Recreational marijuana has been legal in Colorado for 18 months now, and while demand is higher than ever, a new survey shows that the price of weed is actually on the decline.
A recent report from the brokerage services company Convergex shows that the average price of an eighth has dropped up to 40% in the past year. Last June, the average price on an eighth was $50 to $70; this June, the average price is between $30 and $45. Likewise, an ounce of weed that was $300 to $400 a year ago goes for $250 to $300 today.
One reason for declining prices is the burgeoning marketplace. The cannabis industry in Colorado is an ever-growing entity, with new businesses popping up and expanding constantly. With more dispensaries and grow facilities comes more competition, forcing businesses to keep prices as low as possible while still turning as much profit as they can. (Thank you, high school Econ.)
The report goes on to reason that it's "a natural result for any maturing industry as dispensaries try to find the market’s equilibrium price.”
While prices may be dropping, tax revenue is not. The Colorado Department of Revenue reported $4.39 million in tax revenue from recreational weed sales this April; with the 10% sales tax, that means recreational weed sales totaled $43.9 million that month alone. The report predicts a total of $480 million in 2015 tax revenue from recreational marijuana, which would be an increase of 50% from 2014.
As the report observes, the Colorado cannabis market will continue to balance itself out before finding its equilibrium price. Until then, however, Colorado has much to look forward to — including a one-day sales tax holiday on Sept. 16 instituted by Gov. John Hickenlooper, followed by the decrease of sales tax from 10% to 8% in a state effort to further eliminate the illegal black market.
You go, Colorado.