How expensive will legal marijuana be in Massachusetts when retail stores open?
It’s a simple question for a complicated market.
For states that have legalized recreational marijuana, the new authorized markets have carried the promise of increasingly cheap weed. In Colorado, wholesale cannabis prices have dropped roughly 35 percent since their 2015 peak. In Oregon, some pot shops reportedly sell grams of weed for less than a glass of craft beer.
Massachusetts residents will likely have to wait awhile before they see anything similar.
State regulators say the initial market will be “sparse” when the first licensed retail pot shops open in July, due to both the cautious rollout process and widespread municipal bans on marijuana businesses. As a result, experts expect initial prices to be expensive — and stay that way for a while.
“I would expect that we would see really high prices to begin with,” Kris Krane, the co-founder of 4Front, a cannabis industry consultancy firm, told Boston.com. “There’s going to be a shortage.”
For an eighth of an ounce of weed, Krane said before-tax prices could start out around $60 to $70 — compared to an average of around $50 on the black market — and remain at that level for up to six months to a year. Of course, sales will also be subject to a combined tax by the state and local governments of up to 20 percent.
“It’s really simple supply and demand,” Krane said. “There’s not going to be enough supply.”
A similar dynamic has played out to some degree in every state that has gone through the process of implementing a legal retail or medical marijuana market. Because cannabis is (controversially) still an illegal Schedule 1 drug at the federal level, companies and individuals are prohibited from shipping it across state lines. That makes it difficult for each new state market — working in isolation from each other — to grow enough product to meet demand in its early days. And weeks. And months.
Nine states and Washington, D.C. have voted to legalize and regulate recreational marijuana. And the states that have already implemented their markets have experienced initial price surges, followed by broad declines in price. In Colorado, an ounce of marijuana (the legal limit for public possession in Massachusetts) can regularly be found for $150, according to Krane.
Massachusetts might not ever make it to that point, but Krane expects prices to eventually stabilize in the $40 range for an eighth of an ounce.
“That may be a little higher than you see some places out west, but I think $40 to $45 eighths will become the norm,” he said, adding that once large-scale greenhouses and facilities get up and running several years down the road, the state could even see eighths as low as $25.
It’s not a question of if prices go down, but when. That said, the decline will likely be gradual due to Massachusetts’ growing capacity, which — for reasons ranging from space to weather to the delayed implementation of its medical marijuana industry — doesn’t stack up against the likes of California, Colorado, Oregon, or Washington.
Jim Borghesani, a former spokesman for the Massachusetts legalization campaign and now a consultant in the industry, says that Nevada, which also voted to legalize recreational marijuana in 2016, provides “a compelling predictive example” for what the Bay State might expect in the next 12 to 18 months.
Even though it passed its legalization ballot measure the same day as Massachusetts, the Silver State decided to implement its adult-use recreational market last July. However, the industry wasn’t ready for the surge in demand.
“Nevada’s supply chain was hampered by cultivation shortages and a flawed distribution licensing process,” Borghesani said.
Nine months later, prices in the state are still relatively high. The Bay State should expect a similar future, according to Borghesani.
“Massachusetts will likely see supply constraints due mainly to a relatively immature medical cannabis industry and a time lag in getting adult-use cultivation operations licensed and running,” he said. “The results will likely be the same as Nevada—higher prices until supply catches up with demand.”
Massachusetts’ top pot regulating agency, the Cannabis Control Commission, says it is unable to make a meaningful prediction on the early stage pricing. But officials noted that the commission has instituted a number of safeguards aimed at preventing potentially high price levels from perpetuating the illicit market.
Krane says substantially higher prices created problems in Oregon, which had abundant black market cannabis — even compared to other states. The price disparity was so great that consumers opted for the black market over the legal stores. The state then responded by licensing “basically…anyone who qualified” and now struggles with oversupply, which can also facilitate illicit markets.
Krane says it was an overreaction to a predictable early stage problem and the CCC has looked to preempt a similar situation with regulations ranging from “seed-to-sale” tracking to strict licensing and verification standards. Krane’s advice to Massachusetts — officials and consumers like — is to keep the early high prices in perspective.
“By and large, this is very normal,” he said. “The business is responding to market conditions. It will change, but it will take some time.”
