Cannabis from Dispensary Versus Dealers - Which is Cheaper?

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Supply, demand, and stealth determine the price of cannabis from dealers on the street. Supply, demand, and regulatory control determine the price from a licensed cannabis dispensary.

And, factors like location, culture, weather, and more also factor in the price you will pay.

Which is Cheaper — Cannabis from Dispensary Versus Dealers?

Dealer determined price/oz.

The word on the street price comes from Price of Weed on November 2, 2017. If you focus on states where recreational weed is still illegal, you may recognize some patterns:

Texas: On the average, Texans pay $326.24/oz. for high quality and $242.74/oz. for medium quality. Houstonians pay $200/10 grams. Austin with its 45+ students only pays $130/oz., but folks in Dallas pay $400/oz.

Kentucky: Residents of the Bluegrass State pay $342.74/0z. or $199.80/oz. You’ll pay $200/oz. for high quality in Louisville, but $100/oz. in Lexington.

Tennessee: Residents in The Volunteer State pay marijuana dealers $346.50/oz. or $248.41/oz. But, that could mean $400/oz. in Franklin or $196/oz. in Hendersonville.

New York: In Manhattan, Budzu.com says an ounce of pot is easily secured for $298.00 to $256.48. It’s cheaper at the other side of the state in Buffalo for $220.00/oz. to $250.00/oz.

Idaho: In a state as different from New York and California as you can imagine, you will pay $272.60/oz. to $233.36/oz.

Dispensary determined price/oz.

According to Statista.com, Michigan leads the dispensary price per ounce at $301.00, and Oregon is the lowest at $214.00. Other legal states sit in between Arizona ($290), California ($299), Colorado ($225), and Washington ($238).

Arizona: Mostly driven by patients between 18-30, Arizona medical marijuana dispensaries sold 29 tons of product in 2016 producing $29.5-million in taxes.

California: The state is slow to get off the mark. It has had trouble formulating its administrative controls. License applications sit waiting approval. And, so-called dispensaries dare to operate at will. Given the potential market for legitimate sales in California, they must act soon.

Sacramento has floated the idea of forming a state bank to handle cannabis financing and credit transactions. That is a sign of the size of their problem, but it also represents some out-of-the-box thinking.

Colorado: Dispensaries have seen sales of recreational-use product increase throughout 2017. At the same time, prices have dropped significantly. The Colorado PotGuide notes, “Since 2014, the price of an average gram of flower sold in Colorado has declined 22 percent across both medical and recreational channels combined.” As retail dispensaries multiply, the competition has driven prices down although 2017 has seen some stabilization in prices.

Washington: 502 Data reports the State of Washington tracks performance that shows $2,480,718,706 in sales. That produced $682,023,598 in Washington’s Marijuana Tax and $223,264,684 in Sales Taxes. For a state with Washington’s population, such impressive numbers will continue to promote the market.

Which is Cheaper — Cannabis from Dispensary Versus Dealers?

Comparing the dispensary price with the marijuana dealer price is not an apples and apples event. Both the dealer and the dispensary offer a classic economic option, a price decided by what customers are willing to pay in a supply and demand situation.

Nothing is fixed in this market. The cannabis dealer or medical marijuana dispensary on one side of town may have different prices that the ones on the other side. And, the increased availability of weed has driven prices unpredictably lower.

In Colorado alone, the cannabis taxes shake out to increase the purchase price at the dispensary:

  • 15% excise tax
  • 10% state tax on retail marijuana sales (8% on July 1, 2018)
  • 2.9% state sales tax
  • Local sales taxes (Colorado Average of 4.6%)
  • Local excise taxes on marijuana (3.5% in Denver)

Fortune reports on other states tax impact:

  • Nevada: 15% tax on wholesalers goes to Nevada’s education budget and 10% on retail sales moves to “the state’s rainy-day fund.”
  • Oregon: Local governments can vote to add municipal tax up to 3% to state’s 17% on recreational marijuana sales. Taxes go to education, law enforcement, addiction rehabilitation, and cities and counties.
  • Washington: The State of Washington has a 37% tax on adult-use weed purchases.
  • Alaska: The state puts a $50 tax on each ounce of marijuana buds or flowers and $15/ounce for the remainder of the plant.

What’s your payoff?

The black-market marijuana dealers will do their best to undersell the dispensary prices. The dispensary prices remain state-controlled in the sense that, regardless of the dispensary’s attempt to compete for price against other dispensaries, their sales are heavily impacted by the taxes imposed.

What you do get at the cannabis dispensary is quality control, selection, information, and peace of mind. For the right to sell medical marijuana and/or adult-use marijuana, cannabis dispensaries have committed to providing their public with a seed-to-sales quality tracking.

They have committed to labeling products clearly with content, THC:CBD ratios, and any foreign content. Competition drives them to provide heads-up advice through management and budtenders. And, those taxes assure customers are adults capable of paying.

Dispensary customers directly and indirectly comply with the law, move some of the purchase power away from teens, and move out of the shadows where dealers work. You may never know how much dealers are taking out of the market, and the competition may drive them to deal in more dubious and dangerous street drugs.

But, the revenue and taxes realized in compliant states indicate there is a sizeable customer base willing-to-pay regardless of higher prices charged at medical and recreational use dispensaries. So, “cheaper” is not always just a matter of price.