The Effect of Medical Marijuana Laws on Extralegal Marijuana Prices

As of Mar 2012, 16 US states plus the District of Columbia have enacted laws that legalize medical marijuana at the sub-national level. This article examines the effect of medical marijuana laws on extralegal marijuana prices. While there are other costs associated with the sale of medical marijuana besides production costs, prices in the extralegal market are clearly much higher because of its illegality. The study found that medical marijuana laws, by removing medical marijuana patients from the market for extralegal marijuana, lead to lower prices in extralegal markets. In other words, having passed a medical marijuana law was negatively related to the price of an ounce of high-quality street marijuana within a state, as measured by http://www.priceofweed.com.