Uruguay Plans To Sell Legal Marijuana for $1 a Gram
Uruguay’s drug czar has announced the country’s latest plan to combat illegal drug trafficking: Legalize the sale of marijuana and set the prices so low that the drug dealers cannot compete. As AP reports:
The plan to create a government-run legal marijuana industry has passed the lower house of Congress, and President Jose Mujica expects to push it through the Senate soon as part of his effort to explore alternatives in the war on drugs.
The measure would make Uruguay the first country in the world to license and enforce rules for the production, distribution and sale of marijuana for adult consumers.
Marijuana sales should start in the second half of 2014 at a price of about $1 per gram, drug chief Julio Calzada told a local newspaper, El Pais, on Sunday.
The stunningly low price (an 8th of what it costs at dispensaries in the United States) is not meant to be profitable. Instead, the cost would make competing against the government prices nearly impossible. The Uruguayan government hopes this price fixing will serve as a monetary disincentive to those looking to profit from the illicit sale of the drug.
“The illegal market is very risky and of poor quality,” he said. The State “is going to offer a safe place to buy a quality product and on top of that, it’s going to sell it at the same price.”
In August, he had estimated that the price would be around $2.50 per gram.
Smoking marijuana has long been legal in Uruguay, but growing, carrying, buying or selling it has called for prison terms. Now, Uruguay turns to controlling the market rather than fighting it.
The model is very different than the one the United States has been adopting recently.
Washington has imposed a heavy 25% tax on each of the three parts of pot production: producer to processor, processor to retailer and retailer to customer. Regulators say that will put the price of marijuana pretax at an average of $12 a gram, a price that the ACLU’s Holcomb says is competitive with illicit pot on the street. Colorado votes on its pot tax — a less onerous 15% excise tax and 10% sales tax.[source]
These prices will still try to be competitive with street value of marijuana so as to encourage people to use the legal stuff, but the idea has always been to make a profit. One of the ways marijuana legalization advocates in the U.S. have gotten politicians and the public to soften towards the drug is by suggesting that it will benefit the economy through taxation.
In case you’re already on travelocity booking your flight to Uruguay, the government doesn’t plan on being the next marijuana vacation destination. The law limits the sale of legal marijuana to locals only.