Shocker: Legalization produces pot sales boom, shortages in Colorado

It’s been a week since Colorado became the first state — and arguably perhaps the first government in the world — to fully legalize the use of recreational marijuana. Legalization advocates claimed before the law passed that legalization does not equal endorsement, and that the effect would be mostly limited to shifting sales from the black market into the open. At least in the first week of legalization, it seems to have produced a little more demand than predicted:

A few years ago, after Andy Williams quit his job as an industrial engineer to become a marijuana entrepreneur, his nights were haunted by a recurring dream. “I would have nightmares about being in prison and never seeing my family again,” he says. “The same nightmare for weeks.”

These days Williams isn’t sleeping much at all, but the deprivation isn’t driven by fear. The debut of Colorado‘s market for retail pot sales has propelled a crush of new customers to Medicine Man, his cannabis dispensary in north Denver. Early on Monday morning, a line of buyers snaked through the shop, waiting to purchase one of 21 strains of pot from glass jars arrayed in display cases, or to sample the menu of THC-infused chocolates, tinctures, creams, lozenges and baked goods. Between extensive preparations for the Jan. 1 rollout of the world’s first legal marijuana market and the media attention that has attended it, Williams says he has been too busy to sleep much at all lately.

Rationing and price spikes have resulted:

“We are going to run out,” Denver dispensary owner Toni Fox said amid the frenzied opening of the retail market. That was, in fact, the fate of Denver-based Clinic Colorado, which exhausted its supply of recreational pot on Monday.

To keep their doors open, most businesses are resorting to rationing. The new Colorado law allows customers to purchase up to an ounce for personal use, but some stores are limiting individuals to just an eighth of that to preserve supply; one store in the western part of the state is capping sales at a single gram. Most have already hiked prices, which have jumped to as much as $65 per eighth at some stores.

Needless to say, this isn’t a bad outcome in terms of tax revenues, and there is a novelty factor in play here, too. The demand will likely subside to more normal levels after a few weeks, but it still leaves open the question of whether legalization in the long run sends a moral signal that encourages use. Colorado will make a very good laboratory to test that hypothesis, and other states will certainly pay attention to the results.