Why Marijuana Prices are Slipping into a Deflationary Spiral

Why Marijuana Prices are Slipping into a Deflationary Spiral

Three pot growing counties nearby here in Northern California are experiencing an “economic catastrophe” due to – get this – plummeting marijuana prices.

NPR reports:

Legal pot, under the guise of the California’s medical marijuana laws, has spurred a rush of new competition. As a result, the wholesale price of pot grown in these areas is plunging.

“There are business foreclosures, storefronts closing. There’s a lot of instability and anxiety,” she says.

California’s pot economy is transforming, and it’s starting to resemble a real commodities market where only big players can compete. It’s a shift that could leave some growers in the dust.

The entire story runs about 5 minutes, and you can listen to it here – it’s worth it for the entertainment value alone.Marijuana Effects

Classic free market economics at work here – the legalization of medical
marijuana has increased supply drastically of the hippy lettuce.  The result?  Much lower prices – and increasing pressure on dealers that grow “low quality” stuff.

Right now I’m reading a great book called Defending the Undefendable, in which libertarian author Walter Block defends the scourges of society – with one chapter devoted to the defense of drug dealers.

Block makes the case that the “War on Drugs” is entirely financed by the lucrative economics that the government’s prohibition of drugs enables.  If not for the artificially high prices, dealers would have a much more difficult time making a go of it, Block believes.

California’s upcoming vote on the legalization of marijuana could be the first real-life test of this we get in the United States of this theory.  Would legalization make pot smoking more economical and feasible for the rest of us – turning us all into a bunch of stoners?

Hard to believe – though it certainly might make unemployed life a lot more bearable for the 20% out of work!

Hat tip to good friend and fellow deflationist Carson for passing this piece along!

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