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Dealing with prices. Pricing mechanisms in cannabis markets
Tim Surmont
Tim Surmont
Scientific Researcher Drugs
Institute for International Research on Criminal Policy
Ghent University
+ 32 478 97 35 26
surmont.tim@gmail.com
For several years the Belgian indoor cannabis growing industry is booming. After dismantling
a plantation, the Belgian prosecution estimates the financial advantages of the actors
involved. The Belgian prosecutor uses a fixed retail price to make this estimation (€3 per
gram), without differentiating at different levels of the market chain or taking other
variables into account.
This research triangulates a literature review on pricing mechanisms in drug markets – and
more specific for marijuana – and qualitative fieldwork. The objective is to reveal prices and
pricing mechanisms in specific chains of the Belgian cannabis market by interviewing active
stakeholders (growers, high-level dealers, low-level dealers,…) found through snowballsampling.
In international literature authors often refer to the concept of ‘quantity discounting’.
Quantity discounting is a decrease of the price per unit when the quantity purchased
increases. Up till now, no uniform explanation for this mechanism has been developed:
researchers describe additive and multiplicative models based on added value in the
distribution chain. This economic approach focuses at a constant influence factor on the
price through the distribution chain.
As international literature already indicated, our fieldwork confirmed that many types of
indoor cannabis growers exist. As a consequence it is very hard to make a uniform
estimation of costs and price determination at grower level. Variables that influence these
costs and prices are the amount of plants, type of installation used, but also the network
they are a part of. When descending the distribution chain, profit percentages seem to
decrease.
At the lower levels of distribution the profits of the dealers are rather low. These dealers
often do not see themselves as dealers. They are just the person that buys in bulk for his
friends. It is often unclear whether these ‘friends’ were already friends before the low-level
distributor started his activities. In this part of the chain we see that the profit for the
distributor often is an amount of marijuana for personal use, rather than a financial profit.