Tuesday, September 5, 2017
The title of this post is the headline of this new Wonkblog analysis authored by Keith Humphreys at The Washington Post. Here is how it starts and ends:
All the diverse effects of legalizing recreational marijuana may not be clear for a number of years, but one consequence has become evident almost immediately: Pot has never been so cheap. Steven Davenport of the Pardee Rand Graduate School has analyzed marijuana retail prices in Washington state since legal recreational markets opened in July 2014. Remarkably, prices have fallen every single quarter since....
The ongoing decline in marijuana’s price after legalization has an important implication for drug policy more generally. The experience of Washington and other marijuana legalization states demonstrates how enormously effective prohibition of production and sale is at raising drug prices. For example heroin’s price took a decade to fall by 16 percent, which the legalization of marijuana accomplished in just eight months. Notably, even high taxes on legal marijuana don’t keep the legal price anywhere near what it was when the drug was more broadly illegal.
Prohibition imposes huge costs on drug producing industries that are passed on to consumers in the form of higher prices. These higher prices are one of the principal reasons (the others being stigma and fear of punishment) that illegal drugs are used so much less frequently than legal drugs such as alcohol and tobacco. Marijuana is a rare example where we can see the impact of legalizing a drug in real time, which shows that were the production and sale of heroin, cocaine and methamphetamine also legalized, those drugs would also become dramatically cheaper to consume.