Marijuana Legalization 2013: Uruguay is the First Country to Regulate the Price of Pot, And It's Damn Good

Uruguay's drug czar Julio Calzada told El Pais newspaper on Sunday that a gram of marijuana should cost $1 in the second half of 2014. If that sounds inexpensive, that's because it is. Two months ago, Calzada said a gram would cost $2.50, but lowered that estimate Sunday.

Uruguay will become the first country in the world to create and uphold regulations surrounding the distribution of weed. However, sales are only for locals. The goal of the law is not to turn a profit, but instead to steal market share from illegal dealers by undercutting their prices. This will hopefully reduce the power of those dealers through economic means, which is why Calzada has set the price so low.

And it is really low. Last November, Americans in Colorado and Washington state voted to legalize marijuana, despite its continued illegality on the federal level. For the past 11 months, the states have been working on rules to regulate the marijuana industry. A Colorado Futures Center study last spring attempted to estimate how much revenue legalization would bring in. As part of it, they had to estimate the cost of weed in Colorado after it became legal. They found that it will cost approximately $185 per ounce, or $6.50 per gram. Regulators in Washington have said that a gram of marijuana will cost approximately $12 thanks to onerous taxes on the product.

Both of those estimates are significantly more expensive than what Calzada is looking to charge people in Uruguay. Of course, Uruguay is selling weed to crack down on the country's underground drug sector while Colorado and Washington legalized it for a variety of reasons, such as reducing black market sales and enabling recreational consumption. As the industry comes above ground in the United States, the price could drop significantly, especially if marijuana were to be legalized at the national level. Until then, American dreams of Uruguayan-esque inexpensive pot prices will have to wait.

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Danny Vinik

I'm a recent graduate of Duke University majoring in economics and public policy. I write frequently at my own site, called Political Algebra (www.dannyvinik.com). My main interests are economic policy and political analysis. Outside of journalism, I'm a big sports fan, particularly of Duke Basketball and the Boston Red Sox.

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