Bay Area Cannasseur: Sticker shock seen in cannabis prices
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Sticker shock is setting in among many cannabis dispensary customers, sending some of them back to the black market, where prices are as much as 50 percent cheaper.
The rise in dispensary prices began in early January, when Proposition 64 regulations kicked in, adding a 15 percent excise tax and an approximately 10 percent cultivation tax, which are typically passed on to retail customers. Dispensary customers also pay local sales tax, which is 8.5 percent in San Francisco.
Activist Clint Werner, author of "Marijuana Gateway to Health: How Cannabis Protects Us from Cancer and Alzheimer's Disease," believes the price increases will drive the black market. Werner, a gay man who has owned and bred champion dachshunds for the past several decades, said the "greedy and irrational bureaucrats who think they can bleed cannabis consumers for tax money to fund utopian boondoggles need to develop critical thinking skills and try to grasp free market principles or else they will stand as the agents of preservation for the black market.
"If I can buy a pound of excellent marijuana for $1,200 why would I pay $60-plus for an eighth [of an ounce] at a dispensary?" Werner said in an interview with the Bay Area Reporter. "But if I can pay $35 for an eighth (in the black market) I'll do it to have some variety."
He said the industry is in an "adjustment phase."
"I think more tax revenue would accrue from lower prices because being able to shop for cannabis in a store is both novel and convenient," he said. "We are in an adjustment phase. Because cannabis is so safe and beneficial compared to alcohol and energy drinks, we should see more rational policies emerge as normalization continues."
A price check on January 31 indicated that the most common price for an eighth of an ounce of indoor grown flowers at the Apothecarium in the Castro was $68 and, with sales tax, $73.78.
But on the same day, eighths were for sale on Craigslist for as little as $17.50. Others on Craigslist offered pound packages for $800, or $600 if you bought five pounds.
Under Prop 64, California's adult use cannabis law, dispensaries agree to have their products undergo testing for chemicals and impurities, while a black market seller typically sells flowers they have purchased from a grower.
Berkeley activist Brent Saupe, a garden consultant and founder of the Pot Club, a defunct cooperative that helped grow its own plants, believes that dispensaries' recent price hikes more than cover their increased regulatory costs.
Saupe, who has built and operated a number of large indoor gardens, said that while growers have been getting lower prices from dispensaries, the retailers have marked up prices.
Saupe said that when he recently checked, a number of dispensaries had doubled their price from $30 to $60 for an eighth of the same strain.
"I've also noticed that a number of dispensaries are carrying a much smaller selection of strains," he said. "If the trend continues, and I believe it will, I think there will be some product shortages."
Saupe attributed the contraction to new regulations requiring dispensaries to work with wholesalers who have obtained permits from the state.
Pounds of outdoor cannabis can now be purchased in the black market for as little as $300, down from $300 an ounce as recently as a year ago, he said.
Despite the higher prices, business is brisk at the Apothecarium, according to spokesman Eliot Dobris. In the three weeks that the Market Street dispensary has been selling recreational cannabis, it has sometimes been so busy that deliveries had to be limited to medical patients and delivery times have sometimes been longer than usual, he said.
One way medical patients can potentially save money is by obtaining a state-authorized medical card, exempting their purchase from sales tax. The Medical Marijuana Dispensary Identification Card Program requires the patient to pay $100 per year and obtain the card in person at the San Francisco Department of Public Health, 101 Grove Street. For more information, visit https://www.cdph.ca.gov/Programs/CHSI/Pages/Program-Information.aspx.
Bay Area Cannasseur runs the first Thursday of the month. To send column ideas or tips, email Sari Staver at email@example.com.