I’ve received emails from people in the know about Mr. Khoury’s discount collectives that I reported on in LAPD reports 250%-265% retail markup at Los Angeles dispensaries:
Just to update you, I have spoken with several people with direct knowledge of Richard’s collectives and all have confirmed to me that the price in the LA Weekly article was way off and that the figures are most likely a column for gram cost and then a column for eighth cost and not gram retail as the article stated.
According to the people I trust the Skywalker was on the board at $75 per eighth and often discounted to $65-$70. Likewise the trainwreck sold for $45 an eighth.
A markup of 100% is standard in Los Angeles, some markup less, some more but most use a 100% formula. For example a pound bought for $3,200 that is broken down to $25 an eight would usually sell at $50 an eighth (bringing back $6,400), $15-$20 per gram. Individual gram sales are the biggest moneymaker to collectives.
That’s good to know that dispensaries are only selling marijuana for $360 to $600 per ounce instead of $1,000. 
Don’t get all bent out of shape, Russ, it’s just a 100% markup, not a 265% markup! 
I can still get an ounce of saffron for $171.50 / ounce or $11 / gram shipped to me from Spain. To produce that ounce, Spanish families will hand-pick three little stamens from 4,687 saffron flowers, dry them and vacuum-pack them and ship them by air across the Atlantic Ocean. But to get one ounce of cannabis that required a Californian to trim leaves and stems from the buds of one flower and drive them across town to the dispensary will cost me $360 – $600?
Again, it’s not the dispensaries’ fault as much as it is prohibition’s fault. 100% markup isn’t as ludicrous as the initial $3,200 they have to pay the grower for that pound. Back in the day, my weed dealer told me the reason weed cost so much is because the grower was risking arrest and jail time. So why is it, under Prop-215 where growers don’t face arrest and jail time, they are still charging as much (or more!) as my old illegal weed dealer?
A salary of $120,000 to $240,000 a year? Check this out: http://www.payscale.com/research/US/Country=United_States/Salary
Construction project managers’ median salaries are $72,000.
Attorneys’ median salaries are $77,000.
And then there are the doctors:
Family Physician = $135,000
Oncologist = $196,000
I’m just throwing this out there. I want to be able to defend medical marijuana when I’m speaking to a skeptical public. When they see “compassionate caregivers” driving Escalades and living in McMansions in the hills, it makes my job much more difficult. Could you maybe get by on $90,000 a year and perhaps drop the price on those eighths of medicine?
When marijuana is completely legal, I am all for businessmen charging all the market will bear and becoming wealthy in the process. But it is becoming increasingly difficult to maintain this front that this is about compassion and non-profit organizations when the median salary for non-profit executive directors with 20 years experience doesn’t even break $100,000. Is running a dispensary really that much more difficult than running the NRA or the AARP?
Now a very good point to make here is the risk the dispensary owner is facing of federal trials and prison sentences. John Lucy reminds me that defense in federal court is extremely expensive. This is why I continue to defend the dispensary system that exists in California (along with the fact that anyone who wants a card can get one), warts and all. I just hope that the dispensary owners making $10-20K a month are plowing some of that money back into the activist groups that are trying to end that federal risk.
Let’s not forget the costs of running a dispensary…an example of costs per month (Yep, I run a dispensary in Hollywood)
Rent – $3,000
Insurance- $1,000
CPA- $ 500
Employees $ 13,440 ( 4 employees @ $15 per hour x 8 hour days x 28 days a month)
Electricity $ 300
Advertising $2,000
Security $5600 (1 guard @ $25 per hour x 8 hour days x 28 days a month)
Owner’s Salary ($10-20K month)
Non-profit DOES NOT mean the owner doesn’t get paid…and paid well!!
On average, costs to run a full size dispensary range from $700 to $1000 per day…
Just to throw it out there..
