0

It is conventional wisdom that the criminalisation of the supply of recreational psychoactive drugs causes an increase in the cost to supply and therefore to the user. In an unreferenced but somewhat intuitive statement:

According to multiple economic analyses, current marijuana prohibitions raise the cost of its production by at least 400 percent; the resulting higher prices help hold down rates of usage.

However other studies have indicate this is not the case, according to one frequently referenced study from 2016 (though relating to harder drugs):

We find that (retail) prices of cocaine and opiates did not decrease following the drug decriminalization [in Portugal]. Therefore, drug decriminalization seems to have caused no harm through lower illicit drugs prices, which would lead to higher drug usage and dependence. This evidence contrasts with the commonly held belief that drug decriminalization would necessarily lead to a dramatic increase in usage rates.

With the prevalence of marijuana legalisation and darknet markets it is easy to do direct comparisons online. Comparing prices for delivery between San Francisco dispensaries (which are legal at the state level and face significant competition) and darknet markets (which are illegal at state and federal level) we see that prices are similar for quantities of 1g – 3.5g and about half the price on the darknet for quantities of 14g – 28g. Results are similar for Amsterdam, with a greater price differential in favour of illegal supply for lower quantities and less difference at the 28g level. I am not including links here, but these numbers are easy to check (but I suggest you use tor if you do so). Anecdotal evidence indicates that quantity is at least as high on the darknet.

Excise tax is used to increase prices of such products, but it seems this is only 15% in California, so does not explain the price difference, let alone the absence of a reduction in cost due to legalisation.

Why is it that the predicted reduction in prices has not occurred?

Changed status to publish