The Free Market At Work: Price of Cannabis Drops By 50% In Colorado After Legalization


A Medithrive sales kiosk in San Francisco, where competition is cutting prices. (Photo by David Downs)

A Medithrive sales kiosk in San Francisco, where competition is cutting prices. (Photo by David Downs)

The free market is putting potentially tens of millions of dollars back in the pockets of America’s cannabis consumers this summer, as competition takes huge bites out of the price of pot.

The price for a pound of cannabis has fallen by 50 percent in a year in Colorado, from around $2,400 to $2,600 per pound in October of 2015 to around $1,400 to $1,600 per pound now.

The figures come courtesy of some of the first-ever price tracking of the pot market, which is no longer obscured by prohibition. Tradiv — a wholesale online marketplace for cannabis — released the statistics Monday.

The price drops comport with what analysts expect to happen in the legal cannabis trade. Under full cannabis prohibition, buyers paid a “risk premium” for the botanical analgesic, based on the fact that about 700,000 Americans are arrested each year for pot. Law enforcement spends an estimated tens of billions of dollars annually arresting and imprisoning pot producers.

But as legalization spreads and risk drops, so does the risk premium for pot. Drug policy research experts at RAND have estimated that up to 90 percent of the price of black market pot is this risk premium. That means a gram of marijuana, which once cost as much as $20, could fall to $2 under full national legalization.

Prices have rapidly declined in Colorado, Washington, and Oregon, according to price listing sites like

While Californians are still paying up to $20 per gram of pot, consumers in legalization states are paying half that or less. Many illegal cannabis farmers are concerned further legalization will bring more savings to consumers, and about half are opposed to drug policy reforms.

Those pot farmers have become strange allies of their longtime foes — the law enforcement community — which is also voicing concerns about the availability of cheaper pot.

Cannabis is a fast-growing, hearty weed that can grow from a single seed to an eight-foot-tall outdoor bush in just 120 days, if given sun and nutrient rich soil. On Monday, drug policy expert Beau Kilmer noted that the United States could grow enough marijuana to meet America’s annual needs in just a few counties in Iowa.

Overproduction of cannabis and thinning margins have already crashed the price of pot once in Washington. It’s leading to continued industry consolidation in Colorado, as more efficient producers squeeze out costlier grows.

Americans spend between $30 billion and $60 billion on marijuana annually, according to White House estimates.

Source: Marijuana is getting much cheaper under legalization

David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.

Get Access