Tuesday, November 4, 2014
Oregon's Cheap Legal Weed Could Starve Washington's Market
http://www.huffingtonpost.com/2014/11/01/oregon-legal-weed_n_6084208.html DUE 10 NOV 2014. Using the Laws of Supply and Demand, discuss the issues involved with Oregon passing legislation for recreational marijuana. How will government intervention affect the marijuana markets in Washington? How will government intervention affect the marijuana markets in Oregon? How does this lead to the creation (or sustainability) of black markets?
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The laws of supply and demand dictates that as demand rises and supply is limited price rises, also if supply increases but demand decreases prices decrease. That being said, in respect to the laws of supply and demand and the Oregon case, supply is being increased 2 fold. If supply increases and prices decrease, then the weed industry in washington will be harmed by the competition in price and supply. The governments intervention in Washington has caused for prices to be high when an excise tax is placed on wholesale consumption as well as a fee of 50% when bussiness sell to the consumer. This drives the price up even higher than black market prices. Government intervention will not affect the markets in Oregon besides raising prices on weight to balance prices in respect to washington to create an equalibrium.
ReplyDeleteCurrently if the dispensaries cannot produce enough or lower prices, black markets will continue to thrive even with the legalization of marijuana. As long as prices are high or supply is low black markets are guarenteed sustanability and creation because demand call for it. The demand for marijuana is overwhelming and government regulation did not account for the miscommunication to harvests, licenses, and the amount of dispensaries allowed to be open. Drug dealers still have a market just like they did when it was illegal, some may even say because of dispensaries the black market has been expanded with an increase in demand, drug related crimes will continue in the forseeable future because we can never get enough marjiuana even if its the good stuff.
The law of supply says that as the price of an item goes up, suppliers will increase the quantity available. The law of demand says that as the price of a good increases, demand for that good will decrease. In this Oregon case, the supply of weed available to residents in Washington will increase, shifting the supply curve to the right and causing prices to decrease. Residents in Washington will also buy more weed in Oregon because of the substitution effect, which basically says that a consumer will chose to buy the lower price item. Government intervention in Washington has caused the prices to be high because of the excise tax on weed, giving more of an incentive to the consumers to buy the lower priced weed in Oregon. Thus, government intervention in Washington can cause suppliers to go out of business. Because the government intervenes less in Oregon by not having an excise tax, the weed will be cheaper and attract more consumers from Washington. More people in Oregon may also start to try weed because of the low price. This article also talks about the black market of weed. Since the price of legalized weed in Washington is twice the amount of the price of black market weed, the black market will probably continue to thrive because people will want the cheaper product. However, in Oregon, since the price is much cheaper, the black market may decline because the savings will not be worth the risk of getting caught.
ReplyDeleteUsing the law of supply and demand, if Oregon passes the legislation for recreational marijuana the demand curve is going to shift to the right on a basic supply and demand graph. This shift will cause an increase in the price of marijuana. Government intervention will benefit the marijuana markets in Washington because they will order a decrease in the price of marijuana and eventually bringing the price close to that of Oregon. If the price goes down, people will continue buying their marijuana in Washington.
ReplyDeleteGovernment intervention in Oregon could cause the price of marijuana to go up by requesting taxes on it. A price increase will bring the cost close to Washington so their prices will be around the same. This will not hurt or benefit Oregon, people will continue buying it because the price is the same everywhere. These high prices lead to the effectiveness of black markets. Black markets do not have to pay a tax to the government on marijuana so they have lower prices. Legal sellers have to pay a tax and the price is high. People are more willing to go to black markets to buy marijuana because they get it for a cheaper price. Black markets can make a lot of money and will always be in demand.
The law of supply states that as a price of a good rises, suppliers will increase the quantity of the good; and the law of demand states that as the price of the good increases, the demand for the good will decrease among consumers. Based on both laws, if Oregon passes the legislation for recreational use of marijuana, the supply will increase (shift to the right) and prices decreases (shift to the left). Government intervention in Washington has increased the prices on recreational marijuana, which makes the markets too high for the consumers to purchase. Due to a large price on the good, Oregon could benefit from the lowered price markets for marijuana where consumers from Washington would purchase marijuana from its neighboring state.
