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Comment by russell | Hacker News Reader

The current price is high because the supply is constrained. If CA Proposition 19 passes, the price is probably going to drop by an order of magnitude. The dreams of the tax revenue rescuing the state are going to vanish. (No citation because I pulled this out of my nether regions.)

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Pricing is probably disrupted more by the inefficiency of the market; like most people, if I wanted to buy an eighth tomorrow, how would I know whether $50, $75, or $250 was a good price?

Which is to say that there are least two factors (scarcity and lack of transparency) artificially inflating pricing.

On the other hand, in a truly free market for tobacco, a pack of American Spirits might only cost a buck or two; nicotine is our one and only drug-war success, and I think the state has demonstrated that it can extract profits from vice goods if it wants to.

You'd still pay $75 (is that the right price?) for an 1/8 if that was the only legal way to do it, even if you could get it illegally for $30. At least, I would.

(pedantic) For a physical object, scarcity isn't inherently an artificially inflating factor. Enforced scarcity is a different matter. (/pedantic)

This doesn't make sense. Whether scarcity is enforced or natural, it's the demand & supply that drives the price inflation. The reason for scarcity (lack of supply) does not come into play during a static economic analysis.

It's only in a dynamic analysis that the "enforced" part comes into play, usually because it is easier to get around artificial scarcity than discover new resources (natural scarcity).

Scarcity is a natural property of supply, which is a natural factor of price. As a property without inherent artificial component, scarcity cannot artificially affect price without said scarcity itself being given an artificial component such as being purposefully controlled to that end.

I'd pay the premium to know that I'm not getting something laced with rat poison or PCP.

There's no incentive to lace weed with poison. It's an old wives' tale.

Funny enough, back in college my roommates and I once received a pack of weed that smelled like Pine. It was hard to burn, so in his paranoia, one friend suggested it was spiked with Pine Sol. He rationed that it was sprayed in order to weigh down the weed. He refused to continue smoking it and called us naive for not believing someone would spray it to weigh it down.

After some arguing and googling "weed smells like pine", he came down from his paranoia perch and relaxed.

There is an incentive to lace it with anything that will increase weight and not be obvious to the user.

There was a news report in the UK a while ago about people adding glass (or something like), IIRC it was well substantiated.

I believe it, but it can't be common, since pot in end-user quantities is described by weight but actually bought by volume. An eighth looks like an eighth looks like an eighth - you eyeball it, say 'yeah, that looks like an eighth to me', and fork over your cash.

Say the dealer laces his pot so a twelfth of an ounce actually weighs an eighth. Unless the additive somehow plumped up the pot's volume, the buyers would look at it and say 'you're ripping me off - that's a really light eighth.'

Sure, the dealer could then bust out some scales, but that would be weird. Not to mention dealers love repeat customers and glass in the mix would put an end to that quick.

I'm not sure that nicotine is a drug war success. There's a thriving and very serious black market in cigarettes, at least across the Canadian/American border. It supplies a lot of funding to groups like the Hell's Angels.

http://www.canadianbusiness.com/after_hours/opinions/article...

Interesting opinion. In the NatGeo documentary I saw, the semi-legalization of Marijuana has brought an influx of supply, making it harder for (legal) growers to find places to sell to.

If its legalized, it can still generate vasts sums of tax revenue. Look at how much tax money tobacco and alcohol bring in.

I didnt see the show, but I think I am making the point. There will be an influx of legal , non-cartel, growers that will drive down the price. Unlike tobacco and alcohol, the taxation opportunities are limited because you can grow your own. Even so we are probably in agreement, that there is a lot of tax money involved, just not enough to erase past financial sins.

It really depends on the extent to which it is "legalized".

The issue you mentioned regarding taxation applies to both tobacco and alcohol as well - you can grow your own tobacco and make your own alcohol. Many people who smoke marijuana may have no interest in growing their own - the same way many tobacco smokers don't grow their own. Although, the point could be made that marijuana is probably a much easier plant to grow.

Furthermore, legalization does not necessarily allow people to grow for the purpose of selling. For example, it is legal to make alcohol for personal consumption but illegal to sell it.

The accessibility and drop in price will also surge demand forward. If you can pick it up like a 6 pack or pack of cigs at any convenience store, then sales and consumption should dramatically increase.

Not so in the case of Holland.

Even if growing and selling were legalized, the cartels are essentially private in-house, in-industry armies. I expect there'd be a flare-up of violence as they attempt to intimidate legal growers into backing off.

Within a few years, though, they'd probably catch on that they can accomplish the same means via more traditional trusts and regulatory capture. They'll have to, before the market price drops through the floor, killing off their revenues.

Not throwing advocacy one way or another, just an observation on the cartels' likely follow-up response.

What you said is common sense, but if you want a citation look at http://www.rand.org/pubs/research_briefs/RB9543/index1.html for the results of a RAND study on this question.

The tax revenue won't vanish if the price goes down. I'm sure the legislature will use a flat tax of a certain amount like they do for gasoline. It doesn't matter if gasoline costs $0.99 or $3.99, California still gets 64.5 cents per gallon.

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