This article explains the economic impact that legalized marijuana use has done for the Colorado market, especially in terms of competition. Retailers are expected to increase which will only make competition tougher. This competition can create a price battle between all these competitors and high demand. The growth in this market is fascinating. A slight decrease in price, from $1,900 to $1,800 per pound could increase sales as much as 20 times more. The number of recreational stores that sell marijuana have increase by 110%, even though there are more issued for medical than recreational. Analysts say that this is creating grounds for a price war that will likely strongly bring the price down in 2015. To compare, when the recreational market first opened in January of last year, prices were around $4,000 a pound. These price drops are basic supply and demand consequences.
http://www.ibtimes.com/marijuana-price-wars-colorado-recreational-pot-prices-expected-fall-fast-year-1895938
8 comments:
We can definitely expect to see price drops as the market matures. The market is still quite young and it might take a while but supply will adjust to drive prices down
I agree that a massive increase in sales will result. Also, each price decrease of legal marijuana will hurt business for black market dealers. They will be getting less sales and also be forced to drive their price down. Hopefully this leads to positive effects involving crime. Sales taxes on marijuana are ridiculously high, so being taxed on a lower price will also decrease the amount of tax paid.
Its a huge price drop from $4000 to $1900. But, the market should eventually reach an equilibrium.
Since this is still a fairly new market more and more competitors are going to flock to it. They will all try to undercut each other and form some kind of monopoly. This helps to bring the prices down for the consumers. However this will definitely come to an end when the market reaches equilibrium.
I think it's really interesting to see how quickly the marijuana market has grown. It's amazing that it already has a considerable amount of competitors as well as a relatively elastic demand.
It is interesting to see how the marijuana market has been maturing since its legalization. The inflow of several competitors definitely influences the price drop for the good and as of right now, the consumers are probably have a great time purchasing marijuana for a cheap price while the competitors are undercutting each other to gain market share. I think more states will legalize marijuana and we will see the market grow even more dramatically. It will be interesting to see if/when the federal government decides to legalize marijuana in the United States.
I agree that the price will eventually drop to the equilibrium as the market mature. Since Marijuana just got legalized recently, the demand shift from black market to the real market so it drives the price up. High price will give supplier incentive to supply more and will drive the price down again.
It is very interesting to see that the market has grown so fast. As the market continues to grow we will most likely see a continue drop in prices. This will increase sales and increase the size of the marijuana market. State benefit through taxes will also continue to rise as this occurs.
Post a Comment