Why tobacco prices are rising while weed prices are falling – and what that means for you

If you’re a frequent cannabis purchaser, you’ve probably noticed that some of your favorite cannabis products have stayed the same or even gone down in price over the last year. When prices for your favorite cannabis are falling, you probably don’t want to ask too many questions. Instead, you’re more likely to buy as much as you can and leave with a pocket full of savings.

Marijuana prices have indeed been falling, or at least have been stable lately. While this may not raise suspicion, you have to wonder why a heavily taxed product like marijuana isn’t going up in price while tobacco, another taxed and regulated substance, continues to go up in price.

To understand why tobacco prices are steadily rising while marijuana prices are fluctuating, it’s important to understand why and how these two products are taxed.

Tobacco is taxed at the federal and state levels. A primary reason tobacco is taxed at the federal level is to offset the increasing costs tobacco has for avoidable medical costs. According to that CDC, cigarette smoking cost the United States more than $600 billion in 2018 alone. The money has to come from somewhere to cover these costs.

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The other reason tobacco taxes are steadily increasing without decreasing is that the rising price is linked to smoking cessation (especially among young people). “Tax increases are the most reliable policy tool to encourage smokers to quit, discourage young people from trying cigarettes and generate revenue to offset the public health costs of tobacco use,” it said tobaccoan economic research group on tobacco control policy.

RELATED: Lessons the recreational cannabis industry can learn from Big Tobacco

Marijuana is also taxed heavily, but differently than tobacco and with different goals. For one, marijuana isn’t taxed at the federal level because it’s not legal at the federal level. Instead, it is taxed at the state and local levels. Because marijuana isn’t associated with terminal diseases like tobacco products, the tax collected from marijuana is used for programs that often tend to benefit the state where the marijuana is purchased.

Most states use the tax revenue collected to support education and treatment programs, law enforcement, and even top up their state’s general fund. Colorado, for example, uses 71.85% of tax revenue collected for “health care, health education, substance abuse prevention and treatment programs, and law enforcement,” according to the Colorado general assembly. More than 15% (15.56%) of the revenue goes to the general sovereign wealth fund.

This shows that while both products are heavily taxed, the tobacco tax aims to discourage people from buying the product and reduce federal costs for health problems caused by smoking. The marijuana tax is used to benefit the state in which it is purchased, meaning there probably is no desire to reduce marijuana sales in states where it’s legal, so selling the product is a smart idea to keep affordable. Overuse could hurt sales and in turn hurt the state’s economy.

RELATED: Marijuana Vs. Alcohol: How the Two Industries Are Dealing with Inflation and What That Means for Consumers

Another reason marijuana prices are falling while tobacco prices are rising has to do with how established (or not) these two markets are. Tobacco and its leading companies have established their markets, brands and customers. This means that while they can spend money on advertising and promotional offers to attract customers, the price is set fairly.

Marijuana, on the other hand, is a very new market, particularly the legal market. It’s so new that the big players are just starting to rise and sometimes fall as the industry grows. While this is an exciting time for the industry and those who support it, it’s also an economically volatile time for those who invest in it. There is a lot of competition in many states. The new cannabis boom has prompted a rush of entrepreneurs to jump into this growing market.

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However, this growth has led to a certain oversaturation in some areas and also to an oversupply of products. “In some states there is just too much product, causing prices to fall. In California, for example, wholesale cannabis prices have plummeted about 50% over the past year Politically, which noted that Colorado, Washington, and Oregon also saw significant declines. This is one of the main reasons why you’ve probably noticed these dropped prices lately.

Acceptance of marijuana by lawmakers and the general public is slowly growing, which in turn will likely make it accessible and affordable for years to come. Since this is a new market, prices are bound to fluctuate, but when they eventually settle, they won’t break your bank account.

While cigarettes and joints may look alike, tobacco’s political and public acceptance continues to decline. As more and more people want an end to nicotine addiction and the preventable death that comes with it, the only likely future is more taxation and higher prices.