Marijuana News Roundup: Cheap Illegal Pot Biggest Threat to Cannabis Industry?

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Every week we publish a story on the spot and future prices of marijuana at the wholesale level. One of the things you notice from any of these weekly reports is the big difference between the spot price for a pound of cannabis and the price consumers pay at legal dispensaries and retail shops.

Last week, for example, the spot price for a pound of cannabis was $1,640. There are slightly more than 450 grams in a pound and the average price of a gram in states where marijuana is legal — either for recreational or medicinal use — was $11.14. That works out to more than $5,000 for that original pound of pot.

Some of that gross revenue goes for state and local taxes, some for testing the cannabis, some for processing, and some for overhead costs. All in all, legal pot is expensive.

What about illegal marijuana? The Albuquerque Journal has an interesting piece on the farm-to-table price of a kilogram (2.2 pounds) of marijuana grown in Mexico and smuggled into the United States. A drug cartel pays about $20 for a kilo of marijuana at the farm gate. After some processing and packaging and transportation, the illegal marijuana sells for more than $700 a kilo in Albuquerque or Phoenix and as much as $1,600 a kilo in New York City.

That’s less than $800 a pound, half the wholesale price for a pound of legal pot in the United States and around 15% of the $5,000 price in the U.S. retail market. It could be that the marijuana industry faces a bigger challenge than an unfriendly U.S. Attorney General.

What Will Be AG Jeff Sessions’ First Move on Marijuana?
A new lawman has come to town, and the marijuana industry could be in for major upheaval.

But just how much change Attorney General Jeff Sessions might impart — and how quickly he’ll address federal marijuana enforcement — remain the multibillion-dollar question.

“It’s not like you could see agents come into every storefront in the United States tomorrow and deal with this. That’s not a reality,’ drug policy expert John Hudak said Wednesday.

But if Sessions rescinds the 2013 Cole Memo that established federal guidelines for marijuana enforcement, ‘It’s difficult for policy makers. It’s difficult for elected officials.”

Because the industry sits uncomfortably in a legal-illegal limbo and has been publicly chastised by Sessions, the future strategy for the Department of Justice under the Trump administration could present itself in stark contrast to the fairly laissez-faire enforcement approach by the Obama administration.

Read more at The Cannabist.