ReplyDeleteHigh prices for such goods would lead to the spark of black markets for recreational marijuana due to the attraction of other cheaper versions of the good, or better known as substitution good for consumers. Black markets will make larger profit from consumers that are looking for cheaper priced marijuana compared to states such as Washington where the tax on the good is extremely high compared to Oregon's recreational marijuana price.
The laws of supply and demand state that as the price of a good increases the quantity will increase and as the price of a decreases demand will increase. These laws are prevalent in Washington because their are a limited number of weed growers and dispensers which boosts the price up for weed, and then there is the excise taxes from the government which makes the price skyrocket even more. However, if Oregon allows for recreational use of Marijuana the demand curve in Washington is going to shift to the left and the supply and demand curves in Oregon are going to shift to the right. The price in Oregon is going to be much cheaper so people in Oregon and people in Washington are going to obviously go to Oregon dispensaries for their weed because consumers will always go for the lowest price. Government intervention on the marijuana markets in Washington has significantly increased the prices for this good there. The dispensers are paying a total of 50% in taxes from buying the weed from the supplier and then selling it to the consumer, these taxes lead to markups in prices of the good that the consumer is going to have to pay. With the low taxes in Oregon sellers are going to have a much better profit margin and easier time selling because they are going to have very good prices and a high demand, with business from not only Oregon residents but Washington residents also. The high taxes in Washington benefit the creation and sustainability of black markets for marijuana in the state. Obviously people do not want to pay an over 50% markup for their marijuana so they will look for alternatives, the sellers on the black market. They'll buy more goods on the black market because they are getting more for their dollar, which benefits the black market dealers and the consumers using the black market.
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ReplyDeleteOne of the greatest problems dealing with the supply and demand of recreational marijuana is the competitive location – Oregon and Washington being Border States. I believe that, because of their geography, the sale of marijuana based upon supply and excise taxing is extremely elastic for the southern portion of Washington and northern Oregon – where price fluctuations could easily draw consumers to the alternative. This is, of course, the substitution effect.
ReplyDeleteGovernment intervention in the form of an excise tax hurts the consumers, where they have to pay about 30-40% of the tax. At the same time, marijuana in Washington is facing a shortage based upon the poor allocation of quoted licenses and the taxes, which shifts the supply curve to the left and raises prices and lowers quantity. The excise tax will hit the northern Washington folks who can’t travel to Oregon, but there will definitely be an influx of people going to Oregon for purchases, as supply is further out and no sales tax placed.
The reason Washington even legalized marijuana was because it couldn’t stop the black markets. Simply, states will legalize marijuana where it cannot be helped. As long as prices, however, are expensive compared to the black market price, there will always be an underground trade. In Oregon, this is not so much the case.
The main issue that will arise if Oregon legalizes recreational marijuana is that Washington will lose a lot of its consumers because consumers in Washington will travel across the state border to obtain cheaper marijuana. This will cause an increase in the demand or a shift to the right of the demand curve for dispensaries in Oregon. This is known as the substitution effect. Government intervention in Washington via excise taxes, zoning regulations, and quotas on licenses has led to consumers bearing 30-40% of the tax incidence and to dispensaries losing customers. Government intervention has resulted in a shift of the supply curve to the left, increasing prices and decreasing quantity. However, for Oregon, this will be good as it increases the demand for recreational weed as consumers travel across the border from Washington to Oregon for cheaper weed. Black markets for marijuana will increase in number because consumers will always want to have the same product at a cheaper price even if it isn't legal. Due to high taxes in Washington, consumers will buy from drug dealers to obtain marijuana at lower prices. This is counter productive to the main reason Washington legalized recreational marijuana: to cut down on illegal trading of marijuana. For Oregon, there will not be an increase of black market marijuana as the commercial price is already low.
ReplyDeleteThe laws of supply and demand dictate that when supply increases but demand decreases, the prices will drop. Also if supply decreases but demand is increasing, the prices will go up. In the case of Oregon legalizing marijuana for recreational purposes, the supply will increase drastically, but the demand isn't as high so prices will be low. Since Washington has legalized marijuana but its prices are higher, residents of Washington will be going to Oregon to purchase their weed. This hurts the weed industry in Washington because they demand will have a major decrease. Government intervention will cause major increases to the price in Washington because of the taxes added on the original price of the Marijuana, but wont affect the prices in Oregon besides a slight increase per gram. This will cause black markets to stay thriving because people will always try to find the most, for the least. With prices at a certain level, or with taxes added on, people will try and find the weed for even cheaper, even if it is illegal. In Oregon however, the black market will see a drop in productivity because the retail price is already quite low, and it'd be easier and safer to just buy it legally.
