How Much Should Weed Actually Cost?

The cost of cannabis used to strictly depend on black market prices. However, legalization is starting to change things. How much should weed actually cost?

Sep 1, 2015

The price of cannabis varies across the world, it can range from just a few dollars per gram to nearly sixty dollars per gram in places like Japan. Most of these prices are dictated by the black market that was completely in control of the grow and distribution until recently. Their prices will fluctuate based on risk factor, availability and crop quality. Legalized markets are becoming more prevalent which allow growers and wholesalers to work in an industry with minimized risk, better resources and a greater customer base to sell to. This leaves the ultimate question for these new industries: How much should weed actually cost to appease the client base—without letting the black market creep back into existence?

How Much Does Legal Marijuana Cost to Grow?

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Photo credit: Peter Kim / Shutterstock

According to the Drug Policy Research center, an average 5′ x 5′ grow room will produce about 10 pounds of cannabis at a cost of $225 per pound. The cost of growing the marijuana is relatively cheap at around fifty cents a pound (remember that it is a weed). This isn’t to say the growing cannabis is a get rich quick fund. Growing is vastly time-consuming and the fifty cent cost of cannabis doesn’t include labor costs, distribution, retail costs and the new taxation, each of which varies depending on your location. However, in Colorado, weed prices are dropping and revenue is increasing, mostly due to the large amount of cannabis being sold to a legal marketplace. The stiffer the market competition and the more cannabis you sell, the lower the average cost per pound drops.

Cutting the Government In

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Photo credit: Andrea Izzotti / Shutterstock

When the state governments like Washington, Colorado and Oregon legalized cannabis, they did so with the expectation that they would make huge sums of money off the taxation of a legal cannabis market, which indeed did happen. Last year, Colorado collected $63 million dollars of tax revenue and an additional $13 million in licensing to go towards schools, infrastructure and educational programs. Their taxation includes a 15% tax on every pound to wholesaler and an additional 10-15% sales tax at the point-of-sale depending on the county. Other states have taken different approaches including Washington, who taxes 25% at the point-of-sale and Oregon, who taxes the producer of the cannabis at $35.00 per ounce to maintain their tax-free state. All of this has an impact on your wallet, but is it worth turning to the black market?

Current Cannabis Prices in the U.S.

infograph Key & Peele   Obama Smoking Weed During College
Photo credit: Forbes

It is no surprise that the price of cannabis fluctuates around the country—which it does so for a variety of reasons. In states where marijuana remains illegal, the sale of cannabis is run by underground thugs and dealers. This can cause the price to increase due to the cost to run and distribute an illegal grow-show. Citizens of states with no legalization will find themselves paying $300-$400 for a full ounce of cannabis while states like Washington and Colorado who have legalized the market see cheaper cannabis for the consumer at around $200-$250 an ounce.

So How Much Should Weed Actually Cost?

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Photo credit: Doug Shutter / Shutterstock

There isn’t a single answer to how much weed should cost across the country because there are so many factors to consider based on the state. The most important factor to consider when deciding the price of cannabis in the state is the current cost per gram to consumers on the black market. Current smokers who get their supply from a traditional weed dealer will unlikely support the legalized industry if they have to pay double for the herb they love. This legalized industry needs to entice the regular smokers who will be the lifeblood of the industry. It is safe to say, however, that as more states legalize cannabis on a federal level, the price of cannabis will decline, based on competition in a legal market along with better resources to grow and distribute marijuana.

This is only the beginning folks!

Featured image OpenRangeStock / Shutterstock

Sep 1, 2015