{"id":86491,"date":"2026-07-28T04:35:16","date_gmt":"2026-07-28T12:35:16","guid":{"rendered":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2026\/07\/28\/setting-marijuana-taxes-too-high-drives-consumers-to-the-illegal-market-federally-funded-study-finds\/"},"modified":"2026-07-29T19:48:01","modified_gmt":"2026-07-30T03:48:01","slug":"setting-marijuana-taxes-too-high-drives-consumers-to-the-illegal-market-federally-funded-study-finds","status":"publish","type":"post","link":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2026\/07\/28\/setting-marijuana-taxes-too-high-drives-consumers-to-the-illegal-market-federally-funded-study-finds\/","title":{"rendered":"Setting Marijuana Taxes Too High Drives Consumers To The Illegal Market, Federally Funded Study Finds"},"content":{"rendered":"

<\/p>\n

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.<\/p>\n

The research, published in the journal Health Economics, looked at past-month cannabis purchasing behavior of 1,525 adults aged 21 and older.<\/p>\n

Researchers with Ohio State University found that high cannabis taxes and prices are linked to \u201clower cannabis consumption and THC intake\u201d 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.<\/p>\n

\u201cIf 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,\u201d the study said. \u201cHowever, given the sizable illegal market, a large portion of the consumption reduction due to taxes may be offset by switching to illegal products.\u201d<\/p>\n

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.<\/p>\n

The study<\/a>, meanwhile, also demonstrated that legal and illicit cannabis flower are essentially \u201csubstitutes for each other.\u201d<\/p>\n

Raising the price of legal cannabis flower by 10 percent \u201cresults in a 0.9 percent-1 percent increase in illegal flower consumption (units and THC),\u201d and the inverse follows a similar pattern, the researchers found.<\/p>\n

\u201cWhile the cross\u2010price elasticities for unit demand between legal and illegal flowers are symmetric (not statistically significant), the cross elasticities for THC demand suggest that the increase in THC from illegal flowers in response to higher legal flower prices exceeds the increase from legal flowers in response to higher illegal flower prices.\u201d<\/p>\n

Meanwhile, illicit flower seems to serve as a substitute for cannabis cartridges, as a 10 percent increase in the price of a THC cartridge drives consumption of unregulated flower by 0.4 percent.<\/p>\n

The study was partly funded through a grant awarded by the National Institute on Drug Abuse (NIDA) under the National Institutes of Health (NIH).<\/p>\n

\u201cMany states are sacrificing the long-term health and sustainability of the legal cannabis market for theoretical short-term gains reaped by sky-high taxes,\u201d Paul Armentano, deputy director of NORML, said<\/a>.<\/p>\n

\u201cImposing excessive taxes on legal cannabis strengthens illicit markets while weakening legal ones,\u201d he said. \u201cIt encourages consumers to seek out unlicensed sellers who don\u2019t check IDs, who lack the means or the desire to test their products for quality or purity, who operate without any regulatory oversight, and who don\u2019t redistribute their revenues back into their local communities.\u201d<\/p>\n

\u2014
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Separately, a recent analysis from the Marijuana Policy Project (MPP) showed that states have generated more than $28.4 billion in tax revenue from recreational marijuana sales<\/a> since the first markets launched over a decade ago.<\/p>\n

Some states, it pointed out, are now generating more revenue from legal cannabis than from alcohol.<\/p>\n

\n

A separate economic analysis released last month by Vangst and Whitney Economics found that, for the first time since state recreational marijuana markets launched in 2014, the industry saw a year-over-year decline in national revenue from cannabis sales<\/a> in 2025.<\/p>\n

Photo courtesy of WeedPornDaily<\/a>.<\/em><\/p>\n<\/div>\n

The post Setting Marijuana Taxes Too High Drives Consumers To The Illegal Market, Federally Funded Study Finds<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n


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\nRead More: Setting Marijuana Taxes Too High Drives Consumers To The Illegal Market, Federally Funded Study Finds<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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 StateContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":459,"featured_media":86492,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,15462],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86491"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/459"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=86491"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86491\/revisions"}],"predecessor-version":[{"id":86493,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86491\/revisions\/86493"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/86492"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=86491"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=86491"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=86491"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}