ReplyDeleteThe law of supply states that as a price of a good rises, suppliers will increase the quantity of the good. For the law of demand, it states that as the price of the good increases, the demand for the good will decrease among consumers.
ReplyDeleteIn this Oregon case, the supply of weed available to residents in Washington will increase, shifting the supply curve to the right and causing prices to decrease.
Residents in Washington has legalized marijuana but its prices are higher, the residents of Washington will be going to Oregon to purchase their weed, because of the substitution effect, which basically says that a consumer will chose to buy the lower price item. Since Government intervention in Washington has caused the prices to be high because of the excise tax on weed, giving more of an incentive to the consumers to buy the lower priced weed in Oregon. Thus, government intervention in Washington can cause suppliers to go out of business. Because the government intervenes less in Oregon by not having an excise tax, the weed will be cheaper and attract more consumers from Washington.
This article also talks about the black market of weed. Since the price of legalized weed in Washington is twice the amount of the price of black market weed, the black market will probably continue to thrive because people will want the cheaper product. However, in Oregon, since the price is much cheaper, the black market may decline because the savings will not be worth the risk of getting caught. For Oregon, there will not be an increase of black market marijuana as the commercial price is already low.
The law of supply states that as supply increases, then producers will increase production or demand while the law of demand states that was price increases, then consumer demand will decrease. Relating back to the Oregon situation, if the supply of marijuana were to increase, then the supply curve would shift to the right, causing price to decrease. This means that the residents in Washington will want to buy their marijuana in Oregon due to the fact that they want to buy it at a lower price. In other words, due to the substitution effect, Washington residents will buy their marijuana where it is cheaper. The Government intervention in Washington gave an increase in price due to an excise tax on their marijuana. With this, the consumers in Washington would rather go to Oregon in order to buy their marijuana since it is cheaper and will eventually cause the suppliers in Washington to close shop.
ReplyDeleteThe Government intervention however, has allowed for an increase in demand for marijuana in the state of Oregon since Washington residents are willing to travel to another state for cheaper marijuana. Marijuana in the black market will continue to increase due to the fact that consumers will always consider a cheaper price for the same product, legal or not. Also, the Government intervention in Washington with its excise taxes will again, push their consumers to participate in the black market in order to obtain their marijuana for a cheaper price. Compared to Oregon, Washington will have a higher activity with marijuana sold in the black market because of the excise tax on marijuana while Oregon will not since their marijuana prices continue to be low.
The law of supply states that if the price of an item increases the producers for that item will increase their quantity. The law of demand states that if the price of an item increases, the demand of the product decreases. When Oregon passes the legislation for recreational use of marijuana, the supply of weed available to the people of Oregon will increase, causing a shift to the right in the supply curve, and the price will decrease, causing a shift to the right. Also this means that people from Washington will come to Oregon to buy the relatively inexpensive weed due to the substitution effect. This is because of the two varying prices of weed in the different states, a high price for weed in Washington and a lower price for weed in Oregon. So with the effect applied people will tend to buy the less expensive weed within these two choices.
ReplyDeleteWith the government intervening with the acquiring and distribution of weed, the prices have rose substantially in Washington due to the excise tax placed upon the weed. With an ounce of weed costing around $500, people will be more inclined to buy weed from Oregon, which costs around $145 an ounce, putting the distributors in Washington out of business. Since people are more inclined to buy weed from Oregon and since the government does not put an excise tax on weed there, the distributors have more room to grow and make larger profits. When it comes to the black markets within both Oregon and Washington, it is more likely to have black markets thrive in Washington due to the highly priced weed. This would definitely push people to buy from these underground sellers. But within Oregon the weed is already much less than that of Washington’s so there is no need to buy from the black markets there, hence, decreasing the amounts of illegal weed activity in Oregon.
The law of supply states that as the price of a good increases, the quantity supplied by producers will increase. The law of demand states that as the price of a good increases, the quantity demanded by consumers will decrease. Oregon legalizing recreational marijuana will affect both the supply and demand curves. With a larger amount of marijuana available, the demand curve will shift right and the supply curve will shift to the right as well.
