Policy experts believe an increase in the prices of marijuana products won’t be a concern of customers, at least not in terms of consumption. The price increase is a direct result of new taxes that could be slapped on the budding industry, which could go as high as 45 percent including the statewide excise tax of 15 percent. Marijuana prices are expected to rise in the first year of its legalization, but hopefully, will come back down once the market picks up and stabilizes.
One policy expert, Steven Davenport, a UCLA alumnus and policy researcher for the RAND Corporation that has worked with the Liquor and Cannabis Board of Washington, finds that California has not been as effective as Colorado when it first started to regulate the medical marijuana market. This is one reason why California’s gray market for medical marijuana could continue to persist despite state regulation.
On the ground however, dispensary staff hold a different opinion when it comes to the new taxes and price increase. They believe that such measures can drive away customers and hurt their business. According to the California Growers Association, the price of an eighth of an ounce of marijuana in the California gray market is around $20, which is less than half of the $50 charged in dispensaries. Still, dispensary owners are confident that they offer value, providing superior quality marijuana that is safer and accessible for customers. They remain optimistic that customers will buy from dispensaries again.
To cope with the taxes, dispensaries admit that rising overhead costs will have to fall on customers, as they’re already being squeezed out of slim profit margins. Nonetheless, Davenport points out that California could follow in the footsteps of Washington, which saw a rise in prices in its first year and then a fall after the market stabilized. He attributes the increase in prices to the shortage of supply of marijuana. California, however, seems to be facing an already turbulent start to its supposedly darling industry. Wildfires that recently hit the state have left numerous small farmers hurting, with their products turning into ash and soot in an instant. Still, experts aren’t losing sleep about the impact of the fire on wholesale prices across the state. While the timing of the fire has been very unfortunate, there has never been a better time for supporters of marijuana in California than now.
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