Price doesn’t follow THC content closely

Dr. Caroline Weber of the University of Washington sent me this chart:  table_for_pat_oglesby.  It comes from her and from two University of Oregon economists, Ben Hansen and Keaton Miller, and considers about 60 million retail transactions.

The regression coefficient of THC concentration for the tax-inclusive price of cannabis in Washington State is 0.188, if I have the terminology right.

A shift between 10 and 20 percent potency would only increase the price of a gram by much less than a doubling.

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Maine’s weight-based marijuana taxes

Here are Maine’s marijuana producer tax rates, in addition to its 10 percent retail tax.  The Legislature overrode the price-based producer taxes that the voter initiative contained:

  • $335 per pound of marijuana flower or mature marijuana plants;
  • $94 per pound of marijuana trim;
  • $1.50 per immature marijuana plant or seedling; and
  • $0.30 per marijuana seed.

http://news.cchgroup.com/2018/05/07/maine-enacts-marijuana-taxes/

 

 

Weak correlation between THC concentration and cannabis price

I’m posting a table covering cannabis sales in Washington that was prepared by Ben Hansen, Keaton Miller, and Caroline Weber – academic economists out west, the first two authors at the University of Oregon, the last at the University of Washington.  They authorized me to share it.  Click here:  table_for_pat_oglesby

The table shows only a small correlation, 0.188, between (reported or claimed) THC concentration and price per gram, so it seems to chip away at the claim that a price tax base is a pretty good proxy for a THC tax.

Meanwhile, weight taxes are proliferating.  California’s tax for flower is $9.25 per ounce, for leaves or trim, it’s $2.75.  AK, NV, CO, and now ME also have multiple categories of product that bear different weight based taxes.  Those weight-based taxes may well correlate with potency better than price-based taxes do.

 

Current state marijuana taxes

 Current mj taxes with MI 3 columns big font 
Note the bolding for medical.

This chart reflects legalization in Michigan on Election Day 2018.   Recreational is taxed at 10 percent at retail;  there was no change in taxation of medical, taxed at 3 percent if sold at a dispensary, but exempt if sold by a caregiver.  All cannabis, recreational and medical, is subject to the state’s standard 6 percent sales tax.