ReplyDeleteIn Washington, government intervention has caused the price of marijuana to increase due to the excise tax they placed on marijuana. In Oregon, they will be taxing the marijuana by weight instead of by price like they do in Washington. This will cause a gap between the price of marijuana in the two states. The price discrepancy could cause some people from Washington to buy marijuana in Oregon since it would be cheaper there.
The Black Market in Oregon will still be there but it will experience much less activity because residents will be able to buy marijuana legally and cheap. The legalization of recreational marijuana would help weaken the black market. In Washington, the black market may thrive more so than in Oregon. High excise taxes placed on legal marijuana will discourage people from buying legal, instead opting to go to drug dealers who do not add taxes.
If Oregon passes the legislation for recreational use of marijuana, it will create a shift to the right on the demand curve. By less risk being associated with smoking marijuana, more people will be influenced to try it thus creating an increase in demand. Because of the government intervention in Washington, people will go to Oregon to get their marijuana instead because of the cheaper price.
ReplyDeleteGovernment intervention in Oregon will cause more people to buy marijuana, originally the marijuana was only accessible to those who need it for medicinal purposes. Now the people who want to use it for recreational use will purchase it. This increases demand, but it also increases the price thus bringing in more revenue than in Washington. By allowing purchase of marijuana for recreational use, the sustainability for black markets will increase because the prices will raise, causing a higher demand for people to buy it from black markets. It will be much easier for people to hide that they grow marijuana because they can lie and say they have bought it from stores, rather than telling them that they grow it. The new black market producers will make a lot more money and will be very difficult to stop.
Oregon passing legislation for recreational marijuana would affect both the supply and demand of marijuana in Oregon and Washington. Marijuana was already legal in Washington but the supply was extremely low due to few licenses to grow and sell being issued and the price was inflated by a series of taxes on both the producers and consumers. Due to the low supply of marijuana in Washington, the prices were already high. Then, due to taxes on both the consumers and producers, purchasing a single ounce of marijuana could cost as much as $500. Meanwhile, in Oregon, more licenses would be issued and there would be fewer taxes. This would cause the supply to increase and the prices to decrease. Since Oregon and Washington border each other, it is believed that people in Washington will cross the border to buy marijuana in Oregon. If the price of transportation is less than the difference in marijuana price, it is beneficial for people in Washington to go to Oregon to purchase their marijuana. This would cause marijuana sellers in southern Washington to go out of business or at least lose profits to northern Oregon sellers. The black market for marijuana will exist as long as it is available cheaper than the market price. When the market price drops, such as in Oregon, the black market could collapse.
ReplyDeleteIf Oregon passes a law that prohibits recreational use of marijuana supply will increase and price will fall in Oregon shifting the supply curve to the left. The taxation of legal smoking herb in Washington will cause the prices to rise very high shifty supply to the right and demand curve to the right. Because of the substitution effect Washington pot smokers will go to Oregon and buy their pot because sit is cheeper. This would cause Washington market to collapse and organ to explode. Government regulation on origins weed could cause prices to rise to a price closer to Washington’s. If taxation happens in Oregon to set prices at an equal playing field with Washington then back markets will strive because ether can sell pot at a cheeper price than the dispensaries can crating that same substitution affect again.
ReplyDeleteIn Washington currently, due to government intervention, the supply of marijuana is low while demand is high, which results in a high price for the item. If Oregon's law passes, than supply in Oregon will be higher, which will result in a lower price, so the market in Oregon will look more enticing to consumers than in Washington where the price is higher. this lower price is also from the fact that Oregon has no sales tax, so many people already come over from Washington to but stuff. Since suppliers in Oregon will increase, the supply curve will shift to the right, resulting in a lower equilibrium price and quantity. In Washington, the price was high because of government intervention. The state government limited the licenses handed out, restricting supply, and then they added a 25% tax on supplier and 25% tax on consumers. Consumers will always want to pay less, so in Washington people could illegally grow marijuana and then sell it at a huge discount compared to legally, while still making profit. this will result in a black market where will marijuana is still legal, there are illegal deals going on because they benefit each party more than legally.
ReplyDeleteThe law of supply and demand bases it principles off the substitution effect, in which, when an alternative has a lower opportunity cost, the relatively higher price will be substituted with the lower one. The most obvious shift of the curves is a shift to the left in supply caused by the shortage. This raises the equilibrium price and lowers the quantity. At the same time, an excise tax burdens the consumer with about 30-40% of the incidence.
