It’s clear that marijuana is very much a cash crop, following the same supply-side patterns of any other crash crop. The map above shows the differences in the retail price of marijuana based on user-generated reports from the PriceofWeed website. It was compiled by the Floating Sheep academic blog and focuses on illegal (not legal) marijuana consumption. As the variations of price show, marijuana production and consumption follows simple economics. Like any cash crop, the price of marijuana is based on freight costs and local supply and demand balance. Weed is produced in temperate rural areas, and sold to urban centers and regions too cold to produce the crop themselves; as it changes hands, the price goes up.
So why has no economist charted the price of marijuana like this?
The map offers an interesting look at the very basic trends of an underground economy. Exact analyses regarding production, distribution, and retailing of such an economy remain difficult to compile, and are often problematic and rarely comprehensive, as the authors of the Floating Sheep blog who compiled this map atest.
It’s bizarre that such simple economic analyses on this product don’t exist, especially since it’s estimated that the legal marijuana market is poised to grow faster than the smartphone market. Not even experts on Wall Street study this market.
But, as Floating Sheep explains: “Underground economies, by their nature, are extremely challenging to analyze and study. They tend to be characterized by a lack of empirical data, unresponsive and secretive research participants, and difficult research environments.”
The map points to some interesting trends: primarily that cost rises as one moves east from the Pacific Coast (with Oregon being the cheapest). There are also pockets of maximum affordability around where marijuana is produced, notably in Northern California, Eastern Kentucky, and Western Tennessee. This is basic supply-side economics, of course, as the price should drop the closer you get to the core distributor. The map is in line with other research: Kentucky, for instance, is reported to be a major center of marijuana production in the U.S. Price also various based on your city, with the cost generally spiking the larger the urban area you live in.
As the authors of the map point out, the trade in illegal drugs is of critical importance. Recreational drug consumption is a widespread practice, and there are significant health and policy issues involved with this market.
Since the mid-1990s marijuana legalization has received outspoken support from within the medical community and more recently by the business community. Marijuana has slowly seen support for its legalization among the general public outgrow opposition.
In 2013, 52% thought that marijuana should be legalized with 45% opposed. According to Pew, this is an 11-point jump from 2010, where 45% thought it should be legalized and 50% opposed legalization. 2010 was when Proposition 19, which would have legalized marijuana in California, was defeated 53%-46%. And of course this is a dramatic swing from 1969, when nearly eight out of 10 Americans were opposed to legalization.
In October, support for legalizing marijuana grew to its highest point ever among Americans, according to Gallup.
Beyond the economic and socuial focus of legalization, there are also tremendous law enforcement and government spending issues surrounding marijuana. The “war on drugs” costs about $40 billion per year. Since it was heavily ramped up by President Nixon, it has cost nearly $1 trillion. Cutting back on marijuana enforcement could help save the government significant amounts of tax revenue.
It’s clear that the costs of keep marijuana illegal outweigh the benefits. The drug has the backing of the general public. More so, there is a huge pay day to be gained for regions in rural California, Kentucky, and Tennessee which produce this cash crop.
Can you imagine how much money those areas could reap from this product?
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