Multilevel determinants of cannabis prices in legal markets: Evidence from products sold in nearly 4000 cannabis dispensaries in the United States

Abstract

Background

Following cannabis legalization, sales in legal markets have steadily increased. Policies influencing product prices are crucial for cannabis regulation and control. This study aimed to evaluate the determinants of cannabis prices at the product, dispensary, and state levels in legal markets in the United States.

Methods

Nationwide data on product- and dispensary-level characteristics were collected in 2022 and merged with state-level policy data. The final analysis included 710,588 cannabis flower products from 3,693 dispensaries across 30 states and Washington D.C. with recreational and/or medical cannabis legalization. Multilevel mixed-effects regressions were used to estimate the associations between cannabis prices and product-, dispensary-, and state-level characteristics. Pre-rolls and dried flowers were analyzed separately.

Results

The average standardized price per gram was $11.72 for pre-rolls and $9.05 for dried flowers, with significant variations across states. A positive association was found between prices and THC level (THC elasticity of price = 0.17, 95 % CI: 0.088, 0.25) and a negative association was found between prices and item weight (weight elasticity of price = -0.18, 95 % CI: -0.22, -0.14). There was limited evidence of associations between prices and dispensary-level characteristics, such as dispensary type (medical vs. recreational), license status, and density of nearby competitors. State tax rates at the retail level were positively associated with prices. These relationships were consistent for both pre-rolls and dried flowers.

Conclusions

Policies targeting potency and item weight may have substantial impacts on cannabis prices in legal markets. Future research is needed to examine how consumers respond to these policies.