Legalization Could Cut Marijuana Prices 80 Percent, RAND Estimates

A study on the expected impact of marijuana legalization in California predicts that the price of the drug would drop steeply, the Sacramento Bee reported July 8.

The RAND Corp. study estimated that marijuana prices could fall as much as 80 percent if the drug is legalized as proposed in a pending ballot initiative that Californians will vote on this fall. That translates into as little as $1.50 per joint — a price point that could spark opposition to the measure, according to the Christian Science Monitor.

The California Board of Equalization has projected $1.4 billion in annual tax revenues from legalization, but study author Jonathan Caulkins of Carnegie Mellon University said that figure could be lower if a black market in cheaper, untaxed marijuana develops. On the other hand, tax revenues would be higher if California becomes a drug tourism market or traffickers buy the drug in California for resale in other states.

RAND also said that the cost of enforcing current marijuana laws is lower than some proponents of Proposition 19 have claimed. The report did not take a position pro or con on legalization but did note that the ballot initiative would put California in direct conflict with federal drug laws.

Correction, July 16, 2010
The original news summary did not make it clear that RAND’s 80 percent figure was the maximum of a potential range in price reduction. The headline and summary have been updated accordingly, i.e., “could fall as much as 80 percent.”