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Marijuana is getting cheaper. For some states, that’s a problem.

News Posted Nov 14 2018

Since the initial legalization of state marijuana programs the price of cannabis has continued to fall cheaper and cheaper. While customers have reaped the benefits of cheaper products many states are experiencing pitfalls in tax revenue due to taxes being added by percentage of price. Many states predicted the price of cannabis to drop, but not nearly as much as it has. Some states with cheaper cannabis taxes eventually may not even be able to support their state cannabis programs with the tax revenue meant for administrative fees. Some are suggesting a fix by changing to a system where tax is added on by weight rather than price percentage like how California does. 

States may have failed to anticipate this problem because of misleading predictions about the effects of legalization. Pro-legalization economist Jeffrey Miron projected in 2010 that marijuana prices would only fall 50 percent when prohibition was repealed, leaving the drug at a price that would yield high tax revenue. That was clearly a rosy scenario.

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