Professor of Economics Argues Price of Pot Might Rise When Legalized
Yesterday the New York Times Blog, Freakonomics, featured a guest post by Daniel Hamermesh. Hamermesh is a professor of Economics at the University of Texas. He claims that “if California passes the Legalize Marijuana initiative in November. If that happens, the demand curve will shift out, tending to raise price still further. But people will be allowed to grow small amounts on their own, and that should keep prices down somewhat; and, if localities allow (taxable) distribution by growers, this could increase supply tremendously. ”
What isn’t clear to me after reading this post is if he has the basic facts correct. He states that after reading NPR’s story on Sunday “about the rising average cost of growing marijuana in Humboldt County, Calif., a center of the industry” he came to his conclusions. However, the piece doesn’t talk about rising costs. It talks about environmental damage. The costs of growing pot may be rising but in the experience of every grower I have spoken to, prices are dropping to them.
Admittedly, the consumer is paying higher prices in some areas (dispensaries in Colorado charge more than black market prices) but is this true across the board. I’d like more information.