BUSINESS
04/20/2013 09:30 am ET

Marijuana's Per-Ounce Production Price Could Drop To 62 Cents If Drug Is Legalized: Report

AP

As you sit back, relax and inhale the doobius holiday that is 4/20, remember this: Life could be even better.

If the country legalized pot, the drug could be farmed and produced for about $10 per pound -- or about 62 cents per ounce -- assuming it was produced in the same manner as similar products like tea, according to American Interest magazine. That doesn’t mean you could get your thrills for that cheap -- the figure is just the cost of production, before retail markup, taxes, testing, etc.

But that weed habit -- or occasional, social use amongst friends -- could be burning a much smaller hole in your pocket if marijuana was legal. A widely cited 2006 study puts the per-ounce production cost of marijuana at around $100, much higher than the American Interest’s post-legalization estimate.

To measure it another way, pot retails for something around $300 per ounce these days, according to a Slate report from last year. But when Washington and Colorado legalized marijuana for recreational use last year, many experts estimated that the per-ounce cost could drop to as little as $3 as a result.

As American Interest notes, legalization “would make marijuana like bottled water in the sense that the cost of producing the good would be a second-order consideration; most of the final price would come from quality-control inspection, packaging, distribution and retailing." In other words, the cost of production would no longer drive the retail price.

Still, there is one way in particular in which legalization could tack on extra costs: taxes. Last month, Colorado lawmakers weighed a bill that would tax marijuana at rates of up to 40 percent in some areas.

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