Marijuana Cost VS. GOLD

[Grizz]

Ok your growing some dank and you want 500 a oz. the guy down the road has the same dank for 400 a oz . where are the buyers going to buy at? Its that damn simple. If your growing volume and can under cut your competion You win. The American way. If you think you can get a group of growers to stick togather and set a high price your crazy , one of them is going to get greedy and under cut and sell.

 

[Guest]

Ok your growing some dank and you want 500 a oz. the guy down the road has the same dank for 400 a oz . where are the buyers going to buy at? Its that damn simple. If your growing volume and can under cut your competion You win. The American way. If you think you can get a group of growers to stick togather and set a high price your crazy , one of them is going to get greedy and under cut and sell.

So offering herb by undercutting is greed? For me greed is getting the most you can. If there's undercutting then someone can supply a good product for less...just frikkin business. Thank god for those willing to take a bit less, make a good livable wage and offer smoke for a more reasonable price.

I think demand is higher than supply

If it was then prices would be increasing...which they are not.

 

[socioecologist]

Supply and Demand is a relict of neoclassical economics, and does not explain market behavior in most situations (it makes too many erroneous assumptions)--especially cannabis prices.

JW--You have a point, but you're assuming perfect market information, i.e. everyone knows who's selling what strain for what price. That might be getting closer to reality in the California med scene, but its not the way black markets operate. Cannabis sellers are definitely influenced by others' prices, but the amount of price information they have access to is going to be pretty small--your average buyer might have even less information.

Another aspect to consider is the high turnover rate for users. Most users are 18-24, with usage dropping to about 1% of the 30+ years of age population. This is a hinderance to developing any sort of institutional memory regarding prices. It really makes me wonder what sort of turnover there is in the growing scene in general--what percentage of growers have been doing what they're doing for 10-20-30 years? That would have an impact too.

Looks like 'Dam prices were $2.50-$12.50 / gram in 1997--not too far off from today. Same situation there. Interesting.

 

[gramsci.antonio]

I would be interested to see the historical prices per gram of cannabis in Amsterdam and see if there is any fluctuation--anyone have access to something like that?

I can tell you that from 1991 price kept on going up and quality went down.

But this is because dutch government is going more restrictive by the day.

 

[gramsci.antonio]

Supply and Demand is a relict of neoclassical economics, and does not explain market behavior in most situations (it makes too many erroneous assumptions)--especially cannabis prices.

I totally agree.

Exemplum given the oil, wich is a legal good, but an elite decide its price. Despite it's freely available in nature.

JW--You have a point, but you're assuming perfect market information, i.e. everyone knows who's selling what strain for what price.

and the good is available at your door.


Edit: grammar errors.

 

[Guest]

Supply and Demand is a relict of neoclassical economics, and does not explain market behavior in most situations (it makes too many erroneous assumptions)--especially cannabis prices.

Honestly...please explain a bit about cannabis prices. I'm genuinely interested in understanding why canna prices have basically held firm while in general the cost of just about everything else has gone up. I'd like to know how this is not a supply/demand scenario.

Exemplum given the oil, wich is a legal good, but an elite decide its price. Despite it's freely available in nature.

If you've taken a close look at the crude oil story you'd see production is peaking as supply is finite. We're basically at peak production and refinery capacity. It's not freely available.

 

[socioecologist]

Commodity Fetishism

The crop value sets itself; supply and demand in relation to risk and competition.

Sorry, but I can't let this one slip by. When was the last time a plant told you what to price it? Maybe this is the wrong place to ask that question...my plants tell me shit all the time.

"Economics" is the aggregated effect of a class of social interactions, not tautological determinism dictated by inanimate objects. If we are to understand why cannabis prices are what they are, we need to investigate the social forces at work here. There is an element of risk, but does that ever figure into the final price? I doubt it.

I strongly suspect prices are most influenced by a seller's historical experience--i.e. prices have remained relatively flat in nominal terms because that's what everyone has bought/sold during their lifetime. If you bought your first 1/8th for $40, you'll probably sell your first homegrown 1/8th in the same range. That's not to say that scarcity doesn't figure in, I'm just saying I don't think its the driving force.

If true, this also alters the demographics of growers and buyers over time as well--to be a small grower today requires a "real" job (i.e. second full time job) to pay the bills, whereas in the early 1990s, that wasn't necessarily true.

 

[Rosy Cheeks]

Supply and Demand is a relict of neoclassical economics, and does not explain market behavior in most situations (it makes too many erroneous assumptions)--especially cannabis prices.

It's perhaps what they taught you in school of commerce socioecologist, but explain to me; how does it "especially" not apply to cannabis prices?

On the contrary, cannabis prices is the simplest of market economies, except for old fashioned trading.
It is exempt from the rest of the market economy - as an illegal product - and fly under the radar of the structure and mechanisms that regulate prices in society. The only 'external' regulation involved are the laws that forbid it, and what you risk if you brake them. Neither taxing nor social charges, interest rates, the stock market in Hong Kong or Alan Greenspan's predictions are going to play directly on the Cannabis market and it's prices.

What can make prices fluctuate? Big drug busts might give some clever cash croppers the idea to raise prices, if they see competition go out of business, but that's only going to work momentarily and prices will auto-regulate themselves eventually.

There's plenty of money in the buyer's pockets - in general - so that's not going to explain why the prices do not rise (in level with gold), if they don't.
If prices aren't rising, someone's doing something right.

If it was entirely an import product, like opium and cocaine, you would see a whole different scenario, I believe.

At the same time, drive over to the other side of the border, in Canada and Mexico, and see how prices drop dramatically.

 

[clowntown]

That's right. Like most items MJ is becoming cheaper by the day, in terms of the percentage of your earning power, but apparently at a much worse rate.

