The Great Marijuana Crash Of 2011

September 26, 2013 10:52 AM

What’s going on in Colorado is an outstanding case study in what happens when a black market becomes a legal one, and it’s something we probably won’t see again in any of our lifetimes.
posted by latkes (168 comments total)

the reference to and photo of the guy smoking the comically large jernt made me lorf. pretty meta humor for a site called "Business Insider."
posted by echocollate at 11:01 AM on September 26, 2013 [22 favorites]

As the retailers — who were often marijuana novices — understood it, pot was pot. Many didn't realize that there were differing qualities of cannabis. They wanted all growers to bring wholesale cost in line with what the bad growers were charging.

Growers who had maintained quality and held the wholesale price at $3,500 per pound found themselves under pressure from their retail partners to take a price cut.

[...]

The businesses that gave in and sold as low as they could are by and large gone. The firms that maintained their composure are thriving.

This is fascinating
posted by showbiz_liz at 11:02 AM on September 26, 2013 [4 favorites]

I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.
posted by Hoopo at 11:05 AM on September 26, 2013 [2 favorites]

I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.

I think it's a combination of taxes and higher quality? But FWIW I think that's the going rate in NYC (not that I have in-depth knowledge of the market or anything)
posted by showbiz_liz at 11:07 AM on September 26, 2013 [2 favorites]

Business Insider is run on the Buzzfeed/Bleacher Report model, they aren't really that professional.
posted by vogon_poet at 11:07 AM on September 26, 2013 [8 favorites]

> They are free to walk out to their cars, drive their marijuana home, and smoke it.

The first six sentences of this read like the script of a high school scare film, just before the "twist":

"Sounds nice, doesn't it? Wholesome, even. But what these customers don't know is..."

*cuts to a shot of some guy passed out on a couch, covered in Doritos crumbs while his young children cry and light fires*
posted by The Card Cheat at 11:08 AM on September 26, 2013 [32 favorites]

Also, part of me thinks I should take out a business loan, go to Denver, and open a store that sells, like, pies and gourmet hot pockets. And is furnished with really deep couches. Give me venture capital plz
posted by showbiz_liz at 11:08 AM on September 26, 2013 [56 favorites]

Beginning next year, anyone with an I.D. can waltz into a marijuana dispensary, put $50 on the counter, and announce to the clerk that he'd like one eighth of an ounce of marijuana.

That price is really surprisingly high to me, and seems basically in line with black market prices. I had always assumed that a large part of the street level cost of marijuana was going towards risk compensation, and that those prices would go down significantly in the event of legalization. Why are they still so high?
posted by invitapriore at 11:09 AM on September 26, 2013 [3 favorites]

Oh damnit. Didn't see Hoopo's comment.
posted by invitapriore at 11:09 AM on September 26, 2013

I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.

On the one hand, illegality drives prices up because the seller wants a higher profit to compensate for the risk. On the other hand, legality drives prices up because legitimate sellers are offering a low-risk transaction compared to the black market. Evidently right now a more-or-less safe purchase is worth more to a buyer than compensation for the risk of jail time is worth to a seller. Once the market expands and more states legalize marijuana, I suspect that legal prices will fall further.
posted by jedicus at 11:09 AM on September 26, 2013 [9 favorites]

the going rate

The going rate of what? Bath tub gin is a notoriously crappy product and should not be priced the same as Hendrick's, no matter how easy of difficult it was to procure either.
posted by jsavimbi at 11:10 AM on September 26, 2013 [3 favorites]

Guys I went to look for info on marijuana pricing in Colorado and the first link I clicked was this and look at the picture oh my god
posted by showbiz_liz at 11:12 AM on September 26, 2013 [15 favorites]

I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.

I'd guess that a significant part of the market for legal marijuana has minimal to zero experience with buying illegal pot, or not recent experience anyway. I know a few people who smoke from time to time, but I have basically no clue what pot "should" cost, and compared to my legal intoxicant experiences - ie, alcohol - that doesn't strike me as blatantly unreasonable.
posted by Tomorrowful at 11:13 AM on September 26, 2013 [1 favorite]

showbiz_liz: "Also, part of me thinks I should take out a business loan, go to Denver, and open a store that sells, like, pies and gourmet hot pockets. And is furnished with really deep couches. Give me venture capital plz"

TOO. LATE.

Voodoo Doughnuts (of all things) has beat you.
posted by boo_radley at 11:14 AM on September 26, 2013 [4 favorites]

It's shameful shit that California is so behind on this.
posted by xowie at 11:15 AM on September 26, 2013 [5 favorites]

Oh, and from what I've seen, $50 will get you change back. I'll keep my eye open on my lunch break for prices.
posted by boo_radley at 11:15 AM on September 26, 2013 [2 favorites]

The $50 price point is because that IS in line with the black market. It's to prevent people from taking dope from CO out of state. They mention that pretty specifically in the article under the section 'The Unsavory Element.'
posted by mfu at 11:17 AM on September 26, 2013 [5 favorites]

Also, I'd like to go to CO for New Year's.
posted by mfu at 11:18 AM on September 26, 2013 [2 favorites]

Maybe this is in the article and I missed it, but what is the limiting factor on growing high quality product. Is is simply expertise? Is it equipment? Having access to seeds of high quality strains?

Is it possible to reduce the cost per plant?

A grower can only grow a limited number of plants legally, so there is a disincentive to growing a range of cheaper product.

In the end, there will be no ditch weed in Colorado, just high cost hydroponic?

All in all, pretty interesting.
posted by Ad hominem at 11:19 AM on September 26, 2013

oh and there's this baller place on colfax that serves these awesome empanadas.
posted by boo_radley at 11:19 AM on September 26, 2013 [3 favorites]

(Did anyone else have weird page load problems for the link?)
posted by latkes at 11:19 AM on September 26, 2013 [1 favorite]

> look at the picture oh my god

Once, at an outdoor rave in Australia, I saw a circle of people smoking a joint that was so big it had to be held up at the other end with a y-shaped stick.
posted by The Card Cheat at 11:20 AM on September 26, 2013 [4 favorites]

From the title, I came here expecting an article on a semi scattering bales of dope on the highway. This was more interesting.
posted by arcticseal at 11:22 AM on September 26, 2013

I think it's a combination of taxes and higher quality?

Just as an example, "a friend of mine" was at one of Vancouver's police-pretend-its-not-happening pot festivals in the middle of downtown where growers sell various strains of different qualities from booths. You could get very-high-end stuff around $35 for an eighth, and perfectly good for much less. And these prices are crazy expensive in any other setting.

The $50 price point is because that IS in line with the black market

You poor, poor bastards.
posted by Hoopo at 11:23 AM on September 26, 2013

That was pretty interesting. Sounds like, as with other gold rushes (and the actual Gold Rush), the people on the fringes are the ones making bank selling supplies and services to the "prospectors".

Also, as someone who does not partake, how much exactly is an eighth? I mean, I know it's 1/8 ounce, but what is that good for? A nice evening or once a day for a week or what?
posted by backseatpilot at 11:25 AM on September 26, 2013

Wash. state shops for a bank to handle marijuana money
posted by Blazecock Pileon at 11:25 AM on September 26, 2013 [1 favorite]

“The problem is that you can't just go back to your manufacturing facility and say, ‘Guys, we need more, turn up the speed on the conveyor belts,’" said Cook.

I can't help but imagine that scene from I love Lucy where the pastries are coming too fast and she ends up shoving them in her mouth.

Only it's with Jim Anchower and more doobage than you can shake a stick at.
posted by chambers at 11:27 AM on September 26, 2013 [10 favorites]

BP: I was so amped on the idea of starting a bank in Washington, but I'm just not well-connected enough. The marijuana financiers are going to become billionaires.
posted by Annika Cicada at 11:27 AM on September 26, 2013

Also, as someone who does not partake, how much exactly is an eighth? I mean, I know it's 1/8 ounce, but what is that good for? A nice evening or once a day for a week or what?

It's hard to say because it really depends on the person- sort of like asking "how much beer will get a person drunk". But, in my estimation it is definitely way more than a single day's worth- more like a week or two. (Someone should be along shortly to radically disagree with this notion)
posted by showbiz_liz at 11:30 AM on September 26, 2013

I figure that while the price is high (and it'll come down eventually) one thing people are paying for is comfort. Clean storefront transaction, not some shady guy that someone knows and who might not be there next week.
posted by azpenguin at 11:30 AM on September 26, 2013

A nice evening or once a day for a week or what?

It really depends. For me, these days, an eighth would last me up to 3 or 4 weeks. When I was in university? me and 3 or 4 friends would probably do that in hazy, pizza-and Goldeneye-N64-filled day or two.
posted by Hoopo at 11:31 AM on September 26, 2013 [5 favorites]

look at the picture oh my god

I can't decide whether or not the one you found is funnier than the one that's supposed to be funny. It might be funnier just by virtue of the fact that it's not supposed to be funny, but that's kind of cheating.
posted by Sing Or Swim at 11:32 AM on September 26, 2013

Also, as someone who does not partake, how much exactly is an eighth? I mean, I know it's 1/8 ounce, but what is that good for? A nice evening or once a day for a week or what?

