Following the legalisation of marijuana, prices have begun soaring
By Nick Allen, Los Angeles
6:48PM GMT 07 Jan 2014
The price of cannabis in Colorado has doubled since the state became the first in the US to legalise the drug for recreational use a week ago.
According to one estimate customers buying cannabis in licensed shops are paying an average $400 an ounce, compared to the $200 an ounce previously charged when the drug was only available to people with medical complaints.
The price has been driven up by the 25 per cent recreational sales tax imposed by the state, and also because there has not been enough supply to keep up with demand.
Several of the first shops to open on New Year’s Day had to close early because they ran out as long queues formed.
A University of Colorado study had put the average expected retail price of cannabis at $185 an ounce, but some shops have been charging over $500 for the purest quality strains.
According to The National Cannabis Industry Association recreational cannabis businesses in Colorado made “well over $5 million” in sales in the first five days.
A week after legalisation Denver City Council has voted to ask the US federal government to allow banks to take on cannabis businesses as customers.
Banks are currently banned from working with cannabis businesses, including offering loans or credit cards, and the shops operate entirely on cash transactions, which one councillor described as “absurd and ridiculous.”
Following legalisation the Washington DC-based National Cannabis Industry Association estimated the average price at $400.
Executive director Aaron Smith told Bloomberg News: “That’s just supply and demand. As more businesses open and the businesses get a sense of what the demand is and are able to meet it, the prices will go back down.”
Rachel Gillette, Colorado executive director of legalisation camaign group NORML, told NBC News: “I think people were a little bit surprised at the price. We are concerned about that. It’s a new industry, a new market.
“I think things will work themselves out in a few years. We saw the same thing happen with the medical marijuana industry before prices came down.”
Local politicians said if high prices lead to a continuing cannabis black market then taxes could at some point be reduced
But they are confident increased competition will soon bring the price down again. Only a few dozen cannabis shops opened in Colorado on Jan 1. More than 100 others have been given licences but their opening was delayed by red tape.