# Marijuana Defies Crop Inflation



## FruityBud (Feb 28, 2011)

Crop prices have shot alarmingly high over the past year. Corn rose 63% during the year through January and wheat, 51%, according to the Bureau of Labor Statistics, which tracks U.S. inflation data. Grain-fed hogs and chickens are 9% pricier. Wool is up 18% and raw cotton about twice that.

Conspicuously immune to recent inflation, however, is a crop some researchers say is now America's largest revenue producer: marijuana. Despite its illegality for recreational use and the vast sums spent by taxpayers to curtail its production, it sells today for a little less than it did a year ago.

Naturally, the government doesn't include marijuana in its consumer and producer price data, but there are a few ways non-users can get fairly reliable prices. There's STRIDE--the System to Retrieve Information from Drug Evidence--where undercover officers report what they paid for drugs. Also, the National Survey on Drug Use and Health contains a bit of information on aggregate volumes and prices, but it's mostly useful for learning, say, that half of Americans drink alcohol, one-quarter smoke cigarettes and 6.6% smoke marijuana, and that only the third category is growing.

For detail and freshness, neither government source matches High Times, a 37-year-old New York magazine for cannabis enthusiasts. Its monthly Trans-High Market Quotations are based on reader submissions of prices by strain and location.

There's a bit more information than the average economist needs. "Prepare to be stuck on the couch for hours," wrote a Baton Rouge respondent who provided a price for something called OG Kush Bubble Hash. "Very, very stinky with hints of sour cream, Parmesan and blueberries," wrote another about the "TGA/Subcool version of U.K. Cheese," which probably isn't a dairy product.

What's clear from the numbers is that prices are looking lazy. The High Times index for "kind" (superior) cannabis fell 4% in the year through January, while the "mids" index fell 6%. January marked the first month that no reader submitted a price for "schwag," or inferior, cannabis. The broad U.S. Price Index increased nearly 3% over the past year, presumably because respondents have traded up to better weed.

High Times didn't respond Friday to a request for comment.

It seems clear why marijuana might buck the inflation trend. Recent commodity pressure can be traced to rising demand among the swelling middle classes in emerging markets like China, for whom pot isn't likely a priority. Also, the price of marijuana bears little relation to farming costs or prices for typical crops. Medium quality strains sold for $283 an ounce in January, according to High Times. Corn futures recently traded at $7.10 a bushel (about 70 pounds for ear corn). That's close to the June 2008 peak of $7.65.

Indeed, the high price of marijuana makes U.S. production of it more valuable than that of corn and wheat combined, according to a 2006 study by Jon Gettman, a High Times contributor and former head of NORML, the National Organization for the Reform of Marijuana Laws. Marijuana is the top cash crop in 12 states, according to the study. California is the overwhelming production leader, growing pot worth more than its grapes, vegetables and hay combined. Marijuana proceeds political name peanuts in Georgia and tobacco in the Carolinas, according to Gettman.

Falling prices ought to worry the White House. In an October position paper titled "Marijuana Legalization: A Bad Idea," it argued that "legalization would lower price, thereby increasing use." A 2005 study from the National Bureau of Economic Research found that the two most important predictors of marijuana use are perceived harmfulness and price.

The marijuana price decline also presents an awkward irony for policy makers. A 2005 Harvard report found that federal, state on local government spend $7.7 billion a year to make marijuana more difficult to come by. That's roughly what the federal government spent in 2009 to make corn, cotton and wheat more plentiful.

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## tcbud (Feb 28, 2011)

In Northern California...you can still feel the price dropping.  Last Fall Harvest can still be found for sale out here.  Some prices have fallen by half for the producers.  Some growers are sitting on their crops waiting for the price to go back up.  And some are selling at prices NEVER seen before.  It definitely is a buyers market in Northern California.

The above last paragraph is enough to make MJ legal IMO.


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