I buy it a gram at a time and that lasts me about two weeks, assuming my normal usage of once or twice a week. I don't smoke every week, and some weeks I may smoke 2-3 times depending on my current stress level / social plans / artistic endeavors, so it sorta balances out.

As a data point (Southern California), I pay just under $30 for a gram, but I've dialed in the precise effect and flavor that I like from my weed, and it's a bit more expensive than the garden-variety stuff.
posted by mykescipark at 11:32 AM on September 26, 2013 [1 favorite]

Another Q for Coloradoans who partake: What is the leaves-to-dab/BHO ratio in the dispensaries? Are concentrates really on the sharp increase that I hear about?
posted by sandettie light vessel automatic at 11:39 AM on September 26, 2013

From the essay: Coloradans can also grow up to six plants -- with only three flowering at a given time -- in their home for personal use. Adults can possess up to an ounce of marijuana legally.

Weed is notoriously easy to grow. Legalization starts the process of putting cheap weed out to pretty much anyone who wants it. Back in the day, dirt weed was the norm, with such stuff as Panama Red, certain Colombian strains, and Thai Stick the coveted, but rare, find. Later on, American growers put hybrid weeds from all over the world to the front. Nowadays even dirt weed is almost as good as the primo weed was back in the day. You probably won't put this genie back in the bottle anytime soon.

The key to good weed is good care. Even bad seed stock will give an improved product if it's well-tended. But the central issue is good seed stock. You don't get silk purses from sow's ears.

I haven't tended a weed garden in quite a few years. I had certain strains that grew into 18-foot tall trees. I had to tie the limbs with supporting twine to keep the weight of the colas from breaking them. I believe this was a Colombian seed. Another seed grew a little plant, about three feet high, which was a central stem topped by a two-foot purple cola. It was a sort of narco weed: one-hit wonder. I believe this was an Afghan seed. My Thai plants also were huge.

My system was to let the plants continue to mature (outdoors, in the central San Joaquin Valley) until into November. By this time all the guard leaves had fallen off, and the colas and minor stems were covered with a sugary glaze. When trimming the plants, I would have to pause now and then to scrape the glaze off my fingers: I rolled this into little balls and smoked it in a toker.

My partner grew a neat plant in an alcove in our living room. She trimmed it carefully to keep it from spreading, and used a grow-light, to tease the plant into a vine-like shape. Subsequent growing seasons gave us "volunteers" in our garden, which sprang up from the seeds of the previous year's crop. Many of these were hybrids.

Also, I did an 18-month stint on the Big Island. I had a large plot, with about a hundred plants. They were not as lovingly tended as my California plants, because of certain logistical issues. Some of them were grown in 30-gallon black bags, filled with a prepared mulch, and placed in trees, on cliff faces, and so on, to hide them. They weren't as carefully tended, so many of them never achieved their full potential. They were from good stock, though, and fell into the class of what we used to call "narco-weed."

These plants are very forgiving, so long as you keep the roots well-drained. You should know that the pollen of the males is very small and light. They can carry many miles on the wind. If you want your weed to remain sinsemilla, you need to keep it in the house. Also, I've had plants that were hermaphrodites. The good news is that, with only a couple of plants, you can identify the males and destroy them before the females begin to bud. The bad news is that the plant may respond by producing male parts. Oh I love these things. The were so emblematic of ... well I don't know. Maybe the issues and analogies that were planted in my brain had more to do with smoking scrapings than the other reality.

Weed Power!
posted by mule98J at 11:46 AM on September 26, 2013 [74 favorites]

I figure that while the price is high (and it'll come down eventually) one thing people are paying for is comfort. Clean storefront transaction, not some shady guy that someone knows and who might not be there next week.

I doubt it will go down much further at all. I think that the quality and confidence that what you bought last time will be just as good this time will keep that point pretty stable.

I can see, however, there being 2 or 3 options in quality, not unlike how gasoline is sold in regular, premium, and super-premium. This would allow for a way to deal with basic variances in crop quality and supply, and a multitude of branding options. I would be surprised if the lowest went for under $35. Continuing with the gasoline metaphor, any gas will get you to your destination, but some gas makes your engine run smoother. It's not like more gas makes you go faster, it just allows you to drive for a longer amount of time*.

*note: Of course you use more gas when you go faster, but too much gas in the combustion cylinders at once will very quickly lead to the engine choking out, not unlike this metaphor did.
posted by chambers at 11:46 AM on September 26, 2013 [5 favorites]

Maybe it's because of the bad economy, but the going price for an 8th of quality stuff // gram of dabs in MI is now $40. Steadily dropping since we passed our MMJ law.
posted by wikipedia brown boy detective at 11:47 AM on September 26, 2013

One of my favorite things about dispensaries/legal is the things you couldn't do in the black market, like saying "I want $17 worth" and paying in mostly in crumpled dollar bills and quarters.
posted by wcfields at 11:50 AM on September 26, 2013 [3 favorites]

Here on the front lines in Denver, things are already changing. While not yet legal (although fifty or sixty bucks and a little paperwork will get you a medical marijuana certificate, a farce), you can get it delivered on a almost risk-free basis already. See health and beauty products, Craigslist Denver.

And, yes, although the price may not be that different than the black market, the ease and legality with which one will soon be able to buy pot - and not just "pot," but highly concentrated "wax" etc. - will definitely increase the number of smokers, tourists or not. Some of us don't have black market connections anymore, and are curious.

There will be a spike in sales which may only continue with cannabis tourism, though. As an ex-pothead, re-experiencing the hash high was only temporarily entertaining. Having cosmically brilliant ideas which are forgotten within the minute doesn't have the allure it did for me as a youngster. I don't know how many newbies (or ex-hippies) will take up the habit.

One thing not mentioned yet is an upcoming vote on taxing the drug. That is becoming a point of contention for some: the tax is pretty high.

And, yes, as someone just asked, the concentrates seem to be a big draw for ganja-lovers who score at their local "medical" dispensary. (There are a half-dozen places I can walk to in five minutes from my house.)
posted by kozad at 11:51 AM on September 26, 2013

Even a year down the road it blows my mind that Washington was all "here's a bunch of reasonable restrictions on how much you can possess and oh yeah also 72 ounces of infused liquid." That is so, so much for some infusions.
posted by jason_steakums at 12:01 PM on September 26, 2013

"Why are they still so high?"

MARIJUANA!
posted by klangklangston at 12:10 PM on September 26, 2013 [2 favorites]

Maybe this is in the article and I missed it, but what is the limiting factor on growing high quality product. Is is simply expertise? Is it equipment? Having access to seeds of high quality strains?

I think all those things are factors, but I seem to hazily remember that growing marijuana is a bit like growing giant pumpkins, you have to prune and cut back in order to funnel the plant's energies into one high quality bud. So maybe it's a case of yield being inversely proportional to quality, if you're growing indoors. I could be way off on that, though...
posted by Diablevert at 12:13 PM on September 26, 2013

Dan Williams, the man behind Canna Security, has already received an infusion of capital from the Arc View investment group, a consortium of investors who focus on the ancillary businesses of the emerging marijuana industry.

Arc View indeed, these guys are going to be the next US Steel.
posted by Potomac Avenue at 12:14 PM on September 26, 2013 [4 favorites]

And yeah, there's a bit of sticker shock here, considering that when I moved shit, it was $900 pounds that turned to $35 eighths of decent commersh. But $3500 pounds to $50 eighths is not terrible, especially since these $50 eighths are equivalent to what cost, in Michigan a decade ago, about $70 (Northern Lights, good bud).
posted by klangklangston at 12:15 PM on September 26, 2013 [1 favorite]

I can see, however, there being 2 or 3 options in quality, not unlike how gasoline is sold in regular, premium, and super-premium.

Think more along the lines of wine or beer (especially craft brews). The dispensary I belong to has a wide range of strains, and breaks them out by type (indica, sativa, hybrids), indoor vs outdoor, as well as THC and CBD percentage. The staff are helpful and know what they're talking about.

I have few doubts that we will soon see growers talking about terroir, and that becoming a selling point.
posted by rtha at 12:15 PM on September 26, 2013 [5 favorites]

I seriously haven't seen/heard the word "partake" used in conjunction with weed since, ahem, the '70's.

I'm getting some weird and thoroughly enjoyable flashbacks here.

Card Cheat , this is my favorite Quote of Vague Doom from the article:

The marijuana that goes on sale to the general population on Jan. 1, 2014 was planted about six weeks ago.

posted by mmrtnt at 12:19 PM on September 26, 2013

The interesting difference between marijuana and cocaine is that $50 of pot, depending on quality, could last you a week, a month, or a few of months or more. My friend bought a $50 bag of super-high-quality pot last November and partakes so infrequently that there is still enough left to not even think about buying more any time soon.

With Cocaine, $50 will last you one night. So will $100 worth. So will $500 worth. Etc.
posted by Cookiebastard at 12:24 PM on September 26, 2013 [19 favorites]

I was recently in Maine visiting friends, one of whom is a fibromyalgia sufferer with a legal permit to grow and smoke. She brought out some fancy toys to show us, all of which had been purchased at her dispensary. Then she brought out an assortment of tasty looking buds... all of which were neatly vacuum-packed in plastic and printed with bar codes. After that she showed us her grow room which was being lovingly tended by her son. She had gotten samples, she explained, and then bought seeds based on the strain which helped her cope with pain best. It was all so... normal and humane.

