Cheap Marijuana Is Causing Cannabis Tax Revenue Drops in Legal States

Cheap marijuana at legal dispensaries may be great news for consumers, but unfortunately it's not so great news for local and state governments who are looking for extra revenue.

Many legal states are facing lower revenues than expected partly due to the low cost of marijuana. For instance, Colorado reported its highest marijuana revenue month in March with $106 million in cannabis sales. But just two months later in May, those numbers dropped to $96.9 million, and the state's medical marijuana sales hit their lowest point ever with only $26.2 million in sales.

Meanwhile in California, a state that only legalized marijuana this year, sales numbers have been far lower than expected. The state recorded only $34 million in cannabis sales tax for the first quarter of 2018, about one-third of what was predicted. Oregon and Washington are also facing issues related to overproduction of cannabis and low prices.

The decrease in the price of marijuana is quite drastic. In Colorado a pound of retail cannabis flower costs $846 and pounds of trim average out to $404, which are respectively 16.4 and 42.3 percent less than those prices were one year ago. 

Of course, in some ways lower prices for marijuana can be a good thing. For instance, some people complain that excessive taxes on marijuana keep some customers from leaving the black market. But if legal prices are cheap, that can help some people transition from illegal purchase to legal ones. 

But obviously marijuana businesses and governments would prefer prices to increase to help revenues. But that would mean states would need to start addressing overproduction issues that are leading to those cheap prices in the first place.

Until then, you can continue enjoying your cheap weed.

(h/t Westword)


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