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
National

Woman dies when run over by bus at…

A woman at the Burning Man arts and culture festival in the Nevada desert died on Thursday when she was run over by a bus carrying participants.

National

Texas parents sue day care center for duct…

By Marice RichterDALLAS (Reuters) - A Texas couple has filed a lawsuit against the owners of a Fort Worth-area day care center seeking $1 million…

National

Santa Fe city council votes to decriminalize marijuana

By Joseph KolbALBUQUERQUE N.M. (Reuters) - Santa Fe on Wednesday became the latest U.S. city to decriminalize small amounts of marijuana, with lawmakers in the…

International

Egypt queries Mursi over documents "leaked" to Al…

CAIRO (Reuters) - Egypt is investigating jailed ex-president Mohamed Mursi in connection with documents that judicial investigators say were leaked to the Qatar-based Al Jazeera…

Going Out

'Friends' coffeehouse Central Perk coming to NYC —…

"Friends" is coming back for a one-off special: "The One with the Free Coffee." Warner Bros. is bringing a pop-up replica of Central Perk, the…

Movies

Interview: 'As Above, So Below' directors: 5 ways…

The fraternal directors of the found footage horror "As Above, So Below" dish on the best ways to frighten the bejesus out of audiences.

Movies

Criterion's new Jacques Demy box mixes the light…

Jacques Demy, the most effervescent of French New Wave filmmakers, gets a Criterion box all to himself, with classics like "The Umbrellas of Cherbourg."

Entertainment

Comedian Joan Rivers, 81, rushed to New York…

NEW YORK (Reuters) - Acerbic comedian and fashion critic Joan Rivers was rushed to Mount Sinai Hospital in New York on Thursday after she reportedly…

NFL

3 things we learned in the Giants preseason…

The final score didn’t matter — a 16-13 win by the Giants — but it would’ve been nice to finally see Big Blue’s new-look offense get on track.

NFL

NFL Power Rankings: Seahawks, Broncos, Patriots, 49ers start…

NFL Power Rankings: Seahawks, Broncos, Patriots start at top

U.S. Soccer

5 facts about new England captain Wayne Rooney

Manchester United striker Wayne Rooney was named as the new England captain by coach Roy Hodgson on Thursday.

NFL

Jets vs. Eagles: 3 things to watch

A win on Thursday night at the Eagles would give the Jets a 3-1 record and just their second winning preseason under head coach Rex Ryan.

Style

Trend: White hot on the 2014 Emmy's red…

White was one of the big trends on the Emmy's red carpet.

Food

Recipe: Samuel Adams beer-marinated grilled shrimp

Summer calls for two things: a cold beer and light food. Sam Adams' Latitude 48 IPA fairly bursts with citrus notes, making it an ideal marinade…

Wellbeing

4 healthy ingredient swaps to make your meals…

When it comes to eating well, everyone knows they could be doing better. But cooking in an apartment on a busy schedule is a recipe…

Wellbeing

Heart trumps brain when it comes to movies…

When you need a good cry, do you reach for the movie that’s “based on a true story”? Science says you’re giving your brain far…