Damn. I still feel as though I hallucinated the experience. Damn LSD flashbacks.
posted by kinnakeet at 12:26 PM on September 26, 2013 [3 favorites]

Having 3 flowering plants all the time is just about exactly perfect - nice to encourage growing for personal use. It's fun and educational!
posted by parki at 12:29 PM on September 26, 2013

It's not really even recreational-use legal yet, is it? The first legal stores aren't set to open until January 2014, so I think it's wrong to talk about the white-market price just yet: that market, technically, doesn't exist yet. (Recreational, specifically; there's a medical-use market, but since it's smaller than the recreational use market it makes sense that it doesn't set prices.)

My guess is that once stores start opening up and there starts to be competition across the entire cannabis supply chain, from growers to retail, you'll see prices drop.

From the article:

For many, the low prices were simply more attractive than higher-priced, higher-quality product.

This is still true, even if prices have recovered. By holding the line at $50/eighth, medical growers apparently decided they didn't care about the low end of the market. Perhaps this was because they realized, correctly, that once someone has taken the time to get a MMJ card, they're going to buy marijuana. And as long as you're not more expensive than the black market, you basically have their business.

It doesn't seem like the economics of the open, recreational market are going to follow that. Instead of people who have already decided to use marijuana, the recreational market might consist of people who want to have a good time on Friday night, and are deciding whether to spend it on a couple of six-packs or ... something else. I think that market is probably immense, but it's price-sensitive, because marijuana — in all its forms — is just one of many options that a person can spend their discretionary, recreational dollar on. And as a result, fixing the price to the black market doesn't make much sense. The value proposition can't be "same price and less sketchy than buying from a drug dealer!" Instead, it has to be made relative to other white-market products, like booze or movie tickets, in terms of fun-per-dollar.

There will certainly be a market for premium products, sold by people who really know their stuff and can out-snob the best œnophile, but the real money is going to be whoever can scale up production enough to drop the price (keeping in mind the punishing tax structure) and increase the size of the market many times over.
posted by Kadin2048 at 12:34 PM on September 26, 2013 [3 favorites]

This is excellent news. Now if people can only make the intuitive leap from marijuana to other prohibited items...
posted by Justinian at 12:36 PM on September 26, 2013

It's shameful shit that California is so behind on this.

Man, I live in Vancouver and it makes me crazy that WA State is now better about pot than we are. I think ours is still better quality, though, but only barely.

Also, the rapid merger of capitalism and medical marijuana in WA has been hilarious to observe. My friends there get emails about "free gram Fridays" and bonus joints thrown in with orders over X dollars.

As a rapidly-approaching-middle-age lady who still likes a smoke every now and then, I am definitely willing to pay more for safety and convenience.
posted by jess at 12:39 PM on September 26, 2013

Given the wine model, I believe we are going to shift very quickly from the War on Drugs to the Bores on Drugs, nattering on about strains and terroirs and bouquet and mouth and hints of tangy iron amid the honeydew.
posted by chavenet at 12:46 PM on September 26, 2013 [30 favorites]

This is excellent news. Now if people can only make the intuitive leap from marijuana to other prohibited items...

What did you have in mind?
posted by Lord Chancellor at 12:49 PM on September 26, 2013

Wait...."free gram Fridays" ... ?

Ah, man.
posted by mule98J at 12:51 PM on September 26, 2013 [1 favorite]

(Did anyone else have weird page load problems for the link?)

*strained voice from the corner of your browser* Oh shit...

*exhaaaaaaaale*

Totally forgot. Buh-huh-huh-huh-huh...
posted by Rykey at 12:51 PM on September 26, 2013 [2 favorites]

> What did you have in mind?

32oz. sodas.
posted by davelog at 12:54 PM on September 26, 2013 [8 favorites]

What did you have in mind?

I dunno man, whaddya got?
posted by Justinian at 12:57 PM on September 26, 2013 [6 favorites]

"I have few doubts that we will soon see growers talking about terroir, and that becoming a selling point."

Back in Michigan, where I've got friends with cards, they're already there — multiple substrains of essentially the same THC content, with distinctions based on flavor profile (minty, piney, citrus, earthy, etc.).

"Man, I live in Vancouver and it makes me crazy that WA State is now better about pot than we are."

Ha! When I visited Vancouver, I tried to buy a little weed while I was there at some coffeeshop, and got told that it was illegal to sell weed there, but hey, why don't I just give you a big bud or two. I got handed a pinkie finger bud and got told that would last me, "A couple of hours," until I could find someone who could really sell to me.
posted by klangklangston at 1:00 PM on September 26, 2013

I wonder if anyone has ever looked into the economics of farming cannabis on an industrial scale, using modern machinery, just like any other agricultural product. And rather than having the plant itself as the end-product, treat it as simply a feedstock into a THC-extraction process.

Seems to me you could be a lot rougher on it, and get much higher yields per dollar since it would be much less effort-intensive.

E.g., get a field and surround it with razor wire, then plant it with cannabis seeds. Let it grow, ignore the sex-selection stuff that you do when growing it indoors, harvest the whole field, shake out the seeds (replant them), and then macerate the plants and throw them into some sort of recoverable, volatile solvent. I've heard anecdotally that butane works for solubilizing THC, but I suspect there are better chemicals around. (There's lots of equipment around for doing CO2 extraction of caffeine from coffee beans, maybe that would work.)

The "product" thus isn't a bunch of plant buds, but a barrel of THC that you can then sell on to people making consumer products. It would be a fungible, commodity product, like high-fructose corn syrup or 190-proof beverage ethanol. And that means instead of arguing about terroir and mouthfeel, you could instead have a rationalized pricing scheme (e.g. price per kg of THC). Hell, you could have a whole futures market, which would allow hedging and get around a lot of the problems of long lead-time.

I can't find any information on whether the change from medical- to recreational-use in CO allows industrial scale farming. The medical system didn't because of the plants-per-patient requirement on dispensaries, but I don't see how that would translate to recreational stores. If there's no limit to the number of plants a person can grow, then I think what we're going to see is a race to see who can apply the established wisdom of industrial agribusiness to weed.
posted by Kadin2048 at 1:01 PM on September 26, 2013 [12 favorites]

Also, part of me thinks I should take out a business loan, go to Denver, and open a store that sells, like, pies and gourmet hot pockets. And is furnished with really deep couches. Give me venture capital plz

Such stores exist in abundance (ok, not the couches part), but delivery options are limited. Besides, who wants to leave home? GrubHub is not set up to bring ice cream and Doritos and donuts at 2:00 a.m. I have been talking this up for a year now. Business opportunities abound!
posted by Wordwoman at 1:01 PM on September 26, 2013 [1 favorite]

Weed is just not the thing for me anymore but man I would really like to hear my accountant's long-suffering sigh if I were to give him investment income records as a weed dispensary VC.
posted by elizardbits at 1:01 PM on September 26, 2013 [10 favorites]

"The "product" thus isn't a bunch of plant buds, but a barrel of THC that you can then sell on to people making consumer products. It would be a fungible, commodity product, like high-fructose corn syrup or 190-proof beverage ethanol. And that means instead of arguing about terroir and mouthfeel, you could instead have a rationalized pricing scheme (e.g. price per kg of THC). Hell, you could have a whole futures market, which would allow hedging and get around a lot of the problems of long lead-time."

Other cannabinoids found in marijuana also affect the high. Simply extracting THC leads to stuff like marinol that isn't as effective.
posted by klangklangston at 1:06 PM on September 26, 2013 [5 favorites]

What’s going on in Colorado is an outstanding case study in what happens when a black market becomes a legal one, and it’s something we probably won’t see again in any of our lifetimes.

This seems like an unsupported assertion.
posted by Chrysostom at 1:08 PM on September 26, 2013

HA my mom was prescribed marinol and she was like I DON'T FEEL ANYTHING and then suddenly ate 5 pudding pops in quick succession and fell asleep in the middle of the last one.
posted by elizardbits at 1:10 PM on September 26, 2013 [29 favorites]

Kadin2048: " And that means instead of arguing about terroir and mouthfeel, you could instead have a rationalized pricing scheme (e.g. price per kg of THC)."

