Price elasticity of illegal versus legal cannabis: a behavioral economic substitutability analysis

Background and Aims The evolving legal status of cannabis world‐wide necessitates evidence‐based regulatory policies to minimize risks associated with cannabis misuse. A prominent concern is the impact legalization may have on the illegal cannabis market, including whether illegal cannabis will serv...

Full description

Saved in:
Bibliographic Details
Published in:Addiction (Abingdon, England) England), 2019-01, Vol.114 (1), p.112-118
Main Authors: Amlung, Michael, Reed, Derek D., Morris, Vanessa, Aston, Elizabeth R., Metrik, Jane, MacKillop, James
Format: Article
Language:English
Subjects:
Adult
Behavioral economics
Cannabis
Catchment areas
Commerce
Consumption
Contraband
Crowdsourcing
demand
Demand curves
Drug abuse
Drug addiction
Drug legalization
Drug Trafficking - economics
Economic models
Economics, Behavioral
Female
Humans
Illicit Drugs - economics
Legal status
Legality
Legalization
Male
Marijuana
Marijuana Use - economics
Marijuana Use - legislation & jurisprudence
Medical marijuana
Medical Marijuana - economics
Price elasticity
price policy
Prices
Pricing policies
substitutability
Young Adult
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Background and Aims The evolving legal status of cannabis world‐wide necessitates evidence‐based regulatory policies to minimize risks associated with cannabis misuse. A prominent concern is the impact legalization may have on the illegal cannabis market, including whether illegal cannabis will serve as a substitute for legal cannabis. Empirical data on this issue are virtually non‐existent. This study used behavioral economics to investigate substitutability of legal and illegal cannabis in legalized catchment areas in the United States. Design A substitution‐based marijuana purchase task assessed estimated cannabis consumption from concurrently available legal (a dispensary) and illegal (a dealer) sources. Prices of the two options were reciprocally either held constant ($10/gram) or escalated ($0–$60/gram). Setting US states with legalized recreational cannabis. Participants Adult cannabis users who were at least 21 years old (n = 724; mean age = 34.13; 52% female; 74% Caucasian) were recruited using online crowdsourcing. Measurements Mean consumption values were used in demand curve modeling to generate indices of price sensitivity and elasticity. Differences in demand indices were compared using extra sums‐of‐squares F‐tests. Findings Both legal and illegal fixed‐price cannabis options had significant positive cross‐price elasticities (Ps 
ISSN:0965-2140
1360-0443
DOI:10.1111/add.14437