Marijuana prices hit another high

Taxes play significant role in increase at two shops in Vancouver

By Sue Vorenberg, Columbian features reporter

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You know what they say in the marijuana business — what goes up must ... continue to go up?

Cannabis prices hit another new high this week at Vancouver's two stores, with 1-gram bags from one grower selling for between $32.50 and $38 after taxes. That's high, especially compared to the roughly $20 a gram charged when the stores first opened, and the street value on the black market of $5 to $10 per gram.

"I know I've said before that we thought the prices would come down, but this is really it," said Ramsey Hamide, a manager at Main Street Marijuana. "I don't think prices will ever get any higher than they are now. We've just had bad news after bad news, but there's no way it's going any higher."

The price problems are due in part to high taxes, including a federal tax that stores have to pay on the excise tax they give the state. That legality of that tax is somewhat iffy, but until there's more clarity about it from the feds, accountants have recently advised both stores to collect it, marijuana store owners said.

On the state side, Washington charges a 25 percent excise tax on the product three times: once when it goes from grower to processor, once from processor to seller, and once more when it's sold to a customer. Some growers have also gotten processor licenses, which allow them to skip paying the excise tax between grower and processor.

According to Leafly, a cannabis information website, Colorado collected $2 million in taxes on $14 million in sales in that state's first month. Washington, in comparison, collected $1 million in taxes on $3.8 million in revenue in its first month of sales. That indicates Washington customers are paying a lot more tax than those in Colorado.

Yet despite the high costs, customers were still buying the 1-gram bags all week, albeit at a somewhat slower pace. Both Vancouver stores remained open all week with a smaller but still steady stream of customers coming through their doors.

"Another part of the problem is that some growers — not everybody, but some — are overcharging," said Brian Budz, co-owner of New Vansterdam in Vancouver. "I'm not sure where they've been getting their (pricing) numbers. We've been open in sharing our figures with them, but that's often not reciprocated."

Budz wouldn't name the growers he's had issues with, other than to say that "we've had problems with growers out of Eastern Washington, not with Monkey Grass Farms, but some other growers there."

Some growers have changed their prices on delivery even after having prior price agreements with the stores, he said.

"We can and have said no to some of them, but if we do that, we have to close the store," Budz said. "This is all so new. If those growers took the time to explain to us why they're charging what they're charging, it would go a long way. We're hoping this will evolve into more of a partnership."

Katey Cooper of Monkey Grass Farms said she thinks eventually the market will drop back to closer to $20 to $25 a gram for the high quality product.

"For us, we set the wholesale price where we think the market's going to be when it eventually settles out," Cooper said. "But there's a lot of issues with taxes. In order for stores to keep running, they have to charge more."

Cooper, Budz and Hamide all declined to release their wholesale prices to The Columbian.

Steven Wilde, a customer at Main Street Marijuana, said he was OK with the price even at $32.50 a gram. He's visiting the state from Colorado and said it's nice to have a place to purchase it legally without worrying about transporting it from state to state.

Wilde also said that in Denver near his home, a 3.5 gram bag sells for $88.

"On the black market you can get an ounce for $150, and really, most of us are still buying from the black market," Wilde said. "But at least you can travel and get it, and you don't have to pay this much that often."

Store owners said a lot of their customers have been tourists coming over from the airport in Portland.

"We've had quite a few tourists come through," Hamide said. "But we understand the prices are rough on our regular customers."

Edibles have been even more costly. So far, New Vansterdam is the only Vancouver shop to have sold them. But at $55 for one serving and $105 for a six-serving bar, they haven't been flying out the door, despite the demand.

The problem with those prices is the extra 25 percent tax that processors have to pay if they're not growers to buy material. Added to that is the fact that there's still a vast shortage of product from the small number of growers that have been licensed by the state so far. And beyond that, some growers have been price gouging for shake, left-over marijuana cuttings that processors use to make edibles and other pot products.

"We sold our edibles at zero profit, and the prices were still very high," Budz said. "But for a processor to be charged up to $1,800 a pound for trim (or shake), that's just not a sustainable business model. We can't charge $150 for a chocolate bar."

Shake generally sells for something closer to $400 or $500 a pound.

Main Street Marijuana and New Vansterdam expect to have enough product to stay open through the weekend.

Budz said he understands customer complaints about high costs, and the store is doing what it can.

"We're seeing changes and we're seeing product come in," Budz said. "We've had, sadly, some miscommunications and some screw-ups, so the prices will probably stay that way for a bit. We hope they'll come down soon, though."