To some degree that already happens with the concentrates. However, a lot of us who enjoy cannabis actually enjoy the taste, when it's good anyway, and it's more than the active chemicals which make the experience worthwhile. It's like saying, who cares about the taste of beer or distilled spirits? Let's just market Everclear and be done with it.
posted by krinklyfig at 1:17 PM on September 26, 2013 [8 favorites]

Besides security corps, what other kinds of ancillary businesses are going to make bank during the coming legal mary jane gold rush in CO, CT, DC, and MA (and then everywhere)? I mean, literally the bank that decides to join in, but who else? Like, bong makers? Guys with chemistry sets that figure out how to distill it better? Vaporizer engineers? Who else?
posted by Potomac Avenue at 1:19 PM on September 26, 2013

Lawyers I guess lol.
posted by Potomac Avenue at 1:19 PM on September 26, 2013

bakeries, prolly.
posted by elizardbits at 1:19 PM on September 26, 2013

What are the "pickaxes and sifting tools" for this gold rush?
posted by Potomac Avenue at 1:19 PM on September 26, 2013 [1 favorite]

And comfy couch manufacturers.
posted by elizardbits at 1:20 PM on September 26, 2013

Ha definitely bakeries.
posted by Potomac Avenue at 1:20 PM on September 26, 2013

Couches is a stereotype and I'm insulted you brought it up man.
posted by Potomac Avenue at 1:20 PM on September 26, 2013 [4 favorites]

Its a culture thing. The people who make money will be trying to sell the new weed culture.
posted by psycho-alchemy at 1:20 PM on September 26, 2013

Who made money in 1933 after the repeal of prohibition?

Government agencies perhaps...
posted by Potomac Avenue at 1:22 PM on September 26, 2013

elizardbits: "HA my mom was prescribed marinol and she was like I DON'T FEEL ANYTHING and then suddenly ate 5 pudding pops in quick succession and fell asleep in the middle of the last one."

FTR, so was I, and I honestly didn't feel it. This was back in 1990, so other medical options weren't available. My oncologist recommended I get marijuana through my usual sources if it helped me, and he would go to court on my behalf if I were caught with it, at least as long as I was undergoing cancer treatments. Anyway, I gave it an honest try, increased the dose gradually over several hours, and it really did nothing (had a few friends try it too, with similar reports). In the end I got supply through the black market, which did work alleviating nausea and helped me sleep.
posted by krinklyfig at 1:23 PM on September 26, 2013

Someone should open a place that's like a sleazy adult video store with little screening booths, but instead of porn they have every episode of MST3K
posted by theodolite at 1:24 PM on September 26, 2013 [8 favorites]

Wait what if you combined those wall-to-wall trampoline places with lazer tag
posted by theodolite at 1:26 PM on September 26, 2013 [1 favorite]

I hope this is reflected in my Drug Lord game. The loan shark just broke my legs.
posted by Smedleyman at 1:26 PM on September 26, 2013 [2 favorites]

Back in Michigan, where I've got friends with cards, they're already there — multiple substrains of essentially the same THC content, with distinctions based on flavor profile (minty, piney, citrus, earthy, etc.).

Oh, here too, for sure. It will be interesting to see that spread through the larger, not-restricted-to-medical market, is more what I meant. At my dispensary, they will offer you a sample of any of their stock for you to smell before you buy, for instance.
posted by rtha at 1:26 PM on September 26, 2013 [1 favorite]

Form those asking earlier, a related story is 29 Tips For Growing The Best Marijuana In America. I have no idea how accurate that is.
posted by codacorolla at 1:29 PM on September 26, 2013

Who made money in 1933 after the repeal of prohibition?

I have a vintage cocktail book from the late 30s or early 40s, the introduction of which begins "ever since the repeal of prohibition..." and basically goes on to suggest that there is a need to reestablish the lost culture of high-quality alcohol. The book, besides cocktail recipes, also contains detailed drawings and explanations of the proper glassware for each drink, a small history section, and a section about choosing wine. I'm sure many similar books about weed- without a tacky tie-dyed cover, and with a focus on the pre-prohibition world history of weed, as well as intro-level explanations of smoking equipment- will be along shortly. And in general, I'd predict an attempt to de-tackify smoking.
posted by showbiz_liz at 1:30 PM on September 26, 2013 [8 favorites]

Well thanks to this helpful wikipedia newsreel I found the answer for 1933:
Bottling companies, barrel makers, ice companies, grain growers, employment agencies for dealing with the flood of new workers needing to be hired and trained, train companies etc.

Another interesting theory I've heard is that the concert industry was kicked off much more fully (especially big bands and standup comics) because of the repeal of prohibition because there were bars everywhere--you couldn't just rely on people showing up to drink booze and so you had to pay much better to have high-quality talent telling jokes and playing music. Which meant having a hit record now allowed you to tour.

Maybe this will be a revolution of the opposite: now people will REALLY not leave the house. Or like comedy movies will be way more popular now that you can blaze up in the street outside the movie theater.

This is all just so good for America.
posted by Potomac Avenue at 1:31 PM on September 26, 2013 [2 favorites]

I wonder if anyone has ever looked into the economics of farming cannabis on an industrial scale, using modern machinery, just like any other agricultural product.

Sure!

If the THC anti-cancer folks are right there will be plenty of reason to do exactly that.

Considering some of the THC strains can grow tall with long fibres there is the fibre market for paper, clothing, and perhaps conversion of the material into sugar or protein.
posted by rough ashlar at 1:34 PM on September 26, 2013

Let's just market Everclear and be done with it.

The 151 proof version or the 190 proof version?
posted by rough ashlar at 1:36 PM on September 26, 2013

Mahjoun and Bhang will come into style in a major way.
posted by Cookiebastard at 1:36 PM on September 26, 2013 [4 favorites]

I'm envisioning a smoky room filled with table after table of settlers of cataan.
posted by Potomac Avenue at 1:39 PM on September 26, 2013 [5 favorites]

...around $50 retail for an eighth of an ounce.

Wow. Things sure have changed since I was in college. I used to pay $15/ounce for Mexican Green, and it wasn't even legal. Columbian was about $30/ounce. I bought an ounce of hash one time and I think it was about $120.

So $50/8th is the result of a price crash? The stoners must really have been getting gouged.

(I stopped smoking 30 years ago, so I'm out of touch.)
posted by Chocolate Pickle at 1:40 PM on September 26, 2013

I have a question -- what's the market like for shwag? What if (PURELY HYPOTHETICALLY) I were a long-time cannabis aficionado who prefers to smoke mild, not-very-potent bud in small amounts? All this designer bud is like wearing a cement hat -- I can't get off the couch after partaking. I'd much prefer cheap, mild pot that adds a little billowy buzz to my day instead of crushing me with a three-hour-long OH GOD SO STONED couch session....

NOT THAT I KNOW ANYTHING WHATSOEVER ABOUT THIS AT ALL

*cough*
posted by BitterOldPunk at 1:44 PM on September 26, 2013 [13 favorites]

Besides security corps, what other kinds of ancillary businesses are going to make bank during the coming legal mary jane gold rush in CO, CT, DC, and MA (and then everywhere)? I mean, literally the bank that decides to join in, but who else? Like, bong makers? Guys with chemistry sets that figure out how to distill it better? Vaporizer engineers? Who else?

Do you think it's a coincidence that Peyton Manning bought a whole bunch of Papa John's franchises just 2 weeks before the Colorado vote? He's always thinking two steps ahead.
posted by Copronymus at 1:47 PM on September 26, 2013 [3 favorites]

"Who made money in 1933 after the repeal of prohibition?"

The Ob-may.
posted by klangklangston at 1:51 PM on September 26, 2013

I thought they lost money? How did they benefit, cuz they already owned the bars?
posted by Potomac Avenue at 1:54 PM on September 26, 2013

with couches but you can't have any
posted by elizardbits at 1:54 PM on September 26, 2013

BitteroldPunk,

You don't necessarily need to seek-out schwag—you just to to find the strains that don't lock you to the couch.
posted by thylacine at 1:54 PM on September 26, 2013 [1 favorite]

I am a marijuana grower with 35 years experience. Ask me anything.
posted by telstar at 1:59 PM on September 26, 2013 [2 favorites]

"I thought they lost money? How did they benefit, cuz they already owned the bars?"

Are you kidding? Nah, the mob made out like bandits, no pun intended. They saw a massive increase in sales, along with, basically, their legitimization under liquor control commissions. No more (or fewer) shoot-outs, government-sanctioned monopolies, and the ability to vertically integrate through bars, brewers and distributors? It was a godsend, the way prohibition ended.

I mean, even now, liquor distributors are often mobbed the fuck up and a reliable cash cow.
posted by klangklangston at 1:59 PM on September 26, 2013

The 151 proof version or the 190 proof version?

The 420 proof version.
posted by ian1977 at 2:05 PM on September 26, 2013

It's like saying, who cares about the taste of beer or distilled spirits? Let's just market Everclear and be done with it.

Well, yeah. A large part of the beverage market, invisible to the consumer, trades in what's basically Everclear — high-proof white whiskey, produced in huge column stills and then sold as an intermediate good, to be made into finished products (e.g. by placing it into barrels and aging it, or cutting it with flavoring and calling it vodka, etc.). Like HFCS, you don't really see it on your store shelf, but it's there.

And if it weren't for the laws we have that create an artificial distinction between distilled beverages and fermented ones, and absent a lot of tradition and marketing by beer companies, my guess is that America's get-shitfaced drink of choice would be a dilute infusion of industrial ethanol, water, and flavorings. (And it would probably taste better than Bud Light too.)*

Right now there seem to be a lot of people making the cannabis equivalent of microbrews, but no Bud Light, and that surprises me. I don't think that there's any reason to assume that the average hypothetical cannabis consumer, in a fully legalized market, is going to be any more discerning than the average alcohol consumer.