ReplyDeleteHowever, I also noticed that the way southern Washington is described is very elastic. A shift in price that makes an alternative, say in Oregon, more affordable, is worth the commute. Thus a shift in price results in a sharp change in the quantity demanded, since many will go to Oregon to get their marijuana. Comparing Oregon and Washington’s charts, the supply curve for Oregon is more to the right because it doesn’t face conflicts in license quotas and it doesn’t face an excise tax. In fact, Oregon doesn’t even have a sales tax. This makes legalized marijuana all the more competitive, as these two states are right next to each other.
Government intervention ultimately affects the black market. As long as prices are high, caused by insane excise taxes in Washington, the difference between what consumers will pay and the possible lowest amount they actually would pay will be higher and higher based upon black market prices. These excise taxes fuel the black markets to continue, more so in Washington where they can’t be helped than in Oregon where there is little need.
Supply and demand are two forces that interact together in a market, driving the prices to qeuilibrium. In both Washington and Oregon, you have these forces clashing over the market for cannabis. In Washington, there is a high demand for weed, however there is a relatively small suplly and government inposed taxes are creating a very steep price floor for cannabis. According to the article, in washington an ounce of Cannabis goes for $500 (in comparison, an ounce in the black market goes for half as much, said the article). In Oregon, although the sale of cannabis has not been legalized, the starting price is estimated to be approximately $140 dollars an ounce. The big difference in price is taxing. In Washington, cannabis is being heavily taxed, placing approximately 30% of the tax burden on the consumer. The cannabis is being taxed by price. In Oregon, in the other hand, cannabis is being taxed by weight. Also, the government seems more willing to help the buisness sector in Oregon, keeping taxes relatively low. However, these low prices in Oregon lead to a couple of problems for Washington. People who live in Washington but are close to Oregon will most likely go to Oregon to buy their cannabis. Also, it opens the gates of the black market to anyone, as anyone could legally buy cannabis in oregon and sell it illegally in washington, and make almost 100% profit.
ReplyDeleteThe main problem regarding supply and demand over the issue of marijuana in Washington and Oregon is that the supply will increase because of the legalization of recreational marijuana which will ultimately lead to a decrease in the price. This will cause people from Washington to come to Oregon to purchase the cheaper marijuana rather than the more expensive product in their own state. The government has intervened in Washington by imposing an excise tax on marijuana causing the price of the product to rise significantly. Comparatively an ounce of weed cost $500 in Washington and only $150 in Oregon. This will allow the producers and manufacturers in Oregon to thrive while the ones in Washington will go out of business. This will create numerous black markets in Washington because the price is so high and people will not want to buy the expensive marijuana. On the other hand, black markets are not likely to develop in Oregon because the marijuana is relatively cheap.
ReplyDeleteBecause Oregon legalized marijuana for recreational use, there will be a large discrepancy between the price of marijuana in Oregon and the price in neighboring Washington. Both Washington and Oregon will probably have similar demand curves, since demand curves do not shift because of the price of the good. The major difference in price and the cause of a possible black market will arise due to the supply curves. Right now the supply curve is shifted further to the left for the market for marijuana in Washington rather than for the market for marijuana in Oregon. This is because there are higher input costs to producing marijuana in Washington and there is a smaller supply. The article writes that this occurs for two reasons. First, the state taxes suppliers every step of the way. Next, there are fewer people who are licensed to produce marijuana and those that are licensed to do so are not the most suitable for the job.
ReplyDeleteThese two forms of government intervention limit supply and thus make marijuana more expensive to make and more expensive to consume. In Oregon there will be no government intervention inhibiting supply. So the supply curve will be further to the right in Oregon than in Washington. As a result, marijuana will be cheaper and theoretically more plentiful in Oregon than in Washington.
Since Oregon and Washington are state neighbors, the price of marijuana is so much cheaper in Oregon than in Washington, and the demand for marijuana will probably be just about the same in both places, we can assume that a black market will take shape. This black market will be employed by people who purchase weed in Oregon at a low price and than proceed to sell that same weed at a higher price in Washington. People will forgo the government regulated market to purchase cheaper marijuana in the black market.