How expensive will legal marijuana be in Massachusetts when retail stores open? It’s a simple question for a complicated market. For states that have legalized recreational marijuana, the new
Why are Massachusetts marijuana users still buying on the black market? Cost and convenience, some say
2019 Seed to Sale marijuana expo in Boston
Jason Dick is a longtime marijuana user. For some time, the Hull resident grew his own supply. Now he buys marijuana from a “friend of a friend.”
Although Dick has registered with the state as a medical marijuana patient and a caregiver, he called the prices at dispensaries “absurdly high.” When he buys marijuana from the friend, it costs half as much.
Jesse Hayes of Boston also buys from friends, despite having a medical marijuana card. He said the prices are better on the black market. And even now that Massachusetts has legalized marijuana for all adults, the closest recreational store to Hayes is in Salem. Going there, he said, “does not make sense.”
In November 2018, the first legal recreational marijuana stores opened in Massachusetts, and any adult can walk in and buy a joint. Marijuana users have flocked to the nine stores that are already open, resulting in long lines. But many users have not yet made the switch. While some say they like the safety of knowing what products they are getting, others say buying illegally costs less and is more convenient.
“Until there are places within 20 minutes of everyone’s home, people will continue to go to the gray market,” said a cannabis user from Central Massachusetts who gave his name only as Will.
For now, Will said even though he would prefer to buy marijuana that is tested and regulated, he continues to buy on the illegal market. Going to a legal store “costs twice as much and you have to drive twice as far to get it,” he said.
State marijuana regulators have said they know it will take time for users to switch from buying on the black market to buying marijuana that is taxed and regulated. But part of the goal of legalizing marijuana was to eliminate, or at least lessen the influence, of the black market.
“Standing up a legal industry that is safe and accessible is the best defense against the illicit market,” said Cannabis Control Commission Chairman Steven Hoffman after a recent commission meeting. “I don’t have any expectation that it’s going to disappear overnight, but I certainly have the expectation, and I think we have the commitment of the state, to see that diminish significantly over time.”
Kamani Jefferson, president of the Massachusetts Recreational Consumer Council, said the decision about where to buy tends to depend on availability and pricing. So far, the only shop open in the Boston area — where much of the state’s population is centered — is in Salem. He said the prices in legal stores can be more than double what they are on the illicit market: $60 to $70 for an eighth of an ounce of cannabis, compared to $20 to $30.
Jefferson said it is likely that as more stores open, legal marijuana will be more easily accessible, and with more supply, prices will go down.
The Republican / MassLive interviewed several Massachusetts cannabis consumers at the National Cannabis Industry Association’s Seed to Sale show in Boston on Tuesday. They included recreational and medical consumers. While some had switched entirely to buying legal marijuana, others have kept their old suppliers.
Tim Mack, who is applying for a license to grow and sell marijuana, says he hears from people who visit his hydroponic shop, which sells plants and gardening supplies, that the legal price of marijuana, including the tax, keeps them going to cheaper black market suppliers. He thinks the legal market is attracting many consumers who want the novelty of buying marijuana in a store as well as those who do not know where to buy it on the street.
Justin Gallucci of Boston has cerebral palsy and is a registered medical marijuana patient. He prefers buying on the legal market, because marijuana is more readily available and easy to depend on. But where he shops depends on the variety of marijuana available at dispensaries when he wants to buy.
“If a legal dispensary does not have what I’m looking for, I might have to go back to a gray market source,” Gallucci said.
Others say they know what they are buying in the legal market. Melissa Nowitz, a medical patient from Franklin, said she feels more comfortable knowing that marijuana has been tested. Salesmen at the dispensaries can tell her what strains to use to treat her anxiety and depression, while on the black market, she did not know what she was getting.
David Helbraun, a New York lawyer, who bought from a Salem store while visiting Massachusetts, said as a lawyer, he has to buy marijuana legally. But more than that, he said, “If it’s legal, I know it’s a safe place to get it.” He added that the legal stores have more choice and better customer service than buying from someone on the street.
Steve Croteau, a medical marijuana patient from Uxbridge, said he used to buy marijuana on the black market, but registered for a medical marijuana card as soon as he could so that he could get products that are safe and tested. Buying on the black market, he said, “wasn’t worth my time or my health.”
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Why are Massachusetts marijuana users still buying on the black market? Cost and convenience, some say 2019 Seed to Sale marijuana expo in Boston Jason Dick is a longtime marijuana user. For