People who already have developed a taste for marijuana probably aren't lamenting that, just like how I as a beer drinker wouldn't give two squirts if A-B disappeared tomorrow. But it's still interesting because it seems to show that the market is far from being fleshed out.

* All snark aside, the best evidence for this is South Korea, where inexpensive soju is quite popular, and it consists of commodity rice-derived ethanol that's cut with water and flavorings and bottled. (This creates quite an issue when it's imported to the US, because an identical product made here — like any of Europe's alcopops — would be illegal or subject to liquor tax. You'd have to start with beer and take the flavor out through filtration, like Smirnoff Ice / Twisted Tea / Zima do.)
posted by Kadin2048 at 2:07 PM on September 26, 2013 [8 favorites]

Huh no idea. Well where do I go to invest in this "Mob"? Are the listed on the Dow?
posted by Potomac Avenue at 2:07 PM on September 26, 2013 [1 favorite]

"So $50/8th is the result of a price crash? The stoners must really have been getting gouged."

30 years ago, the bud revolution hadn't really hit. People still bought lids of leaf, and would have to smoke whole joints to get high.

Just doing some back-of-envelop calculations with CPI and relative THC potency, the equivalent of your $15 ounce would be a $25 eighth, or the bottom end of the market today. If you look at the high end, no pun intended, the $50 eighths are a bargain.
posted by klangklangston at 2:09 PM on September 26, 2013 [3 favorites]

Man, I live in Vancouver and it makes me crazy that WA State is now better about pot than we are. I think ours is still better quality, though, but only barely.

I think it was only a few years ago that there was a CBC TV drama called Intelligence, about a Vancouver club owner who, in the course of selling pot, gets lured down to Seattle by an informant, in order to be set up to be murdered by a cowboy DEA agent in league with Canadian police. How things change! But Justin Trudeau might be around the corner to help move Canada forwards. Time will tell.
posted by Blazecock Pileon at 2:10 PM on September 26, 2013

"Well, yeah. A large part of the beverage market, invisible to the consumer, trades in what's basically Everclear — high-proof white whiskey, produced in huge column stills and then sold as an intermediate good, to be made into finished products (e.g. by placing it into barrels and aging it, or cutting it with flavoring and calling it vodka, etc.). Like HFCS, you don't really see it on your store shelf, but it's there."

Heh. A friend and I make limoncello out of local lemons, but have to use vodka to do the extraction (due to Ca.'s everclear laws). I saw that there was a place that sold food-grade ethanol that wasn't too far, and they'd send samples, so I reached out to them (since everything was "contact for prices"). They told me that they'd be happy to send samples — at the tanker truck volume. Even though the price, when measured out, was incredibly cheap compared to what we do, it was a "Oh, yeah, that's way more than anything we're thinking about, thanks" moment.
posted by klangklangston at 2:12 PM on September 26, 2013

Right now there seem to be a lot of people making the cannabis equivalent of microbrews, but no Bud Light, and that surprises me.

There are all those stoner rumors about the design and packaging for "Marlboro Greens" already being thought up. I would imagine that depending on regulation and interstate issues, and how much of a difference economies of scale make, we might see companies that already know how to do large-scale agriculture move in. Plus, people always say that Anheuser-Busch is an impressive company because they're able to make a consistent product on a huge scale; probably consistency is even more important for weed, where apparently the effects can actually be different for different plants.
posted by vogon_poet at 2:14 PM on September 26, 2013 [1 favorite]

Meanwhile here in the Springs, our city council has decided to ban marijuana sales because god or whatever. Our mayor claims he's doing the will of the people, which fits with how I've seen this county treat elections results that it doesn't like.

So what I'm saying is, I might need a ride to Denver.
posted by bibliowench at 2:23 PM on September 26, 2013 [3 favorites]

I'm thinking the economics of legalization have to exceed the economics of prohibition for this thing to take off. A voting district that depends on a new prison being built is now going to settle for a grow field, for instance. And you're going to need middlemen to skim enough off the top to make everybody happy.

You're going to have to make weed expensive enough to match the $10-$40 billion (numbers I've seen thrown around) prohibition industry for it to be politically viable. So somewhere around $50-$150 for every legal adult in the country must be spent. And revenues have got to grow (heh) at a rate that makes investors happy, too. Not a problem in the early stages, though.

Compare to the alcohol industry, which does around $400 billion in revenue a year. Oh yeah, and you can't cut into their bottom line either, unless they're involved somehow.

But it's not impossible, I think, and reminds me of another "black market" closely associated with Prohibition that has since been embraced by governments and is still expanding. Here's a hint: It was limited to Vegas and Atlantic City before the 1980s.
posted by RobotVoodooPower at 2:26 PM on September 26, 2013

BitteroldPunk, you should probably be looking for a hybrid that is the right mix of sativa/indica for your desired effect. Maybe start with 50/50 and adjust accordingly? Or you could play with the Strain Wizard to really dial it in.
posted by bizwank at 2:31 PM on September 26, 2013

And meanwhile here in Manitou Springs (where the dealer two doors down from me runs a brisk drive-up business), the city council has opted to delay the decision on retail use until December 31. I predict a healthy and continuing black market here either way, as marijuana here is more pervasive than cigarettes, and it seems to be more of a cottage industry. The home in between us is a gorgeous little vrbo place, and I have yet to see a visiting out-of-towner who doesn't take the opportunity to light up due to relaxed policing.
posted by mochapickle at 2:35 PM on September 26, 2013

arcticseal: From the title, I came here expecting an article on a semi scattering bales of dope on the highway. This was more interesting.

Something like this plane crash back in the 70s?
posted by JiBB at 2:54 PM on September 26, 2013

I doubt it will go down much further at all. I think that the quality and confidence that what you bought last time will be just as good this time will keep that point pretty stable.

I can see, however, there being 2 or 3 options in quality, not unlike how gasoline is sold in regular, premium, and super-premium. This would allow for a way to deal with basic variances in crop quality and supply, and a multitude of branding options. I would be surprised if the lowest went for under $35. Continuing with the gasoline metaphor, any gas will get you to your destination, but some gas makes your engine run smoother. It's not like more gas makes you go faster, it just allows you to drive for a longer amount of time*.

*note: Of course you use more gas when you go faster, but too much gas in the combustion cylinders at once will very quickly lead to the engine choking out, not unlike this metaphor did.

That's a possibility. I'm looking at this as someone who has never smoked (and unless my life circumstances change drastically, never will.) But a lot of people have smoked it, and some who either did a little back in college, or have never done it but are curious, now have easier access. The process of acquiring the pot is no longer scary. This takes a lot of the value out of the black market. I think prices will come down because street prices will be coming down, and because other states are going to follow suit. Quality and service will still command a premium, but overall the market is going to evolve towards lower cost.
posted by azpenguin at 3:00 PM on September 26, 2013

invitapriore: "That price is really surprisingly high to me, and seems basically in line with black market prices. I had always assumed that a large part of the street level cost of marijuana was going towards risk compensation, and that those prices would go down significantly in the event of legalization. Why are they still so high?"

1) I see what you did there.

2) The answer, maybe? Price Stickiness

3) Do you see what I did there?

4) Honestly, do we expect prices to completely plummet, yet? This is still a grey market with a lot of risk, regardless of what the feds are doing now. A new administration can change the direction at the drop of a hat. Between the fact there's still plenty of risk, the quality is still much higher than it used to be. Hell - a lot of times you buy shitty weed for that price in spotty areas, so now that you can get abundant, quality weed, bred to order, for prices that are currently on the black market, I think that's not too shabby. I mean, yeah, I wish we could go back to the old days of like 15-25 per eighth, but it's not the 90s anymore. I man, fuck I'll take Sour Diesel of Northern Skunk XXXL PURPLE HAZE STICKS THAI GOLD or whatever the fuck the latest strains are, compared to the brick weed I used to get when I first started out.
posted by symbioid at 3:01 PM on September 26, 2013 [1 favorite]

Well, that and taxation.
posted by Blazecock Pileon at 3:22 PM on September 26, 2013

I just paid $28 for an 1/8 of Amnesia in Seattle.

The August 2013 High Times market index.
posted by Ardiril at 3:30 PM on September 26, 2013

I have found that WeedMaps is an excellent source for shopping around. Linked is the dispensary I use most often.
posted by Ardiril at 3:47 PM on September 26, 2013 [1 favorite]

Regarding the price -- that's the price the market found after Colorado's soon to be replaced medical marijuana laws were passed. Under that system, a retailer and a grower had to work together to supply the patients the retailer had enrolled.

For growers this meant the illegality premium was replaced by an infrastructure premium, an adminstrative premium, and (probably) a regulatory premium. For retailers this meant you couldn't just go wherever to stock your inventory.

Add in the lead time required (six months from seedling to bud, according to the link) and the supply is fairly inelastic.

I didn't notice in the article if those same rules will be in effect in January when the market is open. I suspect they (or similar) will be given the closing comments about the uncertainty of demand in 2014 and whether the recently planted crop is too big or too small.
posted by notyou at 3:57 PM on September 26, 2013 [3 favorites]

Speaking of WeedMaps and of selling picks and shovels to weedminers, Ghost Group is hiring.
posted by notyou at 4:01 PM on September 26, 2013 [1 favorite]

This is interesting because I've been pretty excited about the potential for investing some of my money in the marijuana biz in Washington or Colorado since news of this stuff started to hit the wires. I'm sure if I know about it any opportunity to profit has long sailed...especially now that it is in the process of being taken over by venture capital, but it makes for a nice daydream.

