Why is California Medical Marijuana So Expensive?

In debating the Stoners Against Legalization about California’s Prop 64, one criticism they leveled regards its taxation of medical marijuana.

Yes on 64
Click to visit the official Prop 64 campaign website

Prop 64 is establishing a 15 percent excise tax and a $9.25 per ounce cultivation tax on all commercial marijuana transactions, both medical and recreational. Patients who get a new voluntary state registry card can get a break on the state and local sales taxes, but that 15 percent and $9.25 per ounce are paid by everybody.

“Taxing medicine is immoral!” the critics tell me. On a fundamental level, I agree with them. I even take it further – profiting from medicine is immoral, but I think many of those critics (medical growers, dispensary owners) wouldn’t agree. We should neither fund government nor businesses by gouging sick people.

Washington Marijuana Prices
Growers in Washington are getting <$3 / gram wholesale. Now you know why the Emerald Triangle opposes legalization. (Image: Washington Post)

But on a practical level, California taxing marijuana is going to make it far cheaper for patients than the medical marijuana system does now. It may be immoral to tax medicine, but it’s more immoral to subject patients to the existing prohibition tax that makes their medicine twice as expensive as it needs to be.

In the three states that have legalized marijuana and have operational commercial systems (Alaska isn’t ready yet), the prices of marijuana have dropped significantly from their previous medical-only levels.

Pot Prices - Nectar PDX
OG Kush, 22% THC = $159 / ounce in Portland. (Image: Nectar Dispensary)

In Washington, the state with the worst legalization of the four, with no home grow allowed, with an artificial cap on state production canopy, with the nation’s highest (37 percent) marijuana tax rate, regulators found that the average price of marijuana that started at $25 per gram is now down to $9.32.

Pot Prices - Green Door SFO
Platinum OG Kush, 19.6% THC = $330 / oz in San Francisco (Image: Green Door Dispensary)

In Colorado, BDS Analytics reports that marijuana that had started at $8.86 per gram was selling for an average of $6.67 per gram in April, with a $5.77 average price on 4/20 week.

Oregon hasn’t posted sales data with this detail yet, but the 2014 estimates by EcoNorthwest put the average ounce price in Oregon at $180 ($6.33 per gram) and predicted a decline down to $145 ($5.11 per gram) after legalization.

But when I take a look at the menus for the medical marijuana dispensaries in California that are compassionately providing medicine to patients, I consistently see $300 ounces and $15 grams.

When I cite these statistics, the opponents of Prop 64 who smoke pot tell me California’s just different, man. I’m not taking into account the higher cost of living in California. They allege that the average price per gram tells us nothing about the high-end medicine that patients require. They claim I’m cherry-picking special deals on schwag at discount stores in the cheap Northwest and comparing them to the diggity dank chronic at the exclusive stores in expensive California.

OK, sure. Let’s ignore the math behind how averages work and the Ph.Ds who study economics for a living and the marijuana price crash in three-for-three legal states. Let’s compare apples-to-apples and account for cost of living.

Cost of Living - Portland vs San Francisco
The cost of living is 36% higher in San Francisco than Portland. The cost of marijuana is 107.5% higher. (Image: CNN Money)

According to this CNN Money cost-of-living calculator, a $100K salary in Portland, Oregon (where I am) is equivalent to a $136K in San Francisco, which we could presume means it’s 36% more expensive to live there.

Green Door in San Francisco is selling Platinum OG Kush (19.6% THC) for $330 an ounce, before tax.

Nectar in Portland is selling OG Kush (22% THC) for $159 an ounce, with 25% tax included.

Forget about the tax. A $330 ounce of medical marijuana is 107.5% more expensive than a $159 ounce of legalized marijuana. If a $159 ounce cost 36% more, it would be $216, not $330.

Cost of Living - DEN vs LAX
It costs 27% more to live in Los Angeles than Denver. The cost of marijuana is 72% greater.

Even if we went by more expensive housing costs, those are only 94% greater in Portland than San Francisco.

It’s a similar result when you look at other states and other California cities.

The cost of living in Los Angeles, California, is about 27 percent greater than Denver, Colorado.

Lightshade in Denver is selling OG Kush for $195 an ounce.

La Brea Compassionate Caregivers in Los Angeles has OG Kush at $335 an ounce.

It costs 27 percent more to live in Los Angeles than Denver, but the marijuana costs 72 percent more.

Cost of Living - Spokane vs. Sacramento
It costs about 20% more to live in Sacramento than in Spokane. It costs 29% more for your eighth ounce of marijuana. (Image: CNN Money)

Even comparing the smaller cities and the smaller amounts of weed still makes medical marijuana in California more expensive than legal weed elsewhere. The cost of living in Sacramento, California, is about 20 percent greater than Spokane, Washington.

Two Rivers Wellness in Sacramento is selling an eighth of OG Kush for $45.

Spokane Green Leaf is selling an eighth of OG Kush for $35.

It costs 29 percent more for the California medical eighth than the Washington recreational eighth.

The only reason that marijuana costs up to twice as much in California is because prohibition artificially restricts production, increases its cost, and reduces retail competition. According to a report by the Congressional Research Service, legalized marijuana would cost about $15 per ounce to produce.

Marijuana Production Costs
Legalized marijuana costs as much to produce per pound as your medical dispensary or street dealer is charging you per ounce. (Image: Congressional Research Service, pg 10)

That same report notes that legalization in California should drop the price of marijuana from lowball estimates of $40 to $60 per ounce to highball estimates of $100 to $150 per ounce.

No, taxing medicine isn’t optimal policy, but with California having such a lax system of medical marijuana that anybody can qualify for, if the patients were exempt from taxes, everybody would become a patient and no taxes would be raised, so no revenue would fund the regulatory agencies that would license the growers, who then wouldn’t produce the volume of cannabis necessary to bring down prices.

Too many California patients are being fooled by the prohibition profiteers in the medical marijuana industry who love a system that guarantees they remain big fish in a small pond, a system where weed is juuuuust illegal enough to sell to patients at prohibition prices, but juuuuust legal enough they don’t worry about prison.

Let’s really help the needy patients by cutting the price of weed in half through legalization, which also ends their annual cost for a doctor’s permission slip. Vote Yes on Prop 64.

Russ Belville
About Russ Belville 199 Articles
Russ Belville - or "Radical" Russ, as he is known on-air - hosts The Marijuana Agenda, a live news and talk radio program for the cannabis community, weekdays at 3pm Pacific on MJAgenda.com.  The show is based in Portland, Oregon, but "Radical" Russ has traveled over 300,000 air miles in the past five years, bringing his show to report live from hundreds of cannabis conferences, marijuana expos, hemp festivals, and legalization events in over 70 North American cities.