Estimated Cost of Production for Legalized Cannabis

Jonathan P. Caulkins

Published Jul 6, 2010

This paper tries to estimate post-legalization production costs for indoor and outdoor cannabis cultivation as well as parallel estimates for processing costs. Commercial production for general use is not legal anywhere. Hence, this is an exercise in inference based on imperfect analogs supplemented by spare and unsatisfactory data of uncertain provenance. While some parameters are well grounded, many come from the gray literature and/or conversations with others making similar estimates, marijuana growers, and farmers of conventional goods. Hence, this exercise should be taken with more than a few grains of salt. Nevertheless, to the extent that the results are even approximately correct, they suggest that wholesale prices after legalization could be dramatically lower than they are today, quite possibly a full order of magnitude lower than are current prices.

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Caulkins, Jonathan P., Estimated Cost of Production for Legalized Cannabis. Santa Monica, CA: RAND Corporation, 2010. https://www.rand.org/pubs/working_papers/WR764.html.
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