"Business Insider" is genius in that it is a hugely left-leaning web-rag disguised by a conservative sounding pro-business name. I like to think that just sometimes the name alone acts as the sugar coating to a bitter liberal pill...
posted by jnnla at 4:06 PM on September 26, 2013 [3 favorites]

So $50/8th is the result of a price crash? The stoners must really have been getting gouged.

(I stopped smoking 30 years ago, so I'm out of touch.)

In addition to the potency argument, remember inflation. $50 back then is equivalent to around $117 of buying power nowadays, so a cost of $50 today is less than half the price with regards to buying power.
posted by Lord Chancellor at 4:23 PM on September 26, 2013 [1 favorite]

Chocolate Pickle: "So $50/8th is the result of a price crash? The stoners must really have been getting gouged."

No, that's retail for high-end weed before and after (prices have mostly recovered, but smaller amounts have always been significantly more expensive, especially per-gram prices). The same type in larger amounts will be cheaper, whether it's schwag or top shelf. I was paying about $50-60/eighth for the best stuff from a dispensary in San Francisco, but only if I bought by the eighth. An ounce of the same was $300. This is nearly identical to street prices. I'm paying less now, from $200-240/oz, but I'm in a location where medical marijuana is much more of a hassle so it's black market, and I'm mostly getting mids (not bad but not the best).
posted by krinklyfig at 4:31 PM on September 26, 2013

But I would think the illegal pot price in the same market would face market pressure to be enough lower than the legal price for customers to have an incentive to buy the illegal option

This makes sense. One would expect, after everything stabilizes, to have two prices for the exact same product: one is the legal, walk-in-the-front-of-the-shop price, i.e. what a tourist is going to pay, and is heavily taxed. But because the taxes are apparently going to be so high, it's reasonable to expect that there's also going to be another price, perhaps for regulars who are Definitely Not Cops, which is sold off the books out the back door. The price for the latter has to be lower than the former or else, why bother.

You see that with cigarettes today, but only pretty occasionally with booze. The difference between the two seems to be that taxes on cigarettes are higher, proportionally, than liquor. It'd be interesting to look at tax rates by state, vs cigarette-smuggling data, and see if you could figure out what the price is that suddenly makes tax avoidance seem worthwhile?

There's an obvious temptation to crank up the tax on cannabis, both as a revenue stream and as a sort of "sin tax" by people opposed to it in general, but at some point it's going to become counterproductive in terms of eliminating the black market.
posted by Kadin2048 at 4:31 PM on September 26, 2013

Washington State: Average Marijuana Smoker Tokes 123 Joints a Year

That's a joint every 3 days. As Tommy Chong would say, "We roll big joints."
posted by Ardiril at 4:55 PM on September 26, 2013

Can anyone here give us non smokers the conversion table for joints/8th conversions? On average or on fatty/blunt will be accepted.
posted by cmfletcher at 5:15 PM on September 26, 2013 [1 favorite]

Because of all the necessary restrictions in place to placate the requirement that everything be strictly controlled, "legal" marijuana in Colorado and Washington is going to stay expensive.

Citizens in Colorado, however, are supposedly permitted to grow six plants, themselves, at a cost approaching free. Grow shops will profit.

I predict that most Coloradans will simply grow their own, or smoke their friend's surplus, rather than pay top-dollar, plus tax, for the stuff in the stores, which will mostly be consumed by out-of-state tourists.

The shops that will do best in this environment, will be located close to the state lines and in the big tourist towns, and will have their supply vertically integrated...no buying product, from outside growers, in order to keep costs as low, and profit margins high.
posted by littlejohnnyjewel at 5:18 PM on September 26, 2013 [1 favorite]

I think people will pay. The don't have to worry about growing or cops or shady dealers or future deals or blackmail or anything else. $50 is pretty cheap for peace of mind.
posted by Lord Chancellor at 5:26 PM on September 26, 2013

Plus, their taxes will go to a good cause. That's not a bad thing to pay taxes? Something about buying civilization with hash oil or something.
posted by Lord Chancellor at 5:33 PM on September 26, 2013 [2 favorites]

"But I would think the illegal pot price in the same market would face market pressure to be enough lower than the legal price for customers to have an incentive to buy the illegal option"

Knowing some people around the edges of this, yes, black market is cheaper than dispensary now, but there's a better profit to it.
posted by klangklangston at 5:36 PM on September 26, 2013 [1 favorite]

Can anyone here give us non smokers the conversion table for joints/8th conversions? On average or on fatty/blunt will be accepted.

I'd say a typical, average-sized joint holds 0.5 grams. That works out to about 7 joints from an eighth (28.3 g/oz. * 1/8 oz./eighth * 1 joint/0.5 g = 7 joints/eighth). YMMV.
posted by JimInLoganSquare at 5:37 PM on September 26, 2013 [1 favorite]

The August 2013 High Times market index.

The prices in the table seem largely to line up with what people in this thread are saying... and then of course the comments are chock full of people going "HA WHAT SUCKERS I pay $25 an ounce for Purple Chocolate Fucksplosion where are you GETTING these prices"
posted by showbiz_liz at 5:59 PM on September 26, 2013 [3 favorites]

In about 1977, one of my high school friends told me about a business opportunity he was in the process of taking advantage of. He and a couple older girls he knew, girls in their early 20s, were going to buy a pound of marijuana for $90 and break it into ounces for the retail market. The lids would sell for $10, so they were going to almost double their money. They would save enough money for the next pound and some more sandwich baggies, make a little profit, and have all the pot they needed for their own personal use. He moved to FL not long after, and we didn't keep in touch. I wonder what he's up to now? I've looked for him on Facebook, but I haven't been able to find him.
posted by Daddy-O at 6:03 PM on September 26, 2013

Look closer at that index, showbiz_liz, particularly Washington, Colorado, Oregon and Arizona as opposed to New York and such.
posted by Ardiril at 6:09 PM on September 26, 2013

Also note that the prices in WeedMaps are actual retail prices at that particular location.
posted by Ardiril at 6:12 PM on September 26, 2013

Look closer at that index, showbiz_liz, particularly Washington, Colorado, Oregon and Arizona as opposed to New York and such.

No, I know- people in here from NY vs Vancouver and Washington have been reporting different prices, but if you check the comments it's universal scoffing. "I'd never pay over $200 for top-shelf" when the average for their state is $300, etc
posted by showbiz_liz at 6:15 PM on September 26, 2013

I see.
posted by Ardiril at 6:23 PM on September 26, 2013

I'm really surprised no-one has gone the liquor control board option and decided to sell directly to the people and keep the profits for the goverment. Something like Ontario's LCBO. My Dad wrote out some details on the LCBO as part of his blog on going back to collage to become a brewmaster for those of you unfamiliar with it.
posted by Canageek at 6:36 PM on September 26, 2013

I'm really surprised no-one has gone the liquor control board option and decided to sell directly to the people and keep the profits for the goverment.

The fact that selling marijuana remains a federal crime is likely a key reason why this is not happening.
posted by JimInLoganSquare at 6:40 PM on September 26, 2013 [2 favorites]

"I'm really surprised no-one has gone the liquor control board option and decided to sell directly to the people and keep the profits for the goverment."

I would rather keep it black market.
posted by Ardiril at 6:50 PM on September 26, 2013

This article made me think about another question I had back in 2006 or so when legalization really hit the popular consciousness (or perhaps that was just when I was finishing college, so that's how it seemed... regardless).

Isn't there an externality in legalization where you suddenly have black market unemployment? I'd imagine that there are dealers who only do weed, but do so in a way that provides a great deal of their livelihood, or there are large cartels for whom weed is a central aspect of their portfolio.

Government legalization introduces a cartel that they essentially can't fight or compete very well with. What do they do now that the government has put them out of business or at least greatly reduced the available market? Does competition for the remaining share of the drug trade become more violent? Do previously low-key dealers try to move to riskier narcotics trades?

I'm not saying this a reason to not decriminalize, but I am saying that it's something I haven't seen discussed often in the conversation.
posted by codacorolla at 7:16 PM on September 26, 2013

Ardiril: Actually buying from the goverment liquor stores in Canada is a surprisingly pleasant experience. The stores are quite nice and friendly these days, and have a great selection and the staff are crazily helpful when you need advice (Say, on buying wine for a boss when you know it comes in two types: red and white, and nothing else) and don't try and upsell you, doubly so if you tell them your budget. It costs a bit more in Ontario then other provinces, but they, rather surprisingly, aren't crazy on a lot of things; Samual Adam's Utopias goes for $110/bottle at the LCBO, which sounds crazy for a bottle of beer, until you realize it goes for well over $200 in the USA.

It isn't a perfect system: They certainly enjoy having a monopoly over smaller brewers, which you can see in the above posts, and don't have the selection some of the big stores in the US have, but hey, it funds my free health care and I can still get 2L of cider for $8.
posted by Canageek at 7:17 PM on September 26, 2013 [1 favorite]

cmfletcher: "Can anyone here give us non smokers the conversion table for joints/8th conversions? On average or on fatty/blunt will be accepted."

