So, something interesting happens to weed after it’s legal (Washington State)

[n2doc]

Two years ago, the Washington state began an unprecedented policy experiment by allowing large-scale production and sale of recreational marijuana to the public. The effects on public health and safety and on the relationship of law enforcement to minority communities will take years to manifest fully, but one impact has become abundantly clear: Legalized marijuana is getting very cheap very quickly.

Marijuana price data from Washington’s Liquor and Cannabis Board was aggregated by Steve Davenport of the Pardee RAND Graduate School and Jonathan Caulkins, a professor at Carnegie Mellon University. After a transitory rise in the first few months, which Davenport attributes to supply shortages as the system came on line, both retail prices and wholesale prices have plummeted. Davenport said that prices “are now steadily falling at about 2 percent per month. If that trend holds, prices may fall 25 percent each year going forward.”

Ratio of sales value to weight, $ per gram, Washington state

(Chart shows drop from $25 to $9/gram in less than 2 years retail)

Although some observers will be surprised by these sharp price declines – perhaps particularly some investors in the emerging legal marijuana industry – seasoned drug policy analysts have long predicted this effect. As noted by Caulkins and his colleagues in the book "Marijuana Legalization: What Everyone Needs to Know," prohibition imposes many costs on drug producers. They must operate covertly, forgo advertising, pay higher wages to compensate for the risk of arrest, and lack recourse to civil courts for resolving contract disputes. Legal companies in contrast endure none of these costs and also can benefit from economies of scale that push production costs down.

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https://www.washingtonpost.com/news/wonk/wp/2016/05/04/the-price-of-legal-pot-is-collapsing/?hpid=hp_hp-more-top-stories_potprices-845am%3Ahomepage%2Fstory