Since Oregon legalized marijuana for recreational use, there will be a large discrepancy between the price of marijuana in Oregon and the price in neighboring Washington. Both Since Oregon legalized marijuana for recreational use, there will be a large discrepancy between the price of marijuana in Oregon and the price in neighboring Washington. Both Washington and Oregon will probably have similar demand curves, since demand curves do not shift because of the price of the good. The main difference in price and the cause of a possible black market will arise due to the supply curves. Right now the supply curve is shifted more to the left for the market for marijuana in Washington rather than for the market for marijuana in Oregon. This is because there are higher input costs to producing marijuana in Washington and there is a smaller supply. The governments intervention in Washington has caused for prices to be high when an excise tax is placed on wholesale consumption as well as a fee of 50% when business sell to the consumer. This drives the price up even higher than black market prices. Thus, government intervention in Washington can cause suppliers to go out of business. Because the government intervenes less in Oregon by not having an excise tax, the weed will be cheaper and attract more consumers from Washington.
ReplyDeleteThe law of supply states that as the price of a good increases, the quantity supplied by producers will increase. The law of demand states that as the price of a good increases, the quantity demanded by consumers will decrease. Oregon legalizing recreational marijuana will affect both the supply and demand curve, where with a larger amount of marijuana available to the people, the demand curve will shift to the right and the supply curve will shift to the right with it.
ReplyDeleteGovernment intervention has caused the price of marijuana to increase due to the excise taxes that have been placed on marijuana. In Oregon, taxation on marijuana will be by weight instead of by price, similar to the way Washington operates. With this gap in prices of marijuana in the two states, it could entice many people to buy marijuana in Washington than in Oregon since it would be cheaper.
The Black Market in Oregon will probably still exist, but it will experience much less activity because residents will be able to buy marijuana legally and fro a cheaper price. The legalization of recreational marijuana would basically eliminate the black market soon. In Washington, the black market may thrive rather than in Oregon. High excise taxes placed on legal marijuana will prevent people from buying legal marijuana though.
One of the major effects in the shifts of supply and demand is geography; and, because Oregon and Washington are bordering, the passing of an attractive legislation for recreational marijuana has attributed to this theory. Most notably, with governmental intervention of an excise tax in Washington, the incidence of the tax will burden the consumer – about 30-40% of it. At the same time, there is a shortage caused by the improper distribution of licenses that would then raise the equilibrium price and lower the quantity that could be supplied. Meanwhile, there would be a greater demand by those in southern Washington to travel to Oregon to purchase in a place with no shortage and no taxes. The theory that shows this best is the substitution effect.
ReplyDeleteThrough this, black markets will never die out. In Oregon, there is probably less demand for a black market as low prices create little demand for it. However, in northern Washington where people cannot easily travel to Oregon, there is still a demand for the black market, which increases consumer surplus – people are willing to pay a lot for now-legal marijuana, but the black market sells it for half the price than licensed sellers do. There is also a great difference in elasticity – northern Washington is more inelastic (meaning, a change in the already expensive price won’t move people because many don’t have alternatives other than the black market which they would, assumingly, use sparingly). Meanwhile, southern Washington is more elastic, as an increase in price would logically be followed by a demand for marijuana in Oregon.
The law of supply states that as the price of a good goes up the quantity will also go up because the producers are willing to produce more of that good. The law of demand states that as the price of a good goes up, less consumers are willing to buy it, meaning the demand for the good will decrease. In Washington the price of the weed is obviously higher because of the government imposed taxes. The higher price is affecting the demand curve and shifting it to the left as no one wants to buy something If they can buy it somewhere else for cheaper, in this case Oregon. The supply is going to be slightly higher there since it recreational use is legal. In Washington government intervention like licensing and taxes make the consumers not want the weed there as highly because of the ridiculous quotas and pricing on the good they are trying to get. This not only decreases their want for the weed in Washington but makes them more willing to travel to Oregon to get the weed since it is way cheaper over there and it is a neighboring state.
ReplyDeleteGovernment intervention affects black markets drastically. Obviously if the prices are insane for what people want they are going to find some alternative way to get what they want for the price that they want. That is where the black markets come into effect. The price of weed in Washington drives the consumers demand for cheaper weed up thus sending them in the way of the black markets, increasing their sales in that venue. People in Oregon will take advantage of the fact that the weed there is cheaper and go into the black markets to sell them to people in Washington who want to get it for cheap.
