Weed Price in CA is Dropping

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The cost of cannabis is dropping in California. There is so much in supply already on the streets that it’s almost impossible to compete with. Add on medical marijuana dispensaries that out number Starbucks (at least in LA), illegal growers are making a lot less money and in turn hurting the economy. They are lucky if they can make $2,000 per pound. Although the article doesn’t mention legalization as a solution, let alone any solution, it is still great proof to legalize and even a good reason to move to California. Hit the jump for the rest.

Logically softer laws would lead to an increase in economic growth due to increased sales and consumption. But we know that is not the case because we are seeing the exact opposite. In reality it has everything to do with prohibition, the problem had to start somewhere. Prohibition has exacerbated everything. The problem is that the laws against pot made growing so lucrative, the economy became dependent on it. With virtually unlimited demand and an artificially inflated price, it created a massive market. But now that price is declining, it is taking a sizable chunk of money out of the economy. Now there is a whole new problem solely caused by prohibition. If there wasn’t this giant market in the first place or if it was at least done properly (taxed and regulated), there wouldn’t be this huge problem.

“In 1983, the Reagan administration launched a massive air and ground campaign to eradicate pot and lock up growers in northern California. Charley Custer, a writer and community activist, had just arrived to Humboldt County from Chicago. With the Reagan crackdown, Custer recalls, wholesale prices shot up — to as high as $5,000 a pound. That sudden and ironic windfall for those growers willing to risk prison time transformed the community.

“A lot of people were living on welfare and peanut butter and banana sandwiches for a long time before pot made it possible to be part of the middle class,” Custer says.

Nearly 30 years later, Custer says that boom may be over.

What the article doesn’t mention is the cure-all solution, legalization. If it were legalized hundreds of new businesses could not only replace the money lost, but put back in even more. California already has decriminalization to some degree, and we see what the increase in supply and lack of production potential does. Legalization would increase the supply the same amount as decriminalization, but decriminalization doesn’t offer the potential for businesses to be able to effectively produce it in a way that makes a profit. Which is the entire problem of growers now, not making a profit.

“. . .So it really comes back down to that, just like in every other agricultural industry. When you get too many vineyards and too many people growing vines out there, then only the good ones make it.”

Matt Cohen is one of those growers who are making it. On an organic farm near Ukiah, Cohen raises chickens, grows vegetables and cultivates high-grade medical pot. He has avoided the downturn by distributing marijuana directly to patients. But other growers who rely on middlemen and dealers for legal and illegal sales are in financial trouble.

“And I know people, and they’re living from credit card to credit card,” Cohen says. “They’re not even making money. It’s just a lifestyle that they’re in and the alternative is to go do what?”

Regardless of how cheap corn or wheat is, there is always a profit to be made. It is easily produced on a large scale because it is completely legal and always has been. The problem facing marijuana growers from generating profit are laws that prevent them from becoming more efficient. The softer laws increase competition among growers and benefit us tokers, but they are capped at what they can do to keep up with competition.

California’s pot economy is transforming, and it’s starting to resemble a real commodities market where only big players can compete. It’s a shift that could leave some growers in the dust.

Any business eventually expands and has to make their production process more efficient to cut costs. Which is why some outdoor cannabis growers moved indoors, higher quality product that can be harvested year round. Now it has hit the maximum of increasing efficiency, solely based on the laws against it. Growers can’t improve on the way they sell such as advertising nor can they increase the size of production to entire factories or acres of land to grow on like any other legitimate agricultural business. Marijuana is the biggest cash crop in America, yet it is produced in basements and backyards. Which is without a doubt the least effective way to create a consistent quality product that is in such high demand. Corn takes up almost 30% of all the land in the U.S., yet marijuana beats corn and wheat sales combined. If it could be produced on a scale of just a fraction of a percent of what corn is, it could easily replace the money lost and even more into the economy that it so desperately needs.

Here is the NPR story about this.

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Author: Burner

I'm currently a college student majoring in Economics, Health Administration Policy, and Pre-medicine. I intend to dedicate my career to cannabis research.

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