Price elasticity of cannabis demand in legal adult-use cannabis markets: Evidence from retail scanner data in the United States.

Cooper M.; Shi Y. · Addiction (Abingdon, England) · 2026

**Background & Methods** This secondary data analysis examined retail scanner data from point-of-sale systems across cannabis retailers in 10 U.S. states with legal adult-use markets (2020-2023), comprising 864,616 product-state-quarter observations. Two-stage least squares regression models with state and time fixed effects estimated price elasticity of demand for cannabis flower products, using state-level excise taxes as an instrumental variable to account for price endogeneity. **Key Findings** - Cannabis flower products remained the dominant market category, consistently representing over 50% of total adult-use sales throughout the study period. - Median price per gram declined significantly by 26% over four years, from $8.23 (2020) to $6.12 (2023). - Price elasticity of demand was estimated at -2.29 (95% CI: -2.61 to -1.89), indicating highly elastic demand where each 1% price decrease corresponded to a 2.29% increase in quantity demanded. **Dosage & Administration** Not reported. **Safety & Adverse Effects** Not reported. **Evidence Quality** This study provides Level 2b evidence from observational secondary data analysis with several limitations. The use of non-random retail sampling limits generalizability to broader U.S. cannabis markets, and projections from sampled retailers to statewide sales introduce potential measurement error. The instrumental variable approach (excise taxes) represents a methodological strength for addressing price endogeneity, though tax policy variation may correlate with unmeasured state-level factors affecting demand. The study lacks individual-level consumer data, preventing assessment of demand heterogeneity across demographic groups or usage patterns. Additionally, the 4-year timeframe (2020-2023) reflects a specific market development period; findings may not persist as markets mature. The exclusion of other cannabis product categories (edibles, concentrates) limits understanding of overall market dynamics and potential substitution effects. Cross-state variation in regulatory environments, product quality standards, and illicit market presence could confound price-demand relationships, though fixed effects partially address this concern.

More recent cannabis research