Wednesday, July 7, 2010

Rand Corp. Legal Pot Study Predicts 80 Percent Drop In Price, Cutting Out Cartels

By David Downs
Wed, Jul 7, 2010 at 11:15 AM

The cost of high-grade cannabis could drop to around $70 per ounce from today's rate of around $350 per ounce, if California legalizes over-21 possession and consumption of the plant, a leading think tank disclosed today. “Altered State? Assessing How Marijuana Legalization in California Could Influence Marijuana Consumption and Public Budgets” by the Rand Corporation finds that most of today's pot costs are actually risks to growers, distributors, and sellers who face arrest and jail time. Lifting that risk, along with automation, and economies of scale would cause about an 80 percent drop in the price of sensimilla. The study could not say what would happen to rates of consumption with certainty, but use could double from 7 to 14 percent of the adult population.

“The pretax price will go down, we're very clear about that. Where we're less certain is about what happens with consumption,” says Kilmer. “We would be pretty close to the previous rate in 1978 and 1979 where it was twice as much. That's a nice bright line to think about what it would look like with a large increase.”

Rand also found California could make dramatically more or less than an estimated $1.4 billion per year taxing cannabis at $50 an ounce, depending on taxes collected and not only tourism, but possible exports. Enforcing the state's pot laws costs Californians about about $300 million a year, the study found.

The emergency room costs of increased usage represent a tiny fraction of projected revenue, Rand found. More findings later today.

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