Users’ Preferences for Legal and Illegal Marijuana: Evidence from Discrete Choice Experiments

Background: With Michigan voters approving recreational marijuana legalization in mid-term election in November 2018, the number of states in the U.S. legalizing recreational marijuana has increased to 10 states and Washington DC. With the only exception of Washington DC, all these states have opened or planned to open retail sale of recreational marijuana to adults. Retail sales of legal marijuana were increasing rapidly. Eliminating illegal marijuana market was one major motivation of recreational marijuana legalization. However, very little is known about whether illegal market has been influenced by the introduction of legal sale. A concern about taxation on legal marijuana is that it makes legal marijuana more expensive and increases consumption of illegal marijuana. A previous study using simulate purchase tasks indicated that legal and illegal marijuana products are substitutes and very high tax may unintendingly expand illegal market. We argue that price may not be the only determinant of choice preferences. Using discrete choice experiments, this study will examine the potential impacts of a series of price and non-price attributes on preferences for legal and illegal marijuana flowers.

Methods: We will recruit 1,000 adult marijuana users from states that have opened or planned to open retail sale of recreational marijuana, including California, Colorado, Washington, Oregon, Nevada, Massachusetts, Maine, and Michigan. These marijuana users should have used marijuana at least once in the past 12 months and be 21 years or older. The demographics of the sample will be quota matched to represent the national marijuana user population. Using web-based survey, participants will complete a discrete choice experiment with a series of choice tasks, each of which asks participants to choose from legal and illegal marijuana flowers with varying levels in product quality, lab test, physical access, potency, and price. The recruitment of participants and online survey will be implemented and completed in May 2019.

Expected Results: We will estimate the impacts of product quality, lab test, physical access, potency, and price on participants’ preferences for legal and illegal marijuana products. We will also estimate relative importance of each attribute and conduct policy simulations to project shares of legal and illegal markets under varying policy scenarios.

Policy Implications: Our results are expected to provide important implications to marijuana regulatory strategies and their impacts on illegal market.