What Determines the Price of Weed?
In Oregon, you can obtain a middle-of-the-road gram of weed for about $7. Just one state south in California, you can get that same gram of weed for around $10. In South Dakota, one of the newest states to legalize recreational weed, that exact same gram will cost you upwards of $13.
Why is there such variation in weed prices? There are many variables that affect the cost of the good green herb, such as:
Supply and Demand
The law of supply and demand governs essentially every product and service, and weed is no different. According to this age-old economic theory, the supply of cannabis (i.e. the amount of cannabis available within a state) and the demand for cannabis (i.e. how many consumers want to buy cannabis products within a state) both affect its price.
On the West Coast, a longstanding demand from a large population of cannabis users has been answered by a healthy supply of cannabis products from dozens of flourishing grow ops and hundreds of dispensaries. Thus, cannabis prices in places like Oregon and Washington tend to remain low.
In contrast, in the Midwest, cannabis culture is much less developed, and relatively low demand for the drug hasn’t yet led to a large number of cannabis businesses. With low supply, dispensaries can charge higher prices, and their limited clientele must pay those prices or else go without. This is why places like Iowa and Minnesota boast the highest cannabis consumer costs in the country.
Changing the federal cannabis laws would radically shift the supply and demand ratio around the U.S. Prolific cannabis farms on the West Coast — and new farms in favorable environments like Tennessee and Kentucky — could cater to cannabis consumers, increasing available bud for historically low-supply states, driving down costs everywhere.
Taxes and Regulations
The cannabis market is not a totally free market, subject only to supply and demand. State governments regulate their respective cannabis industries, which can affect how much cannabis shops charge for their products. These regulations can include rules about business licensing or product testing, which can cause cannabis companies to incur costs that they push onto consumers.
The most impactful type of regulation, by far, is taxation. Most states with legal weed levy additional taxes on sale of the drug. In some states, taxes can reach as high as 15 percent of the sale, which drives up consumer costs significantly. Again, more widespread legalization could help reduce taxes in some states, but it could also increase taxes in other states. The best recourse for those suffering under oppressive tax systems is contacting local and state representatives and demanding change.
The Black Market
Unfortunately, even in places where recreational cannabis has been legalized, a black market for bud still exists. Usually, the black market survives by undercutting legal weed prices, so consumers continue to visit their hookup instead of the local dispensary. In response, states increase taxes and cannabis business fees to pay for enforcement of cannabis laws and prosecution of black-market vendors.
Consumer behavior is the only solution for this driver of high cannabis costs, as increasing legalization and regulation will do little to affect criminal cannabis organizations. It should go without saying that you should always buy cannabis products from legal sources. Supporting the recreational dispensaries in Aurora will help to dissipate the illegal drug trade across Colorado, and the same goes for other black markets in other states.
Product Type and Quality
Finally, just as some clothing brands cost more than others, some cannabis brands are able to charge higher prices for their products. Often, this is because certain brands devote more energy toward sourcing high-quality bud, refining concentrates to greater purity or utilizing better ingredients in their edibles. However, sometimes, cannabis brands charge more simply because they look more luxurious or have a reputation amongst users.
If you gravitate toward flashier, costlier brands, you should expect to pay more for the same amount of weed. Then again, you can easily cut your cannabis expenses by opting for budget bud brands and products.
There is slight variation in the cost of milk from city to city and state to state, and the same goes for cannabis. If you want to stabilize cannabis prices and set standards across the country, you need to understand the forces at play and work to counteract them.
While most product pricing is driven by supply and demand, when products are as controversial, politicized and regulated as cannabis, other factors automatically impact the sale price. It’s no wonder that cannabis can be found at so many different price points throughout the country.
While this can be frustrating and unfair, the fact that it is so much more accessible then ever is huge progress. And as consumption of cannabis continues to grow and become mainstream, prices should eventually level off and be more consistent. How long will this take is anyone’s guess.