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Comment by brc | Hacker News Reader

I thought it was a great article, it will be a long time before authors can resist Cheech and Chong references, a bit like how motoring writers cannot review an Aston Martin without mentioning James Bond.

What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level.

Applying the 'sell shovels in a gold rush' rule, I think being a medicinal-pot lawyer or consultant is probably the best way to profit from this. Each time the government gets nervous and changes laws, these people will be needed to help shop owners navigate the new laws. The shop owners themselves are facing a price-sensitive consumer, regulations and retail leases. I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks.

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> What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level.

That might depend on the regulatory constraints. From the article: "A batch of regulations known as Amendment 1284, signed by the governor on June 7, is expected to put many dispensaries out of business, eliminating the amateurs and semipros who jumped in because there was nothing to stop them, but greatly strengthening those who have the wherewithal to remain standing."

As in other industries, onerous regulations might help large companies by raising barriers to entry and hindering startups that can't afford to jump through the hoops.

>What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level.

There will be something of a price floor set by virtue of cannabis potency. Already, black market cannabis when consumed efficiently is effective with dosages that cost around $1. Prices will fall, but not by 10-fold because people are willing to pay more to get high than they would for a single cigarette. A pack of cannabis cigarettes at a gas station is always going to cost more than a pack of tobacco cigarettes, because people expect to pay more for a product of sufficient strength.

Like the prices of wine all get driven down to a very low level? I suspect there will be lots of expensive premium varieties.

Most people drink wine because it tastes really nice, most people smoke pot to get stoned. I've listen to my pothead friends discuss pot, and not one of them has ever mentioned its flavour and bouquet. Equally I've never heard wine connoisseurs talk about which wine is better for getting you really drunk. If people drank wine simply to get drunk then no wines would cost more than 2-3$ a bottle.

Maybe you don't have enough friends who smoke pot. Not only will marijuana consumers judge by flavor, they will also judge by harshness, and, probably most importantly, by the style of intoxication the strain creates (for example racing, innovative thoughts vs. warm, bodily comfort).

Oh they discuss harshness and intoxication. However I imagine that those two aspects will be a lot easier to control and manipulate via simple chemical means if marijuana productions ever becomes properly industrialized and placed in the hands of smart and educated engineers. I just don't see a pot smoker paying $20 for a joint that tastes a bit different from $2 joint assuming they both get him equally intoxicated.

No, I don't think taste is the biggest selling point, but just as there is a dizzying array of potential flavors in nature, so too is there a dizzying array of marijuana intoxications. Just because most types of 'drunk' are similar does not mean most types of 'marijuana high' are similar - thus while a wine type might trade on its flavor, a marijuana strain would almost certainly trade on its style of intoxication.

That is, you can make niche highs just as you can make niche wine flavors.

It has admittedly been several years since I smoked pot and things may have changed, but within markets where the sale of marijuana was open and legal (or at least tolerated) I simply don't recall seeing any significant price differentiation. Sure there where countless variations, but they all cost more or less the same, and certainly nowhere near the price differences one sees in wine.

Now perhaps once the major PR and ad companies get behind the concept we'll see luxury pot brands charging premium prices, and perhaps we'll even see pot snobs who look down on anyone paying less then $15 a joint. With the right marketing campaign you can sell basically anything for basically any price, so I suppose the $500 oz. will probably become a reality if pot is fully legalized, and there will no doubt be plenty of suckers lining up to buy it.

In fact, I was probably wrong when I said that legal pot won't see the same prices as high end wines. The reason we haven't seen those sorts of prices is because the semi to illegal nature of it has meant a lack of fully protected brands and trademarks and advertising. Once we have those then there will be real money to be made.

I'm not a pothead and I'll talk about flavor. In California you can buy stuff that taste like blueberry pancakes. I'm not exaggerating, it's pretty funny.

It's a common misconception that wine pricing is all to do with labelling, and nothing to do with actual price inputs. While it is certainly true to some extent, truly great wine comes from truly great vineyards, which are in limited supply due to the exact agricultural/climatic conditions required to grow them. Also, expensive wines such as Champagne which take a long time to make are still very much a hand-made product.

None of these applies to cultivation of pot, even the more exotic varieties. As it can be successfully grown indoors, the conditions for creating it can be created just about anywhere. There is none or very little post-processing involved and the supply chain is astonishingly short.

So I think the comparison to things like wine and coffee are incorrect, as these 'commodities' actually require exact growing conditions and post-processing to get high quality results.

A better comparison would be tomatoes. There is very little price difference between the cheapest tomato and the most expensive, highest quality, organically grown version. I'm not saying that pot is like tomatoes, just that the market conditions are closer to tomatoes than they are to wine, and so the price discrepancies are unlikely to reach the levels between a cheap bottle of no-label wine and a bottle of vintage Dom Perignon.

> I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks.

Hmm, I was thinking the opposite. A fancier more "treat"-like atmosphere with higher prices and more exotic products would help to differentiate.

I guess both probably have a market.

I suspect pot-friendly merchant services is also a profitable niche.

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