Reefer Madness: Legal Marijuana Leads to Soaring Prices in Colorado
While many marijuana legalization activists were ready to toke up a win on January 2 when the first state licensed weed retail stores opened in Colorado for a second day, many were surprised to find that the prices had skyrocketed to as much as $400 per ounce in just one day due to high demand.
Retailers rushed to raise sticker prices after a busy first day in legal marijuana sales and many found the prices far from what they were used to. The $400 per ounce is much higher than the average of $250 per ounce that legal dispensaries in Colorado had charged since 2010. Some retailers sold bags with one-eighth of an ounce for as much as $70 on the second day even though the average price was about $45 on the first day.
The state has also imposed a 10 percent sales tax on each marijuana purchase which means someone buying an ounce for $400 would also have to shell over another $40 in tax alone. It may not yet be worth its weight in gold but marijuana in Colorado now costs more than one-third of the $1,200 that an ounce of gold is going at right now.
Rachel Gillette, the executive director of leading legalization advocacy group NORML in Colorado, said “I think people were a little bit surprised at the price, we are concerned about that.” Though she would still see the high taxes addressed, she did note that “It’s a new industry, a new market, I think things will work themselves out in a few years. We saw the same thing happen with the medical marijuana industry before prices came down.”
According to a recent report from Colorado State University, weed prices are expected to normalize at around $185 per ounce.
Colorado State Representative Jonathan Singer, who pushed through the 10 percent sales tax, told media “If marijuana continues to funnel into the black market, I am happy to look at shocking the black market out of the legitimate industry by slashing taxes, but this is way too early in the game. And judging by the thousands of marijuana consumers lined up around the block yesterday, Coloradans appear comfortable with taxes as they are.”
(Image courtesy of spotreporting)