Come visit us at 1 of our 3 locations
:
Hollywoods Compassionate Caregivers
HCC420.COM
To take a line from Danny Danko …Let it be survival of the KINDEST !
be thankful any pound of good named hydro cast 6,500 here in michigan but mexican brick cost 600 but who wants to pay 600 for a headache bag so quit crying if 390 passes i’ll move to cali and help grow
absurd amounts to help lower costs even farther
It does not cost mother nature anything to grow it.
I dont even know what to say to that, $3200 for a LB? How can that be any better? $1600 here for a good LB, but still how can that be OK? When we look at the cost of growing pot, even indoor with the cost of electric and chemicals, it cost what? $15-$20 an OZ at most. Outdoor, big plants would be even cheaper like less than $100 a LB? I just dont know what to say, we sure cant think $3200 or even $1600 is a good price? Even when I was young and we would get a kilo brick for $600-800 in the late 70s, thats still jacking the price up big time.
Until we lower to the prices to $10-$20 an OZ, even very good stuff less than $50 would be fine, its a mark up but not a 300-400% increase, like $300-$500. At $50oz the state can tax it and the shop can pay light bills and their people, thats all fine. But I always say I wish I could move out west to medicate freely, but I cant do that anyhow I couldn’t afford it. Again this is a medical law for compassionate use of suffering sick and dying citizens, to help them get cheap and reliable source of medicine, what happened to all that, $400 an oz? I would need up to $1600 (4ozs a month) thats a very nice house payment! How is this better for anyone suffering and in need of cheaper medicine? So, I Wonder why anyone would question the motive of some of these shops and growers?
For me it comes down to one simple issue, I just want to grow my own for free without fear of arrest or losing my kids or my home for doing so. Price how you want, I wont pay it and I sure wont be buying anything once I can grow my own in the amount I need in peace and for free!
“when I was a kid a dime bag cost a dime” Willie Nelson, Half Baked
The trick to fighting black market pricing is to NOT fight it. You just tell your patient that his supply (at reasonable prices) is finite and if he wants more than that he has to go to the black market to get it.
Soon enough they learn that “buy low sell high” is only fun ’til you have to buy high.
And hey, if some guy who could barely afford MY price structure, manages to make a few bucks for himself, more power to him.
A common reason given by dispensaries for their high prices is they must do so to avoid the possibility of patients reselling on the street for profit. They want to promote themselves as compassionate suppliers, and want patients to trust them, yet they won’t trust the patients to use the medicine themselves. Unfortunately, many “nonprofit” dispensaries are anything but. With the markup they enjoy, the operators of these dispensaries reward themselves with generous salaries, considered part of their operating expenses.
The bottom line? It’s all about making money. Thank God there are still a few truly compassionate dispensaries who use the proceeds from sales to better their communities and promote the reasonable use of cannabis.
The sad thing is that with the proliferation of dispensaries, the competition hasn’t produced lower prices, instead, it has allowed those with only dollar signs in their eyes to reap tons of cash from needy patients. Many patients, who desperatly need this wonderful medication are denied access because they simply can’t afford the high prices, and home grows are a risk some folks aren’t willing to take.
I have always promoted medical legalization before recreational, but I’ve come to realize that without general legalization, medical cannabis will continue to be available only to those lucky enough to be able to afford stupidly inflated prices.
Like our main man Russ always says the price of medical in any state will never come down until we have full legalization.
I am sympathetic to dispensaries. No other business in this country runs the kind of risk that dispensaries
and dispensary owners run. Liquor stores can sell as much liquor as they can pour down our throats and
the DEA or local PD will never come knocking on their doors to bust them. Dispensaries run that risk all the time and if they are going to protect themselves they will need a cash reserve for when the DEA comes calling. Legal bills can easily mount up in a matter of weeks and cost 100s of 1000s of dollars.
Dispensaries are suppose to be left alone to operate under state laws, but let’s face it, they aren’t, There’s really no difference between the once illegal weed dealer and the a fully-legal-tax paying dispensary in the eyes of law enforcement. To them we are all criminal!
I think the price is elevated to keep it off the black market.