There could be a problem because marijuana is getting cheaper.

In the states where weed is now legal, the industry has really taken off.

The government and businesses are making a lot of money but will that continue?

In some of those "legal" states, the price of pot is falling.

According to chicagotribune.com,

"Wholesale marijuana prices in Colorado have fallen by a third in just the past 12 months, continuing a price crash that began soon after the drug was legalized. Although this implies that some marijuana entrepreneurs are going to go bankrupt, the bigger financial hit will be felt by states that tax marijuana based on its price."

One of the reasons is legal cannabis businesses are cheaper to run than illegal. In fact, a pound of marijuana can drop to just a hundred dollars. Economist predicted the prices would drop by half but it's been more.

This takes away a lot of that tax money which is the main reason states legalized it. In some places, they could actually lose money because of the cost to regulate the drug.

Many places there's a percentage tax. In Colorado, they raised it from 10% to 15% to try and make up for dropping prices. Unfortunately, it hasn't helped to make up for the difference.

California has found one solution. They tax by the weight instead of price. That will keep their percentages up.

It will be interesting to see how this all plays out.


 

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