The law of supply says that as the price of an item goes up, suppliers will increase the quantity available. The law of demand says that as the price of a good increases, demand for that good will decrease. If Oregon passes a law that prohibits recreational use of marijuana supply will increase and price will fall in Oregon shifting the supply curve to the left.In Washington, government intervention has caused the price of marijuana to increase due to the excise tax they placed on marijuana. In Oregon, they will be taxing the marijuana by weight instead of by price like they do in Washington. The reason Washington even legalized marijuana was because it couldn’t stop the black markets. Simply, states will legalize marijuana where it cannot be helped. As long as prices, however, are expensive compared to the black market price, there will always be an underground trade. In Oregon, this is not so much the case.
ReplyDeleteDue to the fact that Washington currently has a supply quota to limit the amount of licenses available to dispensaries, the prices of pot has sky-rocked in Washington leading to many people buying weed off the black market still as it is half the price of the legal weed. Since the ballot initiative legalizing weed in Oregon, which is willing to give out more licences, passed the price of marijuana will be cheaper in Oregon. This will lead to more people in Washington driving down to Oregon to get their marijuana. With the decrease in demand in Washington the price will fall. Government intervention has a stronger hold in Washington and it has lead to a decrease in tax revenue as a result. Oregon on the other hand has more lax regulations leading to a cheaper product and since it is cheaper more people are going to be willing to buy which again leads to larger tax revenue. The one lesson that everyone is learning from legalized weed markets is that there is no way to compete with the black markets. This is because they can supply their product without tax and at half the price.
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ReplyDeleteThe law of supply and demand states that as supply increases and demand decreases price drops. Since in Oregon the supply is increasing a lot and demand is either staying the same or decreasing a little we see a drop in price in Oregon. At the same time those in Washington are not seeing this drop in price because of the excise taxes on the marijuana and Washington doesn't have as much producers as Oregon, so not only are prices not falling but there actually getting higher. Since the two states are so close this will create a black market because people are going to buy and grow marijuana in Oregon to sell in Washington. The two types of intervention is one that taxes the producers and limits supply and one that doesn't tax the suppliers and doesn't limit the supply of marijuana
The law of supply states that as a price of a good rises, suppliers will increase the quantity of the good. For the law of demand, it states that as the price of the good increases, the demand for the good will decrease among consumers.These laws are prevalent in Washington because their are a limited number of weed growers and dispensers which boosts the price up for weed. Oregon legalizing recreational marijuana will affect both the supply and demand curve, where with a larger amount of marijuana available to the people, the demand curve will shift to the right and the supply curve will shift to the right with it.
ReplyDeleteGovernment intervention in Washington via excise taxes, zoning regulations, and quotas on licenses has led to consumers bearing 30-40% of the tax incidence and to dispensaries losing customers. Government intervention has resulted in a shift of the supply curve to the left, increasing prices and decreasing quantity.
The Black Market in Oregon will probably still exist, but it will experience much less activity because residents will be able to buy marijuana legally and for a cheaper price. Because the government intervenes less in Oregon by not having an excise tax, the weed will be cheaper and attract more consumers from Washington.
As stated by the Law of Demand, as the price of a good increases, the quantity will increase as well because the producers are willing to produce more of that good. As stated by the Law of Demand, as the price of a good increases, less consumers will be willing to purchase the good, therefore decreasing the demand. This has been exhibited by Washington and their high prices for weed, due to the government taxes. The higher prices has caused the demand curve to shift to the left, because the amount of people willing to pay such high prices is so low. A main reason no one is willing to purchase weed in Washington for their prices is because if one would cross the state border they could spend so much less in Oregon. Oregon's prices are much lower because it’s recreational use is legal. Government intervention is what caused Washington's prices to be so high originally, through licensing and taxing resulting in abnormally high pricing and outrageous quotas compared to Oregon’s prices. These intervention methods are affecting the black market as anticipated. When prices are high due to the legalities, consumers are driven to find other ways to receive their goods.
