this happens it will kill me …..guess i`m gonna pay off a politician for a commercial grow…???!!!!

charlie brent
Guest
charlie brent
13 years ago

if this this happens it will kill me …..guess i`m gonna pay off a politician for a commercial grow…???!!!!

Rose
Guest
13 years ago

Listen to me. If it stays illegal, and pot growers are essentially exempted from paying the taxes that all of your friends, neighbors and families have to pay – is that fair?

If for no other reason than to level the playing field, everyone should vote FOR legalization.

Rose
Guest
13 years ago

Listen to me. If it stays illegal, and pot growers are essentially exempted from paying the taxes that all of your friends, neighbors and families have to pay – is that fair?

If for no other reason than to level the playing field, everyone should vote FOR legalization.

Tj
Guest
Tj
13 years ago

Interesting times we live in.

Tj
Guest
Tj
13 years ago

Interesting times we live in.

Staff
Member
13 years ago

It is morally right to vote for legalization in my opinion and, if California is not the first to go legal, it will harm our economy here in Humboldt. The best response seems to me is to vote for legalization but at the same time pour your energy into HuMMAP and get governmental policy adjusted to help support local economies.

Staff
Member
13 years ago

It is morally right to vote for legalization in my opinion and, if California is not the first to go legal, it will harm our economy here in Humboldt. The best response seems to me is to vote for legalization but at the same time pour your energy into HuMMAP and get governmental policy adjusted to help support local economies.

sageplant
Guest
sageplant
13 years ago

Hi kim, this is a bit off subject. did the duffy;s rehab advertizment get placed on your blog because you ‘monatized?”

back to subject, i would like to hear a legal perspective on the difference that the new law would make if prop 19 is passed. i am of the understanding that the current law may actually offer more protection in a way than prop 19 will do…

any legal advisors?

Staff
Member
13 years ago
Reply to  sageplant

Sageplant, The Duffy’s rehab ad must have been only on your browser. No ads appear on my blog and Mozilla does a great job of keeping me from seeing many ads as I browse. You might try Mozilla firefox as your browser see if that helps.

sageplant
Guest
sageplant
13 years ago
Reply to  Staff

i actually do use mozilla/firefox..hmmm

Ben
Guest
Ben
13 years ago
Reply to  sageplant

No Duffy’s ad on my browser… That would be irritating but a bit amusing.

Heraldo
Guest
13 years ago
Reply to  sageplant

Ads are invisible to anyone signed into wordpress.com.

Staff
Member
13 years ago
Reply to  Heraldo

Ahh, that explains it.

sageplant
Guest
sageplant
13 years ago
Reply to  Heraldo

thank’s for the info. i had wondered what type of random adds would show up if a person decided to “monitize” their blog. This is not the case here, and it is rather funny that the rehab add would show up in the pot forums!

sageplant
Guest
sageplant
13 years ago

Hi kim, this is a bit off subject. did the duffy;s rehab advertizment get placed on your blog because you ‘monatized?”

back to subject, i would like to hear a legal perspective on the difference that the new law would make if prop 19 is passed. i am of the understanding that the current law may actually offer more protection in a way than prop 19 will do…

any legal advisors?

Staff
Member
13 years ago
Reply to  sageplant

Sageplant, The Duffy’s rehab ad must have been only on your browser. No ads appear on my blog and Mozilla does a great job of keeping me from seeing many ads as I browse. You might try Mozilla firefox as your browser see if that helps.

sageplant
Guest
sageplant
13 years ago
Reply to  Staff

i actually do use mozilla/firefox..hmmm

Ben
Guest
Ben
13 years ago
Reply to  sageplant

No Duffy’s ad on my browser… That would be irritating but a bit amusing.

Heraldo
Guest
13 years ago
Reply to  sageplant

Ads are invisible to anyone signed into wordpress.com.

