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gporter
Backside 180
Joined: 09 Apr 2008
Posts: 2457
City: Winter Park
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 Posted: Jul 07, 2010 11:09 pm Post subject: Study: Pot prices |
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http://news.yahoo.com/s/ap/us_marijuana_legalization
| Quote: | SAN FRANCISCO – A ballot measure to legalize marijuana in California would so upend supply and demand that pot prices could plummet by as much as 90 percent and possibly undercut the tax windfall that supporters have touted to sell the initative, a study published Wednesday found.
The study by the nonpartisan RAND Drug Policy Research Center forecasts some interesting scenarios if California in November becomes the second state, after Alaska, to legalize pot for recreational use by adults and the first to tax commercial cannabis sales.
Pot prices could drop from $375 an ounce under the state's current medical marijuana law to as little as $38 per ounce before taxes as legal pot suddenly becomes available to the public, RAND researhers concluded.
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ZackFL(BRE)
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Joined: 11 Oct 2008
Posts: 2386
City: Tampa
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| Posted: Jul 07, 2010 11:14 pm Post subject: |
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http://boards.cannabis.com/southern-california/186031-list-l-county-marijuana-clubs-close.html
"The L.A. City Attorney's office on Tuesday 5/8/10 released a list of 439 marijuana dispensaries that have been ordered to shut their doors after a new city council ordinance went into effect beginning this week."
..if shizzle like this is going on don't expect it to be legalized quite yet.. 
and an ounce will never cost 38 bucks... it costs more to produce it..
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scott a
"a" is for angel
Joined: 17 Feb 2004
Posts: 4126
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| Posted: Jul 08, 2010 1:30 am Post subject: |
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This excerpt is from the "Future Price" section of the report that is cited in the article. It begins on page 33. http://www.rand.org/pubs/occasional_papers/OP315/
| Quote: | No modern nation has ever legalized commercial marijuana production, so there are literally no relevant data to guide estimates of marijuana-production costs after legalization. Although the Dutch have essentially legalized retail distribution, they have not legalized production. The same could be said about California’s medicinal-marijuana policy; large-scale production for wholesale purposes is not legal, and, at any rate, quality standards and regulatory oversight are likely to be different for recreational than for medicinal marijuana. Relying primarily on the gray literature (e.g., textbooks on marijuana production), some interviews, and, where possible, the scientific literature, we created cost estimates for four different production methods, which, in decreasing order of cost, are (1) private hydroponic homegrown on a 5-foot–by–5-foot area; (2) filling most of a 1,500-square-foot residential house with intensive hydroponic produc- tion (with artificial lights, best practices, and so on); (3) growing marijuana in “greenhouse farms”; and (4) unfettered outdoor farming that achieves efficiencies of the sort that American agriculture achieves when growing tomatoes, lettuce, or asparagus. Our estimation method is akin to what an entrepreneur would use when developing a business plan for a new product or production process.
For our model, we take the second method as the base case (filling most of a 1,500-square- foot residential house) on the grounds that the third and fourth might attract federal enforce- ment attention. However, even when factoring in the cost of artificial lighting, rent for a house (which is much more expensive than for a greenhouse), and other expenses, post-legalization house-based production costs would still only be on the order of $300–$400 per pound, including harvest and processing (Caulkins, 2010b), or only about one-tenth of the current wholesale price. There are several reasons to anticipate such a sharp decline. First, we antici- pate that workers’ wages will fall because employers will not have to pay a risk premium to employees for participating in an illegal activity.6 Second, there will be greater ability to use labor-saving automation, especially in the manicuring stage. Third, production at the level of an entire grow house, or several houses operated together, permits economies of scale not avail- able to grows kept small enough to avoid attracting the attention of not just federal but also local law enforcement. Fourth, assuming that growers avoid attracting federal law-enforcement attention, they will face minimal risk of arrest and forfeiture.
In our base case, we assume typical producer and retailer markups of 25 percent and 33 percent, 7 respectively, and allow an additional $40 per pound for logistics and distribution, suggesting an untaxed legal retail price of about $38 per ounce (see Caulkins, 2010b). Thus, key drivers of retail price will include whether an excise tax is imposed (e.g., the Ammiano bill’s proposal of $50 per ounce), whether such a tax is successfully collected or evaded, and whether regulatory and compliance burdens create substantial deadweight costs on producers and distributors. These are naturally very hard to predict, so we provide projections conditional on assumptions about these factors.
Figure 3.2 displays the components of the taxed, legal price, assuming a $50-per-ounce excise tax with indoor production in residential houses that are essentially filled with mari- juana plants (1,300 out of 1,500 square feet for plants) grown with artificial light, with one full-time agricultural worker per house. The excise tax would account for more than half the retail price. Production and processing costs and profits account for a bit less than 30 percent of the cost structure, with the biggest components being materials (6.9 percent, mostly grow- ing medium and consumables); house rent (5.8 percent); producers’ markup, including profit (5.7 percent); electricity for lighting (5.1 percent), and labor (4.8 percent, very roughly evenly divided between growing and the harvesting and processing). The remaining chunk stems from distribution and retail costs (and profits). |
It'll be interesting to see how this all shapes up, but I have a bad feeling that the gigantic agricultural companies are gonna try and get their piece of the pie...and you know they're gonna use method #4 to maximize their profits.
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JB_CANSKATE
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Joined: 06 Jul 2004
Posts: 1622
City: Markham, Ontario
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| Posted: Jul 08, 2010 7:20 pm Post subject: |
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locally you'd get and oz for 160-220 not 375:shock: 
not that i smoke that much....... |
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