Massive inflation could be side effect of marijuana legalization

Sam Walsh, left, a budtender, and facility manager David Martinez set up marijuana products as the 3-D Denver Discrete Dispensary prepares to open for retail sales on January 1, 2014 in Denver, Colorado.
Sam Walsh, left, a budtender, and facility manager David Martinez set up marijuana products as the 3-D Denver Discrete Dispensary prepares to open for retail sales on Jan. 1 in Denver.
Credit: Getty Images

There has been a party atmosphere around Colorado’s marijuana dispensaries since recreational sales became legal at the turn of the year.

“People have been queuing for four-five hours,” says Ryan West, an employee at a Denver dispensary. “Everyone is so excited and proud to be in the first state to legalize, and there is so much room to grow.”

West is a product of that growth, hired on Jan. 1 to cope with a boom that saw sales of more than $5 million inside the first week. Fewer than 200 dispensaries are licensed to sell the drug for recreational use and that number is set to rise, while related industries such as “weed tourism” are also growing rapidly.

But there have been unintended consequences, with prices more than doubling in some cases to more than $400 an ounce (28g). This is far higher than the rates of illegal dealers, allowing them to compete, despite the claims of marijuana advocates that a legal industry would replace the black market.

Illegal dealers are also benefiting from police confusion over new laws that have seen an 80 percent drop in prosecutions since 2012, including for distribution.

“Law enforcement feels like they don’t know which way to turn,” Tom Raynes, executive director of the Colorado District Attorneys Council, told the Denver Post.

Campaigners supporting legalization believe these issues are temporary glitches in an adjustment period.

“There has been historic demand at a historic moment, but as the number of licenses grow the demand and price will settle,” Taylor West, deputy director of the National Cannabis Industry Association, told Metro. “At that point the underground market will become obsolete.”

But the industry faces structural difficulties. Banks are currently forbidden from holding money generated through drug sales, forcing businesses to operate in cash, which demands more labor and risk. They are also denied the tax advantages of other businesses through a gap in state and federal law.

“Banking and tax are the big areas we are working on now in Washington,” said West. “We hope as other states see the example of Colorado, the growth of the industry and its advantage over the criminal market, we will see more progress.”

Further states are expected to legalize recreational sales, with Oregon likely to be next. But Colorado has shown the complications as well as the potential.



News
Entertainment
Sports
Lifestyle
Local

MTA announces service changes for Sunday

The MTA has announced service changes ahead of Sunday's People's Climate March, which will be held from 11:30 a.m. to 4:30 p.m. Sunday. Riders using…

Local

NYPD launches Twitter account for L train

The NYPD recently launched a Twitter handle dedicated to the L train and its riders. According to @NYPDLtrain, officers went underground Thursday morning to hand…

Local

Bushwick community space offers activists a place to…

A new Bushwick community space offers community activists to meet, create, learn and throw back a few cold ones. MayDay, located 214 Starr Street in Bushwick,…

Local

Activists gearing up for Sunday's "historic" People's Climate…

If all goes according to plan, more than 100,000 people will gather near Central Park West on Sunday morning and march through midtown to raise…

Movies

Kevin Smith makes peace with the Internet

I was thinking about Ain't It Cool News and Harry Knowles last night, wondering if anyone from Ain't It Cool had reviewed my new movie…

Movies

Art imitates life in 'Swim Little Fish Swim'

There's a certain comfort to be taken in finding that young artists are still moving to New York and trying to make it — and…

Movies

Review: Terry Gilliam's 'The Zero Theorem' is better…

Terry Gilliam's latest, "The Zero Theorem," concerns a reclusive malcontent (Christoph Waltz) struggling with the search for the meaning of life.

Music

Esperanza Spalding and a being called Emily get…

Esperanza Spalding is about to spiral off in a brand new direction that may or may include an alter ego named Emily.

NFL

Oday Aboushi ready for increased role, and to…

Oday Aboushi might feel comfortable enough to engage in some trash talk the next time he is on the field.

NFL

Giants vs. Texans: 3 things to watch

The Giants host the surprising Texans (2-0) in what may already be a must-win game for Big Blue.

NFL

Eric Decker misses practice again, could miss Monday

Jets wide receiver Eric Decker missed practice Thursday as he continues to rehab a hamstring injury suffered last Sunday.

MLB

Derek Jeter still focused on baseball as final…

Derek Jeter has effectively hid his emotions for 20 years in the Bronx.

Parenting

A sneaky way to serve kids fruits and…

"My First Juices and Smoothies" gives smoothie recipes for kids.

Style

3 things we love from Day 1 of…

The highlights from Day 1 of Milan Fashion Week.

Sex

Why don't more couples use condoms?

  Call it the “condom moment.” That’s the name the authors of a new study have given to the pivotal conversation every couple should be…

Sex

Need an idea for a first date? Here's…

Picture your idea of a nice first date. Is it dinner and a movie? A visit to an interesting museum exhibit? Instead, an expert on…