ReplyDeleteThe Law of Supply states that as the price of a good goes up, suppliers will increase the quantity available. The Law of Demand says that as the price of a good increases, demand for that good will decrease. In this Oregon case, the supply of weed available to residents in Washington will increase, shifting the supply curve to the right and causing prices to decrease. RESIDENTS in Washington will also buy more weed in Oregon because of the substitution effect, which basically says that a consumer will chose to buy the lower price item. Government intervention in Washington has caused the prices to be high because of the excise tax on weed, giving more of an incentive to the consumers to buy the lower priced weed in Oregon. Thus, government intervention in Washington can cause suppliers to go out of business. Because the government intervenes less in Oregon by not having an excise tax, the weed will be cheaper and attract more consumers from Washington. More people in Oregon may also start to try weed because of the low price. This article also talks about the black market of weed. Since the price of legalized weed in Washington is twice the amount of the price of black market weed, the black market will probably continue to thrive because people will want the cheaper product.
ReplyDeleteOne of the issues that will arise with Oregon’s legalization of recreational marijuana is a decreased demand for the substance in Washington. Washington’s proximity to Oregon will bring a problem for the former state. Legalization brings forth a price change that will cause consumers in Washington to travel across the border to a cheaper source of marijuana. The demand for marijuana in Washington will shift to the left as more travel out of the state to obtain a cheaper version in Oregon. The demand for marijuana in Oregon will shift to the right because of the influx of people coming in to the state to purchase cheaper drugs.
ReplyDeleteGovernment intervention in Washington like taxes and quotas has led to a heavier tax burden on consumers which in turn drive them away. Oregon has taxed marijuana by weight instead of price, which has caused a huge difference in price between the two states. This gap has led some people to purchase from Oregon instead of Washington.
Oregon will not have an increase in black market activity because the price of marijuana is already low. The price increase of Washington’s marijuana has created a sustained black market in Washington. The high prices of marijuana in Washington will cause some consumers to buy their marijuana from drug dealers if they cannot travel to Oregon.
Using the laws of supply and demand, what we will see here is a shared border between the two states. Due to lower prices in Oregon, more people will have the incentive to purchase marijuana in Oregon instead of in Washington. This leaves the government in a bunch, as they don't know how to address this problem correctly.
ReplyDeleteIn result, black markets tend to be on the rise. Due to expensive costs in Washington, these black markets sell marijuana for about half of the price it usually goes for. More people turn towards the black markets for the cheaper drug. This high price is due to the large amount of taxes and caps placed by the state government, causing a supply shortage in the long-term.
The law of supply says that if the price of an item increases, the producers for that item will increase their quantity. The law of demand says that if the price of an item increases, the demand of the good decreases. Assuming Oregon passes legislation for recreational marijuana, Oregon’s supply curve will experience a shift to the right because it has a ready supply of marijuana for consumers as well as a high demand. As for Washington, due to the shortage they are facing and the excise taxes, will have their supply curve shift to the left. Prices will be high in Washington and therefore quantity will be lowered. People in Washington will be enticed travel south to purchase inexpensive weed which reflects the substitution effect.
ReplyDeleteGovernment intervention will affect the marijuana markets in Washington because of the state taxes that are being placed on the drug. As the drug makes its way to the consumer, along each step, the government is placing a tax. Government intervention will hardly affect the marijuana market in Oregon except with the tax that will be placed on the weight of the drug. This ultimately leads to the creation of black markets, especially in Washington, because people will be willing to pay outrageous prices for cannabis. I envision its formation prevalent among Northern Washington residents because of their discontent with the taxes that the state has placed.
Oregon passing legislation for recreational marijuana and at a cheaper price than what it is sold for in Washington will result in people living in Washington, especially those on the Washington-Oregon border, to go to Oregon to buy their marijuana, as the price that the producers in Washington charge is greater than the price consumers demand and the price in Oregon is closer to the price that consumers demand.
ReplyDeleteIn Washington the government will have to find a way to either lower the taxes on marijuana of increase the amount being produced so that the price will go down, and consumers will be more willing to buy the marijuana in Washington.
In Oregon the government is currently taxing the marijuana based on weight which is a reason for why it is a lot cheaper than in Washington. If Oregon’s government decided to tax marijuana in a similar manner then the price of marijuana there might increase causing consumers from Washington to be less willing to buy from Oregon.
Buying from a Black Market although illegal is cheaper than buying from a legal source because unlike legal sources, Black Markets aren’t regulated by the government and so they aren’t subject to the same taxes that is placed on legally sold marijuana. Because Black Market process are cheaper people will be either more willing to buy from their and those that already bought from the Black Market will have no reason to leave or buy legally.