Sunday, April 22, 2018
Perspective

Perspective: How legalization caused the price of marijuana to collapse

All the diverse effects of legalizing recreational marijuana may not be clear for a number of years, but one consequence has become evident almost immediately: Pot has never been so cheap.

Steven Davenport of the Pardee Rand Graduate School has analyzed marijuana retail prices in Washington state since legal recreational markets opened in July 2014. Remarkably, prices have fallen every single quarter since.

When Davenport spoke to me 18 months ago, retail marijuana prices had already fallen a stunning 58.5 percent.

Yet he predicted correctly that the price collapse was not complete. The current retail price of $7.38 per gram (including tax) represents a 67 percent decrease in just three years of the legalization, with more decline likely in the future.

Davenport expects the marijuana industry to continue to find ways to lower prices for the simple reason that it's a profitable business model. "Some consumers will prefer higher-priced brands, but there will always be a market for the brand that can produce adequate quality cannabis at the cheapest cost," he notes.

The ongoing decline in marijuana's price after legalization has an important implication for drug policy more generally. The experience of Washington and other marijuana legalization states demonstrates how enormously effective prohibition of production and sale is at raising drug prices.

For example, heroin's price took a decade to fall by 16 percent, which the legalization of marijuana accomplished in just eight months.

Notably, even high taxes on legal marijuana don't keep the legal price anywhere near what it was when the drug was more broadly illegal.

Prohibition imposes huge costs on drug-producing industries that are passed on to consumers in the form of higher prices. These higher prices are one of the principal reasons (the others being stigma and fear of punishment) that illegal drugs are used so much less frequently than legal drugs such as alcohol and tobacco.

Marijuana is a rare example where we can see the impact of legalizing a drug in real time, which shows that were the production and sale of heroin, cocaine and methamphetamine also legalized, those drugs would also become dramatically cheaper to consume.

Keith Humphreys is a professor of psychiatry at Stanford University and is an affiliated faculty member at Stanford Law School and the Stanford Neurosciences Institute.

© 2017 Washington Post

Comments
Perspective: The Heartland to Headwaters Florida Wildlife Corridor Expedition finds frustration and fear seeking a safe a path for wildlife across Interstate 4

Perspective: The Heartland to Headwaters Florida Wildlife Corridor Expedition finds frustration and fear seeking a safe a path for wildlife across Interstate 4

The original Florida Wildlife Corridor Expedition in 2012 was inspired by the how the Florida black bear roamed ó and the space it needed to do so successfully. In 2010, expedition team member Joe Guthrie conducted research through the University of ...
Published: 04/22/18
Book review: James Comey wants to explain himself

Book review: James Comey wants to explain himself

In 2016, as the director of the FBI, James Comey publicly dissected Hillary Clintonís email server controversy. Later, we learned that Comey was keeping to himself the beginnings of an investigation into Russiaís active interference in the U.S. elect...
Published: 04/19/18
Updated: 04/20/18
Column: Why the Starbucks racial bias training is more than just good PR

Column: Why the Starbucks racial bias training is more than just good PR

Starbucks isnít really in the coffee business. Weíve known that for over a decade. McDonaldís coffee is better and cheaper than Starbucks, but that hasnít done any harm to the coffee shopís bottom line. Thatís because what people are paying for when ...
Published: 04/19/18
Updated: 04/20/18

"ISNíT EVEN A 1,"is how Michael Cohen, President Donald Trumpís personal lawyer and close friend, would rate on a scale of 1 to 100, where 100 is fully protecting the president. Thatís how one of Trumpís longtime legal advisers, Jay Goldberg, says he...
Published: 04/16/18
Updated: 04/20/18
Perspective: The Heartland to Headwaters Florida Wildlife Corridor Expedition will hope to find a path across Interstate 4 for wildlife

Perspective: The Heartland to Headwaters Florida Wildlife Corridor Expedition will hope to find a path across Interstate 4 for wildlife

n two expeditions, three friends and trailblazing conservationists have already trekked more than 2,000 miles through wildlands crisscrossing the state to prove the viability of a Florida Wildlife Corridor, a network of the best remaining connected w...
Published: 04/13/18
Updated: 04/14/18
A Little Perspective: Interesting news and notes from around the world

A Little Perspective: Interesting news and notes from around the world

THE QUIZ: Four cards are laid in front of you, each of which has a letter on one side and a number on the other. The sides that you see read E, 2, 5 and F. Your task is to turn over only those cards that could decisively prove the truth or falsity of...
Published: 04/12/18
Updated: 04/20/18
PolitiFact: A closer look at attorney-client privilege after raid of Donald Trumpís lawyer

PolitiFact: A closer look at attorney-client privilege after raid of Donald Trumpís lawyer

President Donald Trump lashed out after the FBI seized business records, emails and tax documents belonging to his personal attorney Michael Cohen.Law enforcement executed warrants on Cohenís Manhattan office, home and hotel room as part of an invest...
Published: 04/11/18
Updated: 04/13/18
Smith: Adam Putnam knows Florida, but that might not be enough today to become governor

Smith: Adam Putnam knows Florida, but that might not be enough today to become governor

Here is a little secret among reporters who regularly interact with Gov. Rick Scott:Reporters know it rarely matters if they happen to miss one of the governorís periodic and brief question and answer sessions. He almost never says anything.How shou...
Published: 04/11/18
Updated: 04/13/18
Crystals may have helped Vikings sail to Greenland

Crystals may have helped Vikings sail to Greenland

When the Vikings left the familiar fjords of Norway for icy, uncharted territories, they were at the mercy of weather. They had no magnetic compasses and no way to ward off stretches of heavy clouds or fog that made it difficult to navigate by sun. H...
Published: 04/11/18
Updated: 04/13/18

Perspective: A simple two-step plan to solve Floridaís opioid crisis

Even as Floridaís opioid crisis devastates families around the state, there are real, viable solutions that could curb this epidemic, substantially reduce the cascading number of deaths and provide necessary and appropriate treatment for those addict...
Updated one month ago