States that impose high tax rates on regulated marijuana products are driving adult consumers to the illicit market, according to a new federally funded study.
The research, published in the journal Health Economics, looked at past-month cannabis purchasing behavior of 1,525 adults aged 21 and older.
Researchers with Ohio State University found that high cannabis taxes and prices are linked to “lower cannabis consumption and THC intake” from legal purchases, but that the majority of those reductions (89 percent) may be offset by consumers switching to unregulated products from the illegal market.
“If the illegal market is restricted, policymakers can expect increasing cannabis prices using excise taxes to reduce both unit and THC consumption, while generating tax revenues,” the study said. “However, given the sizable illegal market, a large portion of the consumption reduction due to taxes may be offset by switching to illegal products.”
States have worked to strike a balance between pricing marijuana low enough to transition adults to the regulated market but still high enough to generate revenue. The results so far have been mixed, with no firmly established universal price or tax rate.
The study, meanwhile, also demonstrated that legal and illicit cannabis flower are essentially
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