In the three years since recreational marijuana was legalized, the price has decreased by 33 percent [tweet this], causing delight for consumers, but issues in the industry. The current retail price averages out to about $10 per gram and, despite the regulated market being expected to triple in the next five years, these low prices can potentially mess a lot of things up.
Why is this happening?
Blame it on the free market. The legal cannabis market is saturated and, while demand is higher than ever before, so is production and distribution. In Denver, there are more dispensaries than Starbucks and McDonalds combined. That keeps costs low for the consumer, but these prices are creating an interesting dichotomy for the industry.
Why does this matter?
On the plus side, this has implications for drug policy nationwide. The dropping price of weed is proof that when you make things legal to produce and sell, they get cheaper than the black market. However, it also causes challenges. States use the price of marijuana to calculate the way it should be taxed. The less it costs, the less revenue they will receive. As the price of weed drops, it might also force growers to cut corners, creating a race to the bottom in terms of product.