XPost: ne.general, soc.culture.usa   
   From: williamkeithmahler@gmail.com   
      
   Could Oregon’s legal marijuana market starve Washington’s?   
      
   Voters in Oregon decide on Tuesday whether or not to legalize recreational   
   marijuana. If the measure passes, Oregon and Washington will boast the first   
   shared border in the world of legal retail pot.   
      
   Yet the two states will have very different legal frameworks, with prices in   
   Oregon expected to be far lower than prices in Washington, where a   
   combination of supply shortages and taxes have kept pot prices sky high. The   
   potential discrepancy is causing some to speculate that Oregon’s cheap   
   dispensaries could end up stealing business from those in Washington.   
      
   The predicament underscores the growing pains legalization advocates and   
   policymakers face in figuring out the best ways to tax and regulate the drug   
   from state to state.   
      
   Ever since legal pot went on sale in Washington in July, consumers have been   
   shocked at how expensive it is. At Cannabis City in Seattle, a gram of weed   
   costs about $20: That works out to be over $500 per ounce. Meanwhile, on the   
   black market in Washington, an ounce of pot costs about half that, according   
   to the website Price Of Weed, which crowdsources the cost of marijuana in   
   each state.   
      
   The state’s pot prices are high for a number of reasons. First of all, the   
   state taxes pot at every step of the way -- from the farm to the consumer --   
   meaning that customers end up paying a tax burden of 30-40 percent when they   
   go to buy a dime bag. Second, there was (and still is) a supply shortage.   
   This is partly because the state put a cap on the number of shops allowed to   
   open, and then handed out licenses randomly to entrepreneurs who either   
   weren't prepared to open a business or who had trouble finding a location   
   because of the state's strict zoning laws. Washington's supply shortages are   
   also due to the fact that growers who were given licenses needed time to   
   cultivate the plants (a process that takes about three months.)   
      
   In an especially ludicrous illustration of Washington’s inability to snuff   
   out the black market for weed -- which was one of the primary reasons the   
   state decriminalized the marijuana in the first place -- dispensary owners   
   in Washington have reported having to chase drug dealers off their   
   doorsteps.   
      
   Now compare that to Oregon, where recreational marijuana, if it becomes   
   legal, would cost just $145 an ounce, according to a report from the   
   consulting firm ECONorthwest. Even if dispensaries divided that ounce into   
   smaller units and marked up the price, that’s still significantly cheaper   
   than what legal retail weed costs in many Washington dispensaries. As a   
   result, experts say it’s inevitable that Washington residents will motor   
   over the border to get their herb in Oregon.   
      
   “There will definitely be lots of people coming from Washington to Oregon   
   [to buy cannabis],” said Robert Whelan, an ECONorthwest economist who   
   co-authored the report. Whelan said Oregon -- which is one of the few states   
   in the nation with no sales tax -- already does billions of dollars in   
   business selling other commodities to out-of-state residents from Washington   
   and California.   
      
   “No one in their right mind buys a TV set or a computer in Washington if   
   they live anywhere near Oregon,” Whelan said. “Because if you come here,   
   you   
   save $100.” The same will be true for marijuana, he said.   
      
   Brian Budz, who co-owns a retail marijuana store called New Vansterdam in   
   Vancouver, Washington, said he’s worried that if Oregon passes a law   
   permitting recreational pot stores to open, he could go out of business.   
      
   “It’s absolutely a concern, yes,” Budz told HuffPost. His business is   
   forced   
   to pay a 25 percent excise tax when they buy weed wholesale from a grower   
   and another 25 percent fee when they sell to the customer, Budz said. “And   
   that doesn’t include the federal taxes, or the fact that because we’re   
   selling a Schedule I drug, we can’t write anything off. So we’re getting   
   blasted from all angles.”   
      
   In Oregon, the proposed law would “make it easier for retailers to breathe   
   and make a profit,” because the taxes are so much lower, Budz said.   
      
   The price discrepancy problem would likely only affect southern Washington,   
   since dispensaries in other parts of the state are far from the border. And   
   in the longer run, the price gap could close, said Brookings Institution’s   
   Phil Wallach.   
      
   “Because Oregon’s tax would be by weight and Washington’s is by price,”   
   Wallach said, “if the supply problems in Washington eventually get   
   alleviated and the price comes considerably down, that will also lower the   
   amount of taxes [consumers will pay]. Eventually, there could be an   
   equilibrium.”   
      
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   W. K. Mahler   
   http://www.mahlers.com   
      
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