Consumers prefer retail to cheaper street weed

By: Chris Conrad

The main factor driving people to spend money in the traditional, so-called “illicit,” marijuana market is the lack of over the counter access to the herb — even when the underground supply is less expensive.

Consumers generally agree that cannabis that is sold in legal markets is “superior” to that available on the underground and they are willing to pay a premium price for it, according to data published online in September, ahead of print, in the journal Addiction.

Survey finds that people prefer to do things legally

As the trend of legalizing cannabis for adults gathers steam and Democrats pitch legalization, investigators from Canada and the United States assessed adults’ opinions related to the impact of cannabis pricing on their own purchasing habits.

Researchers reported that most consumers perceive legal cannabis to be of higher quality, in terms of purity and potency, and that the advent of a legal marijuana markets reduces consumer demand for black market products.

Authors also reported that most consumers are willing pay a premium price for legal cannabis, up to approximately $14 per gram, but warned that excessive pricing can induce consumers to return to the illicit market.

As with most products, people can only go so far before budgetary constraints kick in.

Rand corporation researchers and others had warned likewise, but the constraints kick in.

Rand corporation researchers and others had warned likewise, but the new data corroborates that point. Full text of the study, “Price elasticity of illegal versus legal cannabis: A behavioral economic substitutability analysis,” appears in Addiction.

The authors concluded, “[T]his study provides empirical evidence that cannabis users treat legal cannabis as a superior commodity compared to illegal cannabis, and exhibit asymmetric substitutability that supports the use of price policy that results in higher consumer costs for legal cannabis relative to contraband product. “

Chris Conrad, Mikki Norris and Lauren Vazquez pose with the first retail marijuana legally sold for adult use in California on January 1, 2018. The trio worked around the state together as
Friends of Prop. 64

to help pass the 1026 voter initiative.

If local governments want to get rid of street dealers, the answer could be quite simple: License and regulate retail cannabis production and sales. Just make it convenient and don’t over tax it. NORML Deputy Director Paul Armentano, paul@norml.org, contributed to this article." class="Facebook mini postToFacebookFeed">

Chris Conrad, Mikki Norris and Lauren Vazquez pose with the first retail marijuana legally sold for adult use in California on January 1, 2018. The trio worked around the state together as
Friends of Prop. 64

to help pass the 1026 voter initiative.

Cannabusinesses tend to be good neighbors

These findings suggest that availability of legal cannabis generally does not incentivize and expand the illegal cannabis market, unless the price of the legal product is too high. Pricing policy will need to be optimized to maximize the benefits of a legally regulated cannabis marketplace.”

The findings are similar to those of a study published in July which concluded, “[T]he introduction of legal cannabis into the market may disrupt and reduce illegal purchases.” A six-month analysis of law enforcement data conducted by the Voice of San Diego newspaper showed that state-licensed marijuana retailers are not magnets for serious criminal activity.

Reporters reviewed emergency calls between January and June 2018 — the first six-months during which state-licensed retailers were permitted to operate within the city.

Investigators determined that relatively few calls were directly related to any of the city’s 13 licensed storefronts, and that “most of the requests for police assistance were low-priority” in nature – such as responding to false security alarms.

“Those findings should reassure not just San Diegans who might live near a dispensary, but also officials across the country who’ve expressed concern that legal marijuana storefronts will attract crime,” the report concluded.

Prior studies – such as those here, here, here, and here – have similarly failed to report a relationship between the establishment of cannabis retailers and an uptick in neighborhood crime.