Staff
Member
13 years ago
Reply to  Heraldo

Ahh, that explains it.

sageplant
Guest
sageplant
13 years ago
Reply to  Heraldo

thank’s for the info. i had wondered what type of random adds would show up if a person decided to “monitize” their blog. This is not the case here, and it is rather funny that the rehab add would show up in the pot forums!

aash
Guest
aash
13 years ago

Reading over the whole study, it is clear to see that any estimates of price and consumption are a crap shoot at best. One thing the study doesn’t touch on is the sheer magnitude of the black market.

If Prop 19 passes, there are still 49 other states where MJ will still be illegal. Cheaper prices will lead to greater exports, thus driving up the price of legal, taxed MJ. What would be someone’s motivation to sell at $800/pound when out of state buyers would line up to buy at $4,000 or more? Granted there would be some legal risks involved, but growers already take those risks, and having a legal framework to operate under would offer a larger cover to grow. I live in Minnesota and we get flooded with MJ from Cali. $4,000 to $5,000 a pound is the norm, and it seems like we can never get enough.

Also, Prop 19 allows for cities and counties to allow legal sales/cultivation or to opt out. Just looking at medical MJ and how cities are fighting sales tooth and nail, I don’t see them just rolling over and allowing legalized sales if Prop 19 passes. There will be restrictions, regulations, barriers to entry all driving up prices as well. Dispensary prices are currently in line with black market prices to eliminate reselling. I think after Prop 19, they will remain the same.

In the end, I see Prop 19 as a good thing for everyone. It will offer a legalized market and a larger “grey area” both supported by a huge black market that isn’t going anywhere.

Staff
Member
13 years ago
Reply to  aash

aash,

Well said, though I do think prices will drop here. However, out of state buyers are not paying $4000 per pound now (they want some compensation for driving cross country with 20 pounds of weed and risking arrest in the midwest! yikes!). They are paying between $2000 and $3500 depending on quality, availability and whether the pound is indoor or outdoor. Out of state buyers will be willing to pay relatively high prices but competition will slowly drive down prices …and unfortunately, quality. Nonetheless, prices will probably not drop as far or as fast as many assume for the reasons you state in your comment.

aash
Guest
aash
13 years ago

Reading over the whole study, it is clear to see that any estimates of price and consumption are a crap shoot at best. One thing the study doesn’t touch on is the sheer magnitude of the black market.

If Prop 19 passes, there are still 49 other states where MJ will still be illegal. Cheaper prices will lead to greater exports, thus driving up the price of legal, taxed MJ. What would be someone’s motivation to sell at $800/pound when out of state buyers would line up to buy at $4,000 or more? Granted there would be some legal risks involved, but growers already take those risks, and having a legal framework to operate under would offer a larger cover to grow. I live in Minnesota and we get flooded with MJ from Cali. $4,000 to $5,000 a pound is the norm, and it seems like we can never get enough.

Also, Prop 19 allows for cities and counties to allow legal sales/cultivation or to opt out. Just looking at medical MJ and how cities are fighting sales tooth and nail, I don’t see them just rolling over and allowing legalized sales if Prop 19 passes. There will be restrictions, regulations, barriers to entry all driving up prices as well. Dispensary prices are currently in line with black market prices to eliminate reselling. I think after Prop 19, they will remain the same.

In the end, I see Prop 19 as a good thing for everyone. It will offer a legalized market and a larger “grey area” both supported by a huge black market that isn’t going anywhere.

Staff
Member
13 years ago
Reply to  aash

aash,

Well said, though I do think prices will drop here. However, out of state buyers are not paying $4000 per pound now (they want some compensation for driving cross country with 20 pounds of weed and risking arrest in the midwest! yikes!). They are paying between $2000 and $3500 depending on quality, availability and whether the pound is indoor or outdoor. Out of state buyers will be willing to pay relatively high prices but competition will slowly drive down prices …and unfortunately, quality. Nonetheless, prices will probably not drop as far or as fast as many assume for the reasons you state in your comment.

J
Guest
J
13 years ago

While this study sends shivers down my spine I don’t see prices dropping that much immediately. The out of state thing will still keep growers in business and that black market will force in state prices to stay high in order to compete.