I almost never smoke joints anymore, but I usually get 2-3 joints per gram. Before switching to a vaporizer, an ounce of something decent would last maybe a month, which I usually smoked through a small pipe. With a vaporizer an ounce lasts about two months (also, using temperature controls I can more easily control the THC levels relative to other cannabinoids like CBD and CBN, meaning the type of effect can be controlled regardless of the specific strain of cannabis). I am a daily user, mostly for anxiety and insomnia related to PTSD and ADHD, and am fully functional at those levels.
posted by krinklyfig at 7:21 PM on September 26, 2013

codacorolla: "Government legalization introduces a cartel that they essentially can't fight or compete very well with. What do they do now that the government has put them out of business or at least greatly reduced the available market? Does competition for the remaining share of the drug trade become more violent? Do previously low-key dealers try to move to riskier narcotics trades?"

I don't have hard numbers, but from what I can see there are more people employed by the marijuana industry in places where it is decriminalized and/or where medical use is widespread, like California, than was the case when it was totally black market, which includes numerous cottage industries that have popped up in support of growers and users. I see growers selling to dispensaries who were previously underground. High grade marijuana does have Mexican cartel connections, especially in CA, but that is changing as the market moves above ground. A lot of people have legitimized their trade, as far as I can tell, and the need for a criminal cartel is not a necessity, although the shift to a truly legitimate market is taking some time to come about with marijuana. As more states legalize it, the cartel might still be there, but they will have to deal with market regulations and labor laws, like the rest of the businesses who will compete with them, and at that point the incentive to corner the market and rule through violence is no longer possible. Criminal gangs are still involved in liquor distribution, but they don't have the advantage they once did when they operated in a black market, and for them it's more of a way to operate a legit business while hiding truly criminal activity, a front, for money laundering, etc. (which can also be done with a largely cash based business, like a restaurant or car wash).
posted by krinklyfig at 7:44 PM on September 26, 2013 [2 favorites]

I feel pretty sure that Minnesota is going to start heading toward decrim/medical/legalization in the next few years and when I'm around town I always look at various vacant storefronts and think "possible dispensary?". Kind of can't wait.
posted by padraigin at 7:57 PM on September 26, 2013 [1 favorite]

Checking back in: I saw a bunch of signs around Edgewater for eighths at around $28-$35, depending.
posted by boo_radley at 7:57 PM on September 26, 2013

A few companies are going to make billions in a very short amount of time: the window between marijuana being commercially legal in a critical mass of states, and the federal government imposing tobacco style bans on marketing and advertising. Between a few mass market "macro-brews" (think Bud Light or Miller) and a few "mega-microbrews" (Sam Adams, say), the brand equity that the winners in this land grab is unimaginable, and may be very, very hard to displace.
posted by MattD at 8:50 PM on September 26, 2013

Let me take a moment to thank all the thoughtful contributors to this thread. As someone who does not smoke, buy, grow or sell pot, the things I've learned about the economics of weed in the comments here have been super informative - much more than the original article! Thanks stoner mefites!
posted by latkes at 9:09 PM on September 26, 2013 [6 favorites]

Am I the only one not surprised at the prices? In Arizona, the dispensary prices are easily a lot higher than street prices. Then again, Az likes to screw stuff up... This may be how they'll do it.
posted by _paegan_ at 9:56 PM on September 26, 2013

The going rate of what? Bath tub gin is a notoriously crappy product and should not be priced the same as Hendrick's, no matter how easy of difficult it was to procure either.

This may or may not have been addressed already... but the dankest, one hitter quitter, pangalactic gargle blaster turbo chronic GTX-R stuff that gets you absolutely Teletubbies baked in one hit is $35 an 1/8th at a dispensary in seattle. And that price is from BEFORE legalization here, back when it was medical only. It remains to be seen what the prices are at the "Chronic-Я us" stores when they open in a few weeks, but i doubt it'll go up that much from there.

The $50 wont last long, especially when there's a mid shelf but still cheap "nat shermans" of joints available from some nationwide brand that's pretty good, but not amazing. A makers mark of ganja if you will.
posted by emptythought at 10:07 PM on September 26, 2013 [2 favorites]

I mean, even now, liquor distributors are often mobbed the fuck up and a reliable cash cow.

Prohibition- and post-Prohibition-era liquor sales are how the Bronfman family built its empire.
posted by Blazecock Pileon at 11:10 PM on September 26, 2013

>I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.

>>I think it's a combination of taxes and higher quality?

Obviously, taxes can't be that high, when they are currently trying to pass a combined 25% tax in Colorado, only to have opponents giving pot away for free, as a form of protest.

So... who wants to bet that the people giving it away for free are the same people who were saying "legalize and tax" just a few years ago?!
posted by markkraft at 2:34 AM on September 27, 2013

$50 an eighth?

You're kidding me, right?

Do not come to Florida, if you believe that is market value. Don't ask about Bahamian Gold, or Jamaican Green, or Ocho Rios Red, in any town or city down here in a hated Red State. We got nothin'. We grow nothin'. We know nothin'. No boats land, no birds fly, and no people in the Conch Nation roll that way.

Heh. Heh.
posted by paulsc at 3:36 AM on September 27, 2013

The full spectrum of strains is available at many L.A. dispensaries. The difference is usually immediately obvious to anyone interested.

When I was in college up in Oregon in the late 90's/early 00's, average 1/8ths were $40-$45. Friend prices were around $35. There were usually price breaks at the quarter and half ounce, and bigger break for an ounce. Even then, some of the more elaborately cultivated indoor hydroponic stuff was going for $50 at an eighth. So the story is right about that.

However, these days for the strains at $50-$60 their quality is reliably better and the potency is higher than before quasi-legalization. Some of what would have been $45 then is now around $35-40...so the middling product has been pushed down, before accounting for inflation and the reduction of the risk premium. Dispensaries don't carry the true schwag level weed of previous eras, even at the $25 level.

I think the whole 6-month production cycle angle of the article is misled. In an industrial grow its common to have a rotating system, with mother plants, cloning rooms, and staggered crop cycles going through vegetative, flowering and curing stages.

Outdoor grows are still seasonal, obviously, but outdoor grows are usually not the source of the 'top shelf' product. With some exceptions.
posted by snuffleupagus at 7:30 AM on September 27, 2013 [2 favorites]

Don't ask about Bahamian Gold, or Jamaican Green, or Ocho Rios Red, in any town or city down here in a hated Red State. We got nothin'. We grow nothin'. We know nothin'.

Most states that have legalization now had well established black markets with their own famous strains in previous eras. But the variety, quality and consistency of some of the more modern strains are different than those traditional regionally named varieties. Better growing is easier when it's (quasi) legal. You'll see it happen in Florida too, if legalization even happens there.

And that people smoke weed in the South doesn't seem like news to me. In fact, it seems like it gets pop culture nods all the time.
posted by snuffleupagus at 7:50 AM on September 27, 2013

The reasons I am personally happy to pay $35-$50 an eighth are: A nice list of strains, with THC and CBD percentages; knowledgeable staffers who can advise me on what will work best for the effects I am looking for; a clean well-lighted place to shop; no more having to call A Guy, who maybe has to call Another Guy; if I get pulled over by the cops on my way home from the dispensary and the cop goes "Hey what's in the bag?" I can show them what's in the bag and also my medical card and then the cop goes "Okay, well, get the taillight fixed as soon as possible. Have a nice day."

Having done the Call A Guy thing for years before getting my card, with the unreliability of both supply and quality - and shit, I don't know where all y'all are getting this supercheap weed, but I never found it in the various places I've lived - hell yes, I will pay a little more for convenience, reliability, quality control, and aesthetics of the shopping experience. I am not 20 anymore and do not find going to the corner boys fun or exciting.
posted by rtha at 8:04 AM on September 27, 2013 [5 favorites]

A few companies are going to make billions in a very short amount of time

I agree with this 100%. The interesting problem to me is the possibility of a little nobody investor making a few thousand. When I google on marijuana investment the first hit is a Wall Street Journal piece from November 2012, which for my purposes and at first glance appears completely useless.

Does anybody here have some better ideas?
posted by bukvich at 8:19 AM on September 27, 2013

Here's another recent piece on marijuana-based product investment.
posted by latkes at 8:38 AM on September 27, 2013 [1 favorite]

>I am very surprised that even when growers and sellers aren't facing as much legal risk, they can sell an eighth for $50 in Colorado. That is more expensive than here, where it's still technically illegal.

On the one hand, illegality drives prices up because the seller wants a higher profit to compensate for the risk. On the other hand, legality drives prices up because legitimate sellers are offering a low-risk transaction compared to the black market. Evidently right now a more-or-less safe purchase is worth more to a buyer than compensation for the risk of jail time is worth to a seller. Once the market expands and more states legalize marijuana, I suspect that legal prices will fall further.

This is--unsurprisingly--a great answer on jedicus's part, but I think it might be incomplete.

