The way some think in NY What say you?
Why the price of pot matters to us all: How to improve on Cuomo's legalization framework
New York residents who currently spend a lot on illicit marijuana may understandably be curious what the drug will cost if Gov. Cuomo’s legalization plan is enacted. Policymakers, health professionals and the rest of the general public should care about this question as well.
Marijuana prohibition creates illegal markets in which simple plant-based products sell for as much as precious metals. But when the recreational marijuana industry becomes legal, the price of weed rapidly falls to that of, well, a weed. Some decline in marijuana’s price is inevitable and positive, to the extent that it weakens black markets and draws customers into the legal, regulated, market.
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But marijuana legalization states like Colorado, Washington and Oregon are well beyond that sweet spot: Prices are down 50-90% with no bottom in sight. This poses two challenges that New Yorkers should carefully consider.
First: Taxes based on the price of the plant (Cuomo is proposing 20%) stop bringing in significant revenue when prices collapse. Twenty percent of all $400-per-ounce marijuana sales is a lot of money, but 20% of all the $10-per-ounce marijuana sales may not even cover the costs of regulating the industry, much less fund investments in communities that have been historically harmed by marijuana policy.
Like California’s marijuana tax system, Cuomo’s proposal offers some protection against tax revenue collapse by also having an additional flat weight-based tax on cannabis flower ($1 per ounce). That’s clever, although the state may still find that it has to shift to an entirely weight-based tax, as Maine recently did, to make sure that legalization remains net revenue positive.
Second, like any other commodity, consumption of drugs is price-sensitive, particularly in populations that have little disposable income (e.g., teenagers). If it becomes extremely cheap to be intoxicated all day, more people will do just that, creating costs for themselves and for taxpayers (e.g., more traffic accidents, school dropouts). This is particularly concerning because Cuomo has not proposed a cap on the drug’s potency. The experience of Washington’s market shows that the average legal marijuana product is 20% THC, more than quadruple the average potency of marijuana 20 years ago.
Another way to keep marijuana prices off the floor is to prevent the industry from being vertically integrated. This was the approach taken with alcohol after Prohibition, when regulators split the industry into producers, distributors and retailers, with strictly separated owners. Cuomo proposed this corporate structure to allow small businesses a chance to thrive in the new industry, but it should also serve to make the distribution chain less efficient and thereby reduce the decline in marijuana prices.
To a 25-year-old who currently spends $1,000 a year on a daily marijuana habit and simply wants the drug to be as cheap as possible, this may all seem like hand-wringing. But heavy use of marijuana, like all intoxicants, can impose harms that society pays for, giving the government an interest in maintaining higher prices to reduce heavy consumption and raise tax revenue. When that same 25-year-old is 45 and has a house full of teenagers, this will seem more obvious than it does right now.
Cuomo’s legalization proposal shows more awareness than those of other states of the risks of marijuana price collapse and how rock-bottom prices could expand heavy use and starve tax revenues. The governor and his policy adviser deserve credit for that, but the Legislature can improve on his proposals by shifting to a weight-based tax and also either capping marijuana’s potency outright or subjecting the highest-strength products to an additional tax surcharge.
Humphreys is a professor of psychiatry and addiction research at Stanford University.
https://www.nydailynews.com/opinion/ny-oped-why-the-price-of-pot-matters-to-us-all-20190118-story.html
Why the price of pot matters to us all: How to improve on Cuomo's legalization framework
New York residents who currently spend a lot on illicit marijuana may understandably be curious what the drug will cost if Gov. Cuomo’s legalization plan is enacted. Policymakers, health professionals and the rest of the general public should care about this question as well.
Marijuana prohibition creates illegal markets in which simple plant-based products sell for as much as precious metals. But when the recreational marijuana industry becomes legal, the price of weed rapidly falls to that of, well, a weed. Some decline in marijuana’s price is inevitable and positive, to the extent that it weakens black markets and draws customers into the legal, regulated, market.
Advertisement
But marijuana legalization states like Colorado, Washington and Oregon are well beyond that sweet spot: Prices are down 50-90% with no bottom in sight. This poses two challenges that New Yorkers should carefully consider.
First: Taxes based on the price of the plant (Cuomo is proposing 20%) stop bringing in significant revenue when prices collapse. Twenty percent of all $400-per-ounce marijuana sales is a lot of money, but 20% of all the $10-per-ounce marijuana sales may not even cover the costs of regulating the industry, much less fund investments in communities that have been historically harmed by marijuana policy.
Like California’s marijuana tax system, Cuomo’s proposal offers some protection against tax revenue collapse by also having an additional flat weight-based tax on cannabis flower ($1 per ounce). That’s clever, although the state may still find that it has to shift to an entirely weight-based tax, as Maine recently did, to make sure that legalization remains net revenue positive.
Second, like any other commodity, consumption of drugs is price-sensitive, particularly in populations that have little disposable income (e.g., teenagers). If it becomes extremely cheap to be intoxicated all day, more people will do just that, creating costs for themselves and for taxpayers (e.g., more traffic accidents, school dropouts). This is particularly concerning because Cuomo has not proposed a cap on the drug’s potency. The experience of Washington’s market shows that the average legal marijuana product is 20% THC, more than quadruple the average potency of marijuana 20 years ago.
Another way to keep marijuana prices off the floor is to prevent the industry from being vertically integrated. This was the approach taken with alcohol after Prohibition, when regulators split the industry into producers, distributors and retailers, with strictly separated owners. Cuomo proposed this corporate structure to allow small businesses a chance to thrive in the new industry, but it should also serve to make the distribution chain less efficient and thereby reduce the decline in marijuana prices.
To a 25-year-old who currently spends $1,000 a year on a daily marijuana habit and simply wants the drug to be as cheap as possible, this may all seem like hand-wringing. But heavy use of marijuana, like all intoxicants, can impose harms that society pays for, giving the government an interest in maintaining higher prices to reduce heavy consumption and raise tax revenue. When that same 25-year-old is 45 and has a house full of teenagers, this will seem more obvious than it does right now.
Cuomo’s legalization proposal shows more awareness than those of other states of the risks of marijuana price collapse and how rock-bottom prices could expand heavy use and starve tax revenues. The governor and his policy adviser deserve credit for that, but the Legislature can improve on his proposals by shifting to a weight-based tax and also either capping marijuana’s potency outright or subjecting the highest-strength products to an additional tax surcharge.
Humphreys is a professor of psychiatry and addiction research at Stanford University.
https://www.nydailynews.com/opinion/ny-oped-why-the-price-of-pot-matters-to-us-all-20190118-story.html
The only concern the state has about marijuana prices is to try to keep them as high as possible so they generate more tax revenue for the state. 
We all know that is what people want right? We just love to pay high prices. Especially if we could grow it ourselves for about 25 cents a gram but we'd much rather pay $30 a gram.