I guess MJ traffickers never heard of fuel surcharge.

 

[NZjay]

If only I could grow gold..

im glad i wasnt drinking anything when i read that....

 

[Guest]

I know that in the 70's, a nice fat oz was $30 all day, every day.
Special reds and golds could get $35-40.
It was a known fact that any 1/4elbo was a flat $115
This was for years and years.

Sometime during the early 80's a paradigm shift was being made.
The previous normal size of street purchase when herb was $30 an oz was either a full oz, or a "lid" which was half oz. The change of the 80's saw the normal street purchase size decrease to 1/4oz, with the price ending up at about $50 1/4oz.
To this day, the going street is $50 1/4oz.
(your area may vary)

The free market and it's dynamics simply do not work in the normal way with herb, since it has not been allowed any freedom. If the tax hungry politicians would figure out just how much state revenue could be gained by simply freeing up herb, there would be far less of a hokey market. And I for one would be glad to be involved with the taxation, in return for the freedom.

 

[ogatec]

simple supply vs. demand... gold demand has gone way up while supply has gone down.

weed demand has leveled off, but supply over the last few years has gone WAY up...everyone is growing these days....in'91 every1 was still scared the whirlybirds in the sky would get them if they planted a seed.

 

[ogatec]

wow, 91-92.. thats right around the time i started smoking. a pound of mexi-press back then was around $550-600 now its around $300-390....hehe now thats supply & demand in effect!

 

[Haps]

The price of gold is a balloon, have you ever tried to sell it in the real world? Buyers will not pay anthing close to what the markets say it is worth. I needed to sell some a couple years ago, and could not do it because they were just wanting to screw me on price, and the banks won't touch it. Buying gold is one of the stupidest things I ever did, although if I could sell it at todays price I would more than double my money.

"Weed will get you through times of no money better than money will get you through times of no weed", I reckon that is still true.
H

 

[socioecologist]

Show me where supply has increased and demand has leveled off--it is becoming redundant at this point, but the assumptions of a supply/demand model do not apply to this item.

This has been regurgitated several times without evidence. The evidence seems clear--the nominal price has remained relatively stable since the early 1980s (thanks for confirming that Hoosierhash). Now what would cause that? I stand by my previous posts, but would really like to see/hear some contrary opinions that do not rely on a fraudulent abstraction ("supply/demand").

 

[Guest]

I guess MJ traffickers never heard of fuel surcharge.

LOL. I just can't see anything other than supply has been increasing faster than demand but then there are local markets in the US where prices are significantly higher than others. In those ares, I'm guessing, production is lower and distribution more difficult. Inflation is basically always there just sometimes, like lately, it is taking a bigger bite out of peoples spending power. I went into the local health food store and they wanted $3 for a muffin. Increasing fuel costs are having a major impact. Wage increases are just not keeping up. Asset values are plummeting, house and stock prices.

While in some ways the comparison of gold to cannabis may not be the best it's a good starting point.

 

[socioecologist]

Haps--have you tried Ebay? My parents are small time gold miners and have had some success recently on Ebay, getting anywhere from 90-105% of spot price for placer gold (price fluctuations in this case are often due to size of the nuggets being offered--sounds kinda like cannabis to me).

A final note on the alleged supply/demand fairy: how is yelling "supply and demand" at a class of economic transactions, without knowing the underlying assumptions and mechanisms that govern microeconomic models (which do not apply when those underlying assumptions are not met, as is the case with cannabis), any different from someone yelling "Praise Jesus!" when they experience something outside of their understanding?

I truly welcome any contrary opinions that are empirically grounded and theoretically sound.

 

[Guest]

Sometime during the early 80's a paradigm shift was being made.

OK...went back and read that post by Hoosierhash and maybe this is it a bit and I did start smoking around '75 so know that scene. Quarters (pounds) of Acapulco Gold were like $140 and that was EXPENSIVE. There were large volumes of cannabis being imported in the 70's and into the early 80's but this flow was stemmed by increased law enforcement activity. Large planes filled with very inexpensive cannabis grown in third world countries, at that time they were third world countries, basically stopped coming into the US. Shit was coming across the border with Mexico like crazy. When was the last time anyone saw a story about some big jumbo plane getting caught carrying a large load of cannabis into the country? The cost of growing cannabis, which was done on a very large scale, in these countries was almost nil. Once this flow of product was virtually stopped the reliance was on US grown. Growing in the US could not be done on such a large scale as was done in the third world countries or as inexpensively and I'm guessing the cost was higher by a factor of 10, our population density is greater, available open land is less and law enforcement is more significant.

The other thing was people started breeding for greater potency, flavor, etc. I smoked all kinds of landrace back in the day but some of the strains now make that stuff look pathetic. It's a better product.

I don't don't think there was much of a paradigm shift in the 80's. I see it as something else more basic.

 

[ogatec]

supply & demand

supply & demand

more people growing= supply goes up

same people now growing that used to buy=demand goes down

EVERYONE that smokes these days is growing or knows someone that is, it didn't use to be that way...

thats why the price of shwagg has gone down, no one has to smoke it anymore. it definitle didnt use to be like that around here, good nuggets were hard to come by in '91.

 

[socioecologist]

For reference, $140 in 1975 would be about $536 in 2007. That's roughly $33 / 1/4 oz. using 2007 dollars. Contrast that with Hoosierhash's figure of $50 for an 1/4 oz. in 1980 (the price increase), which would be about $70 in 2007 dollars. Hoosier's prices from 1980 sound pretty similar to average prices (check the "price in your area" thread--good info) people outside of the big cities are reporting (after controlling for inflation).

If that's the case, pot prices HAVE roughly kept up with inflation, while quality has gone up. I think we need some more data though, especially during the late 1980s and early 1990s--it seems like something happened there as well.