Simply put, "legitimate" businsesses have expenses--beyond taxes--that black market ops do not, i.e., all the costs that go into running a brick-and-mortar business. Commercial real estate. Labor.* Insurance.** Accountants and lawyers.*** Utilities.**** Advertising, for crying out loud.

I can easily see those additional costs, together with taxes, pushing the retail price pretty close to what it was on the black market, at least until volume production can lower the input costs, which I take to be basically the same for both sides of the market. So while the black market is pricing in legal risk, the legitimate market is pricing in costs of being legitimate.

*Unemployment insurance, payroll taxes, the whole nine yards. Black market growers and sellers don't pay hourly wages to retail sales clerks.

**I have no earthly idea how P&C companies are underwriting and/or pricing the products liability exposure. And will dram shop liability be extended to pot now?

***True, black market growers also need lawyers, but mostly when they get arrested. They're not filing articles of incorporation, signing contracts, or interfacing with state regulatory agencies. And someone operating on the black market doesn't seem quite as likely to use an accountant for things like tax preparation and payroll.

****More expensive for businesses than individuals. By quite a bit in some cases. If you've ever signed up for business telecom services and thought they would be priced like your home line or cell phone, you were undoubtedly shocked by the price difference. It's ghastly.
posted by valkyryn at 9:27 AM on September 27, 2013 [2 favorites]

"people smoke weed in the South" - Vidalia, Georgia has long been known for more than its onions.
posted by Ardiril at 10:08 AM on September 27, 2013

Does anybody here have some better ideas?

Not for individual, retail investors. But it seems to me the missing piece -- at least that I've seen -- is a clearinghouse, wholesale level to intermediate between growers and retailers. Provided that the regulations allow for something like that, and don't require vertical integration between retail operations and growers (as the medical regulations did), someone should set up something similar to the old tobacco auctions in the South.

In addition to providing a competitive market for growers and retailers, ensuring that there's a uniform market-clearing price, it also allows for easy delivery on a futures market. (I.e., you can sell futures for delivery at a particular auction, and then you could do cash settlement of the futures contract based on the actual sale price of the product at auction to an approved retail buyer.) That seems like it'd be a win for just about everyone; it'd make the market much more transparent and stabilize prices, allow growers to hedge against price decreases and retailers against increases, while making it easier for growers and retailers to enter the market by avoiding the "shotgun wedding" approach of the medical market described in the article.

The logistics of setting that up, given that it's still technically a Federal Schedule I substance, are a little challenging though.
posted by Kadin2048 at 10:50 AM on September 27, 2013 [1 favorite]

Feed subsidiary businesses: rolling paper manufacture, hemp paper products, all-night donut shops.

Get this economy up and singing.
posted by mule98J at 2:54 PM on September 27, 2013

mule98J: "Get this economy up and singing."

Oh, here's a little inside baseball for you: I work with a bank that makes big ag loans. Not like Chase or JP Morgan, but dedicated agricultural banks. Like, if you have 10,000 head of cattle and you need feed for the next year, or if you want to secure a loan to grow produce, have the capital to get it harvested and then distribute it globally but one to do all that through one credit line with one rep? That's their business. You're gonna need to restructure your payments for 10 years because the harvest was forefucked? Let's talk, we can all come out ahead. Super interesting business and totally different than commercial banking.

They have literally the hardest of hard-ons for this market to emerge. You want to grow hemp for rolling papers? Need extraction equipment for your oils? Storage tanks? Grow lights? Steel structures? Water storage tanks and solar panels? They'd love to make that deal. Oh, your crop sells at prices comparable to saffron but at a fraction of the labor and investment? let me get my pen!

But right now, they can't. Nobody in the business can get loans. As a bank, it's too risky, because the Federal government could prosecute them, prosecute you, asset forfeiture, maybe they do a hard-ass audit after one of these, who knows? Sure, Obama's being cool about it, but it's still illegal, and illegal's illegal, and maybe the next goon won't be cool about it. As a bank, you don't want to pick up the phone and hear, "Hello, this is Rod from Office of Foreign Assets Control, we'd like to discuss an account with you." Way too much risk to go into knowingly.

The last guy I talked to had to buy a $400,000 storefront all in cash because he can't get a business banking account. He can't take credit cards, can't take checks. All cash. All the time. That's possibly why the security business got a little mention in the articles -- people know you sit on fat wads of cash, maybe they get ideas.

So yeah, let's get things spun up, but it's gonna take a few changes waaaay at the top for that to really happen. The banking system has to know that it's OK to deal with this economy before it'll take off for real.
posted by boo_radley at 10:17 AM on September 28, 2013 [11 favorites]

From talking to dispensary managers and clerks, cradle-to-grave inventory management and accountability are the biggest administrative issues. The paper trails are long.
posted by Ardiril at 4:39 PM on September 28, 2013 [2 favorites]

So the money is really in finding out how to crowdfund weed-related side-businesss. Hmm.
posted by Potomac Avenue at 8:13 PM on September 29, 2013

Commercial real estate in border towns might be a thing, I dunno from investing but I can't imagine pot tourism won't blow up like crazy. A just-across-the-border hotel with lots of food and entertainment options where people can just blow through an entire weekend in a haze would be kiiiinda fantastic.
posted by jason_steakums at 8:42 PM on September 29, 2013 [1 favorite]

Ever since the WA Liquor Control Board released their proposed rules I've been seriously considering applying for a grower & processor license when they open it up in November. Though there is a bunch of work/research to do between now and then.
posted by the_artificer at 9:37 PM on September 29, 2013

Another good investment (probably, maybe): if you've got machining, woodworking and electronics skills or know someone who does, custom vaporizers. The electronic cigarette boom has businesses going like gangbusters making custom mods, it's pretty much the same degree of difficulty to make an herbal vaporizer as it is to make an e-juice atomizer, and the skill level and startup costs are fairly low. Making a Magic Flight Launch Box clone is cake. Lots of small scale at-home hobbyists turning a profit in the ecig world because the profit margin on, say, a custom woodburned design on a wood box mod or a custom e-pipe is insane, can't see why it wouldn't be the same with vaporizers.
posted by jason_steakums at 9:54 PM on September 29, 2013

The last guy I talked to had to buy a $400,000 storefront all in cash because he can't get a business banking account. He can't take credit cards, can't take checks. All cash. All the time. That's possibly why the security business got a little mention in the articles -- people know you sit on fat wads of cash, maybe they get ideas.

Which sorta hints at the seedy underbelly, uncomfortable elephant in the room sort of thing going on here. Where does all the startup money for those sorts of places really come from? This isn't an Elon Musk venture.

I briefly worked at what seemed to be one of the only straight shooting dispensaries in town doing IT stuff. They had really low prices, huge discounts for people on fixed income/ssi/etc, and top shelf stuff.

There were still some really sketchy aspects to it. They had to move in to a new space like 4 times, they had a gigantic safe bolted right into the concrete slab that looked like it would have taken ages to cut into even with a plasma torch(if you even could) that probably weighed thousands of pounds, weird security protocols, and yea... the cash thing.

Every other place i ever heard of/about/etc seemed 1000x sketchier and left you with a lot of questions about how the hell they started up and such.

My current boss is sitting on the jury right now for a case with another dispensary that was cooking the books and not properly declaring income on taxes. They were bringing in freaking millions a year in a little storefront.

What gets me, and what i think the state governments didn't really realize when they created all the rules and waved this on was that if you make something "legal" that's still federally illegal, and it's a business, like the kind where not only do you need a bunch of startup cash but tons of cash will be freely blowing through like a firehose... you're going to attract a lot of criminals who are now happy to be able to operate in the grey areas instead of completely in the dark.

Because really, where the fuck does all the money come from to rent these fancy storefronts, buy all this equipment, and buy all the product to get started? They aren't getting bank loans.

Not to mention that running all cash like that it seems like it could be a fairly decent money laundering operation for turning totally black market dirty money into plausible deniability but not completely 100% squeaky clean money without taking a huge loss somewhere in the chain.

There's no way this is going to get properly clean without federal legalization.
posted by emptythought at 11:50 PM on September 29, 2013

Because really, where the fuck does all the money come from to rent these fancy storefronts, buy all this equipment, and buy all the product to get started? They aren't getting bank loans.

Venture capital. Banks might not want to risk getting involved in this, but investors are willing to risk it. ArcView and Emerald Ocean are the ones that keep cropping up in stories I find, but I'm sure there are others.
posted by showbiz_liz at 9:32 AM on September 30, 2013 [2 favorites]

Oh geez, this image from Emerald Ocean's website cracks me up.
posted by showbiz_liz at 9:33 AM on September 30, 2013 [2 favorites]

ArcView will take your investment if you are an SEC registered investor which means you need a million dollar net worth so it appears this industry is currently out of bounds for the run-of-the-mill investor.
posted by bukvich at 9:59 AM on October 2, 2013 [1 favorite]

I imagine some shady stuff does go on but I do have a successful tech friend who fronted the money for one. He began preparing to invest once the law passed in my state for medicinal use, scouting different groups that were looking for funding. He took his time, did a lot of research, used a lawyer, and was very cautious.

He's raking it in now.
posted by _paegan_ at 3:04 AM on October 3, 2013 [1 favorite]