How much will a pack of joints cost? the future of mass market marijuana
Since the legalization of marijuana in Colorado and Washington, several articles have circulated suggesting that Marlboro would soon be getting in on the weed selling business. This was all started, it appears by an article in Abril Uno (April 1st in Spanish), a satire publication. These claims unsurpisingly, given the source seem to be false. But it does makes one wonder What would a pack of Marlboro Mary Janes cost?
I spoke with Jeff Caldwell, a representative of Altria, the parent company of Philip Morris, which makes Marlboro Cigarettes, and he stated that because the selling of marijuana is illegal at the federal level, their companies have no plans to sell marijuana based products. He also didn t seem too keen on speculating on such possibilities.
At the low end of things, you re looking at a production cost of nearly $40 per pack of Mary Janes.
But Marlboro is in the business of making money, so it seems likely they would want to get in on such a large market. According to a 2010 paper, the business could yield more than $20 billion a year in just tax revenues. Imagine what it could yield for a company mass marketing joints.
In June of 2013, a company named BOTEC speculated that the production cost of marijuana ranges from $2 to $3 per gram, which implies a price to retailers of $6.25, which is broadly consistent with current access points paying about $5 per gram. The average Marlboro cigarette has just under one gram of tobacco in each of the 20 cigarettes contained in a pack. So at the low end of things, you re looking at a production cost of nearly $40 per pack of Mary Janes.
In the current weed economy, successful companies like Medicine Man in Denver are selling 20 pre rolled, one gram joints for $120. Medicine Man produces high quality products, though, and the company is not anywhere close to the size of Marlboro. But production cost also does not factor in what the company must charge to make a profit. The Economics of Smoking, written in 1992, declared that production costs are often half of what cigarette companies wholesale their product for, so what costs a large corporation $40 per pack could result in a $70 or $80 retail price.
You also might not need a whole gram of marijuana in every cigarette.
The cost of a pack could be brought down by the massive economies of scale a company like Marlboro would bring to the market. You also might not need a whole gram of marijuana in every cigarette a little can go a lot farther than a gram of tobacco. Another solution mix the marijuana with tobacco.
If marijuana cigarettes were to be mixed with tobacco, at a 50 50 ratio, it would bring the cost down significantly. Many tobacco farmers will wholesale a pound of their product for less than $2. With a 50 50 ratio of marijuana to tobacco, the cost of producing a pack of 20 pre rolled joints could be brought down to just a little more than $20 so a $40 pack at the store.
It isn t as easy as it seems, though. The government has a vested interest in producing income from the selling of marijuana. In Colorado, the law that voted in marijuana brought with it a 25% tax. The tax includes 15% excise and 10% sales tax. Marlboro Cigarette companies are very familiar with the excise tax. Philip Morris s website explicitly states their opposition to the current excise tax taxes on products that aren’t good for society writing Between 2000 and 2012, federal and state cigarette excise tax rates were raised more than 120 times, more than doubling the price of a pack of cigarettes.
According to Philip Morris, the price of a pack of cigarettes is merely $2.60 after production cost and company revenue, before the 55% of the price that goes to the government. Cigarette taxes are often increased locally to deter smoking, but smoking kills in ways that marijuana doesn’t. The tax would likely be closer to 50% if the marijuana was mixed with tobacco, or closer to the 25% we see today in Colorado if the product was solely marijuana.
The bottom line is a pack of purely marijuana cigarettes is going to run you at least $50, and a pack of marijuana tobacco mixed cigarettes could be as affordable as $20. The mixed cigarettes would cost less to produce, but since they include tobacco, the states would likely tax them around twice as much as if they didn t.
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However, all attempts to gloss and meet certain “elite” image nothing more than a publicity stunt, which was coined by the best experts on public relations. The thing is that these cigarettes are initially directed their attempts at advertising the fair sex. “Soft as the breeze in May,” in the 1920s, the tobacco industry products under the name “Marlboro” placed emphasis on the equality of men and women who follow fashion trends of emancipation. In the 1950s Philip Morris began to think about the need to change course. Not too popular brand tried to save his position, trying to avoid the disastrous results of actions of scientists. The thing is that at that time were released research data Luther Terry, under which he claimed a strong link smoking with lung cancer and chronic bronchitis. Such disclosure has long been feared all the tobacco corporations. And as it turned out, not without reason in connection with an introduction to such information in 1953 in the U.S. for the first time the history of cigarettes significantly decreased their consumption. Of course, thinking about the health of ordinary American citizens, no one was going. The fact that cigarettes cause great harm to health, the owners of tobacco factories and heard, without any research, but do we know a lot of businessmen who care about something besides the well being of themselves and their own family? So in this case, the actions were quite predictable. Tobacco companies immediately tried to refute this information, trying to convince Americans of the unreliability of research, and when such a move has not led to expected results, are recklessly accuse competitors in that they produce more harmful varieties. Of course, a large proportion of the charges were accounted for cigarettes, while products with the filter is completely harmless. At that time it was believed that these cigarettes exclusively female domain, because brand “Marlboro” in this case was left on the horse. However, due to the reduction in cigarette consumption in general, Philip Morris might well fail, but because he urgently needed to teach American males to think that smoking cigarettes without a filter is not shameful. From now on, ladies’ tobacco products were to become universal.