The legal herb industry was marketed as a primary way to destroy the black market and increase local tax revenue. However, in the last two years, it appears that legal herb prices have skyrocketed, rather than declined. Read along to understand why legal herb prices are increasing and how they will continue to do so over the long-term.
Dope taxes are different in each state or country, but they are all supposed to fuel social programs for the greater good. However, the demand for tax revenue appears to push legal herb prices to the point that consumers no longer wish to deal with the legal market.
Currently, states with high tax revenue obligations, such as California, are witnessing a decrease in legal herb sales and an increase in sales in the black market. Prior to legalization, regulators estimated millions, if not billions, in tax revenue from legal herb sales. However, it became apparent that consumers did not wish to pay nearly $60 per 3.5-grams of herb at licensed dispensaries.
Instead, black market dealers undercut legal dispensaries by a massive margin by offering 3.5-grams of herb for $30-40. This is a significant reduction in price, which drove many would-be consumers to the black market, instead of a brick-and-mortar herb dispensary.
Why Did Legal Herb Prices Rise?
As we mentioned above, regulators are forcing herb-based businesses to pay the state a high tax rate. Considering that licensed herb companies have to pay for licensing, permits, rent, products, and packaging - the end result is that they must charge customers more.
This is the sad scenario that the herb industry is currently facing, where it’s less likely that consumers are going to spend their money at a licensed herb shop. Instead, consumers are purchasing herb from unregulated individuals at half the cost because the black market does not charge cannabis tax.
Taking The Facts Into Consideration
So, is legal herb overpriced? The answer to this question is yes and no. The reason behind this is because there are facts to consider when it comes to herb taxes and licensed dispensaries.
When it comes to herb taxes, regulators are unfairly taxing licensed dope shops. Legal herb stores are already pushed to the limit with fees, and adding sky-high taxes only increases the burden. The only realistic way for herb businesses to generate a profit is to increase the price per gram of cannabis.
This, in turn, generates the high prices of herb that we see today. Sadly, the consumer does not have a say and is directly affected by outrageous herb prices. It’s at this point that many would agree that legal herb is overpriced and that regulators and legal herb shops should work together to keep herb affordable.
Until then, the debate of whether legal herb is overpriced or not will continue. However, it ultimately depends on if you’re a herb consumer or a herb-based business.