The arrival of 2017 will bring many changes to the country, including falling marijuana prices in states that have legalized a recreational market. Cannabis users may cheer this news, but it heralds the start of an enduring budgetary headache for states that tax legal marijuana sales based solely on price.
New data from one legalization state illustrate the point. Colorado’s Department of Revenue assesses the going price for marijuana every six months and uses this information to calculate the value of the state’s 15 percent tax on pot production. The progression of marijuana prices over time in Colorado perfectly parallels the pattern in Washington after that state legalized (reported in Wonkblog last year): Prices briefly spiked due to initial supply shortages, but then began dropping as the marijuana industry matured and expanded. Wholesale prices in Colorado tumbled 24.5 percent over the past year to $1,471 per pound.
