By Siddharth Gundapenini
In the United States, inflation accounting serves an ever more important role. The Bureau of Labor Statistics, Bureau of Economic Analysis, and numerous private firms all calculate different measures of inflation, all with the same general purpose of allowing macroeconomic researchers to understand how much prices are rising, what specific goods/services are gaining popularity, and where these changes are taking place. Unfortunately, this analysis remains confined to goods and services sold legally. While these statistics remain helpful, any sales taking place on the black market are left out. Even if black market sales are frowned upon by many, it does have a profound impact on its participants. In the 2008 release of the System of National Accounts, a joint publication by the UN, World Bank, EU, IMF, and OECD stated that it is crucial for data on unofficial markets to be tracked in tandem with legal markets. Therefore, it is just as important to track similar statistics of these illicit substances.
While it would be difficult for me, a single individual, to aggregate all this data, I thought I would set out to provide such a statistic for students of Binghamton University. Furthermore, while it is important to study the macroeconomy, one could also argue that it is even more important to understand the microfoundations that make up the macroeconomy. Henceforth, Binghamton students should recognize price changes on campus, and adjust their consumption patterns accordingly.
I will be sampling data on prices of marijuana from various street pharmacists across campus. Then, inflation (or lack thereof) of marijuana will be compared to prices on a general level.
Note, no marijuana was purchased or consumed for the purposes of this article. Marijuana is a substance that is illegal to possess on the campus of Binghamton University, this data is being collected for research and writing use only. I am not encouraging anyone to purchase marijuana.
For the purposes of this article, data was collected at three intervals: one year ago, six months ago, and the present day. Furthermore, I have collected prices of the most commonly purchased amounts, an eighth, a half ounce (zip), and an ounce. Although many people purchase above an ounce, such as by the quarter pound, half pound, pound, etc, such seasoned consumers likely have a better idea of usual pricings. For this piece, quantities larger than an ounce will not be measured.
Provided are the raw menu numbers, as opposed to sale prices. Many seasoned consumers receive discounts, and thus pay lower than listed prices. For y’all, pay less attention to the raw numbers, and instead heed the trends described in a later paragraph.
Currently, the average price for an eighth is about $39. A half ounce comes in at $95, and an ounce has been around $171. This stands in stark contrast to prices about 6 months ago. In February 2022, on average an eighth went for $44, a half ounce for $111, and an ounce for $210. Finally, in August 2021, an eighth was on average purchased for $59, a half for $147, and a zip for $235.
This is especially surprising considering the pricing trends most other goods have taken. From July 2021 to July 2022, the Personal Consumption Expenditures Price Index (PCEPI) measured by the Bureau of Economic Analysis, indicated that prices rose by 6.3%. On the other hand, since August 2021, the price of an ounce of marijuana has fallen by a whopping 27%, a half ounce by 35%, and an eighth by 33%.
Granted, although some data constraints may account for some overestimation, one can say for certain that the price of marijuana from street pharmacists at Binghamton University has fallen over the last year. The limited sample size, lack of professional survey resources, and regional differences have led to a larger margin of error, but given the extent of the price decreases, one can conclude that prices of marijuana have likely fallen nationwide. It is important to note that New York has suffered less inflation than the vast majority of states, so conditions may be different elsewhere.
Furthermore, this survey was unable to account for quality changes, a flaw also found in traditional inflation measures such as the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCEPI). Given constrained supply chains and travel, one can assume that the quality of marijuana may have also fallen, and that can partially account for some of the price decrease.
Similar trends can be noted in the legal cannabis industry to a slightly lesser extent, with the price of flower (quantities measured not specified) falling by 16.7% from January 2021 to January 2022. This indicates that there are factors that are mitigating the inflationary pressures seen in the macroeconomy, that are endemic to the marijuana industry. The most logical assumption is that the number of marijuana cultivators has grown, thus driving down the price.
In a year where the media has been covered by inflation headlines, it is settling to see deflation in at least one market, even if illegal. While I cannot encourage anyone to purchase illicit substances, consumers are enjoying a surplus in this market given nominal wage increases across income groups and age groups, and the falling price of marijuana. There’s no better time to purchase weed at Binghamton University, aside from the future, if the detailed trends are to continue!