Economics of Cannabis Legalization (1994) Detailed Analysis of the Benefits of Ending Cannabis Prohibition
by Dale Gieringer, Ph.D.
Coordinator, California NORML
The Cheapest Intoxicant
In an untaxed free market, cannabis ought to be as cheap as other leaf crops. Bulk marijuana might reasonably retail at the price of other medicinal herbs, around $.75 - $1.50 an ounce. Premium cured and manicured sinsemilla buds might be compared to fine teas, which range up to $2 per ounce, or to pipe tobacco, which retails for $1.25 - $2.00. This appears to have been the historical price range for cannabis in the days when it was still legal: advertisements from medical catalogs imply that it sold for around $2.50 - $5 per pound in 1929-30.1 Adjusting for inflation, this works out to $1.20 - $2.40 per ounce, a breathtaking 100- to 300-fold reduction from today's illicit prices, which range from $100 - $200 per ounce for low-grade Mexican to $400 - $600 per ounce for high-grade sinsemilla.
It is useful to translate these prices to a per-joint basis, where one joint is defined to represent the standard dosage of marijuana. The number of joints in an ounce depends on the potency of the product involved, where potency is measured in terms of the concentration of tetrahydrocannabinol (THC), the chief psychoactive ingredient in marijuana. THC potencies typically range from 2 - 3% for low-grade leaf to 10 - 15% or more for premium sinsemilla buds. We will define a standard dose of THC to be that contained in the government's own marijuana joints, which NIDA supplies to researchers and selected human subjects. These consist of low-quality 2.5% - 3% potency leaf rolled into cigarette-sized joints of 0.9 grams, yielding a 25 milligram dose of THC. The same dose can be had in a slender one-third or one-quarter gram joint of 10 - 12% sinsemilla. A typical joint has been estimated to weigh about 0.4 grams.2 Taking this as a standard, we will define a "standard joint" to be 0.4 grams of average-quality 6% buds. Thus an ounce of "standard pot" equals 60 joints, an ounce of 12% sinsemilla 120, and an ounce of government pot only 30 joints. Due to the fact that the price of marijuana tends to be proportional to potency, the price of a one-quarter gram joint of $600-per-ounce sinsemilla is about the same as a one-gram joint of $150-per-ounce ditchweed, that is around $6.
We have seen that in the absence of taxation, the price of legal marijuana would be cut by a factor of 100 or more. At this rate, a joint costing $6 today would cost less than $.06 in a free legal market. It therefore appears that marijuana would be a very cheap bargain compared to other intoxicants, including alcohol.
The free-market price of joints can also be calculated by comparison to tobacco cigarettes, which would probably cost the same to manufacture. Cigarettes now sell at an average of $1.83 per pack, or $.09 per cigarette, one-quarter of which represents federal and state taxes.3 There is no reason to think that joints could not be sold for the same price under legalization.
At a nickel per joint, marijuana would be a uniquely economical intoxicant. For only one-half dollar per day, a pothead could nurse a whopping ten-joint per day habit. It may be doubted whether public opinion would tolerate so low a price for marijuana. On one hand, it would invite extensive abuse. Parents would no doubt object against making a serious marijuana habit so affordable for their young. Moreover, cheap pot would also pose a serious challenge to the alcohol industry, a powerful political interest, whose products are over ten times as expensive. In order to make legalization politically palatable, it would almost certainly be necessary to raise the price through taxation or regulation.