I think a lot of people are getting prop 19 confused with legalization. Read the bill. Possession of over an ounce is still a felony. No changes in sentencing or otherwise. Cultivation above 25 square feet (5×5) is still a felony. No nonviolent pot prisoners get released. No ceased assets get returned. Punishment for sales to a minor actually get harsher. (Not a big deal but still) Why are we calling this legalization? The authors of this bill removed the word from the text. Their intent with this initiative is not to legalize but to enable them to open retail pot stores much like the med clubs they currently own. Money is always the bottom line with these initiatives. Richard Lee is not stupid and did not invest a fortune to get this on the ballot so he could essentially put his med clubs out of business.

I don’t see this bill passing but one similar to it will in the next few years. Hopefully that will mean true legalization and more proof that prohibition doesn’t work.

sageplant
Guest
sageplant
13 years ago
Reply to  J

ok, so this is more along the line of the information that i am wanting to find out about. I do think that many people think it will mean legalization in it’s most liberal form. But it seems like it would be better to have a medical than what prop 19 would offer?

J
Guest
J
13 years ago

While this study sends shivers down my spine I don’t see prices dropping that much immediately. The out of state thing will still keep growers in business and that black market will force in state prices to stay high in order to compete.

I think a lot of people are getting prop 19 confused with legalization. Read the bill. Possession of over an ounce is still a felony. No changes in sentencing or otherwise. Cultivation above 25 square feet (5×5) is still a felony. No nonviolent pot prisoners get released. No ceased assets get returned. Punishment for sales to a minor actually get harsher. (Not a big deal but still) Why are we calling this legalization? The authors of this bill removed the word from the text. Their intent with this initiative is not to legalize but to enable them to open retail pot stores much like the med clubs they currently own. Money is always the bottom line with these initiatives. Richard Lee is not stupid and did not invest a fortune to get this on the ballot so he could essentially put his med clubs out of business.

I don’t see this bill passing but one similar to it will in the next few years. Hopefully that will mean true legalization and more proof that prohibition doesn’t work.

sageplant
Guest
sageplant
13 years ago
Reply to  J

ok, so this is more along the line of the information that i am wanting to find out about. I do think that many people think it will mean legalization in it’s most liberal form. But it seems like it would be better to have a medical than what prop 19 would offer?

Mr. Nice
Guest
Mr. Nice
13 years ago

Hell yea retail pot stores.

This shit will just be way more convenient. No more of this making shady ass deals and fronting people and having to speak three languages and all that shit. Open up onna those Pepperwood fruit stands and pitch weed like corn.

Staff
Member
13 years ago
Reply to  Mr. Nice

As long as you also sell Waltana apples you’ll make people happy!

humboldtkids
Guest
humboldtkids
13 years ago
Reply to  Mr. Nice

Fiance here:

L O freaking L.

Mr. Nice
Guest
Mr. Nice
13 years ago

Hell yea retail pot stores.

This shit will just be way more convenient. No more of this making shady ass deals and fronting people and having to speak three languages and all that shit. Open up onna those Pepperwood fruit stands and pitch weed like corn.

Staff
Member
13 years ago
Reply to  Mr. Nice

As long as you also sell Waltana apples you’ll make people happy!

humboldtkids
Guest
humboldtkids
13 years ago
Reply to  Mr. Nice

Fiance here:

L O freaking L.

Charlie Horse
Guest
Charlie Horse
13 years ago

Thanks J. I see this bill as collusion between Agramed and Richard Lee (City of Oakland as well). The bill is less about legalization and more about the establishment of commerical grows and the tax money from such grows.

Charlie Horse
Guest
Charlie Horse
13 years ago

Thanks J. I see this bill as collusion between Agramed and Richard Lee (City of Oakland as well). The bill is less about legalization and more about the establishment of commerical grows and the tax money from such grows.

writerpro25
Guest
13 years ago

I think this is going to turn into another instance where big corporations take over. Marijuana will become a vastly produced product and only a few companies will grow in vast quantity. http://stonerdiary.wordpress.com

writerpro25
Guest
13 years ago

I think this is going to turn into another instance where big corporations take over. Marijuana will become a vastly produced product and only a few companies will grow in vast quantity. http://stonerdiary.wordpress.com