Marijuana Revenue Calculations

Forbes magazine reports that the legal sales of marijuana at $9.7 billion in 2017 in North America.  But this is not the number which is important.  The important number is what is the black market value of marijuana sold in the US.  And this number is harder to find and much more uncertain.

legal marijuana price per pound CO

The easy legal numbers – Marijuana price cut in half in 3 years

There are other interesting legal numbers.   The very expensive Marijuana Business Factbook estimates legal retail sales for 2017 at a much lower value ($5.5 to $6.6 billion) but this same sources has a shocking forecast of $50 to $55 billion in estimated legal sales by the end of 2019.  This would put marijuana sales as greater than video games, doughnuts and 5 times the value of the combined sale of guns and ammunition.

retail legal marijuana sales contrasted to other industries

I am working on an update of this blog post from before even the Colorado legalization took place in 2014, attempting to estimate the total value of black market pot sales in the US.  These numbers look too big to me now, but they might be the right order of magnitude, thus dwarfing the legal sales nationally.  November 2018

The head of the California Cannabis Manufacturing Association estimates that there are 5 times more illegal distributors in most California cities than legal ones.  These illegal dispensaries are also charging 2 to 3 times less than the legal ones, and thus presumably doing more business.  If we extrapolate this to the nation, then the floor value of illegal marijuana sales would be about $50 billion in 2017, excluding non-dispensary sales.  And if we use the Marijuana Business Handbook forecast for 2019, we are looking at over $250 billion in total illegal sale nationwide.

Original post from 2010: I did some searching around on the internet and did not find estimates of what the total California marijuana crop was worth, so I did not of my own math.marijuana fields

The High Intensity Drug Trafficking Area report estimates 49,000 metric tons of marijuana made it to market from California in 2009.  The street value of an ounce of marijuana is (according to Yahoo Answers) is $300

An ounce is 28.35 grams.  This means a metric ton of marijuana is worth about $10 million. This means the total California crop is worth on the order of $500 billion.

Now what is seized is not what is sellable, so there is a significant factor – perhaps 5 fold which this number might be reduced by for the parts of the plant which have little value.  But since HIDTA is saying the 49K tones is what did not make it to market, presumably this is after cleaning.  So i will stick with the half a trillion dollar number, in part as well for its pure shock value.

Update: Mere days after i made this calculation Mexican authorities reported they had seized 105 tones (presumably metric) of Mexican marijuana worth US$340 million. Using this calculation, the 2009 California crop would be worth about $160 billion.  But again, crops grown in Mexico are typically worth about a third of those grown in the superior conditions of California, bringing the price back to around half a trillion dollars.

11 responses to “Marijuana Revenue Calculations”

  1. LordBKP says :

    Well if the numbers are correct or even close then pot should definatly be legal and taxed. Emagine that if California who suggests that the revenue would be 1.4 billion a year, revenue is profit right? Ok so they legalize it, the profit from the first year would go into a fund, at the end of the year divide every person who bought pot and paid the tax into that and send them a check for half, like the stimulus checks, then divide every other person living there that was born in the usa into the remaining balance and send them their checks everyone in California would be rich. After the first year the government then could use the profit to help its economy. What would Californias economy be like if no one was poor? At least those that were born in our great country? Then do that in all other states, what the hell, they can wait one year before taking the profits. 1.4 billion in profit, 40 million or so in population you do the math. after the first year the people wanting pot could even be able to afford it, how great would that be? No stealing to get pot money!!

  2. Ken says :

    One wrinkle I’ll mention: I expect that if pot were legalized, the price would go down. $300/oz is an absurdly high price for something as easy to grow as MJ. Illegality constitutes a pretty serious degree of overhead that could be mitigated by legalizing it.

    Security would still be a significant source of overhead, so I doubt it would ever get as inexpensive as oregano, but it might be that the price would drop to something like cigarette levels. (Is it taxed like a normal vice-product in the Netherlands? I wonder what pricing is like there. Does it offer us any sort of perspective?)

    • Wyatt Smith says :

      It’s not as easy to grow good bud as you think. Do your research before you say things that you have no idea about. I do agree though…300 a zip is insane.

      • Ken says :

        This was not an entirely uninformed perspective. I’m sure that people have different experiences, but do not assume that I have no idea what I’m talking about. But I expect you’re onto something all the same–the effort in growing business/crop-quantities is presumably like growing anything else: large scale operations are probably more like farming (ie, a lot of work) and less like hobby gardening for personal consumption, and carrying the same kinds of risk in event of crop failure. At the risk of indeed hazarding guesses (not knowing anything about large-scale operations): I doubt it’s as finicky and treacherous as growing tobacco, anyway.

  3. Jake Kawatski says :

    This is akin to the effects of Prohibition during the Great Depression. Once Prohibition was gone, the additional taxes on alcohol aided the economic recovery
    Altho, sad to say, it was the engine of World War II that pulled the world out of the Depression. What a price to pay….

  4. Yam Erez says :

    Legalizing hard drugs has its merits too: Get the addicts to where they can be put on methdone and perhaps be helped, off the streets, or at least stem the spread of AIDS and TB; and remove a source of income from organized crime. Win-win, no?

  5. Matthew L says :

    That is completely incorrect an ounce of weed in Cali isn’t even worth 200.

    • paxus says :

      Matthew you are completely correct. AND this was written 5 years ago, prices have come down tremendously with legalization of recreational and medical in now over 20 states.

      Thanks for your comment

      PAxus at Acorn

  6. huophuoi says :

    yse

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