With California likely to join Colorado and Washington as legal states for recreational marijuana, speculation has already started on what this will mean to wholesale and retail prices. Even with the addition of hefty taxes, the net effect of competition is likely drive prices downward. To support this conclusion, one only has to look at what has happened to pricing after legalization in Colorado.
According to Frank Falconer, of the Denver Consulting Group, who works with wholesale retailers and other companies in Colorado, International Business Times that “the recreational market first opened in January last year, pounds were being sold for up to $4,000. Since then, wholesale and retail prices have fallen by more than half.” And he expects prices to keep going down.
Indeed. High Time’s pot pricing index, the October 2015 Trans-High Market Quotations (THMQ), shows that the two lowest priced states for marijuana are Colorado and Washington state.
Global trading house Convergex also looked at the effect that legalization in Colorado had on prices and observed a 40% drop in marijuana prices as the market’s influx of new supply tried to find a new equilibrium price.