Study of US retail shows a 1% decrease in price "was associated with a 2.29% increase in quantity demanded"

AI ANALYSED: A study published online ahead of print in Addiction estimates that demand for cannabis flower in US adult-use markets is strongly responsive to price. The paper, by Michael Cooper and Yuyan Shi, is dated 22 October 2026 and is indexed on PubMed (PMID 42911039; DOI 10.1111/add.70664). The page reviewed is the abstract record, not the full text.

What the document is

This is academic research, not a law, regulation or official decision. It changes no legal rule and sets no dates or deadlines. Its relevance to practitioners is as evidence on how retail prices and excise taxes may interact in legal markets.

The brief's suggested headline describes the study as "federally funded" and refers to 864,616 "sales". The abstract supports neither. The page carries the standard banner "An official website of the United States government", which belongs to PubMed, and the abstract names no funder. The 864,616 figure is the number of "product-state-quarter level observations" on flower sales, covering dried flower and pre-rolls, not individual transactions.

Data and method

The authors analysed retail scanner data from point-of-sale systems. The data came from a nonrandom sample of cannabis retailers, projected to represent statewide sales from 2020 to 2023. The setting was ten states with legal adult-use markets, which the abstract does not name.

They used two-stage least squares models with state and time fixed effects. The outcome was quantity demanded in grams, and the main explanatory variable was tax-exclusive retail price per gram. State-level excise tax per gram served as an instrumental variable for retail price.

Key findings

• Flower remained the dominant category, accounting for over 50% of total sales.
• The median price per gram fell from $8.23 to $6.12 over the four years, a decline the authors put at 26%.
• The price elasticity of demand for flower was estimated at -2.29 (95% confidence interval -2.61 to -1.89).

The authors read the elasticity figure as showing that a 1% decrease in price "was associated with a 2.29% increase in quantity demanded". The abstract uses the language of association, not proven causation. It describes demand as "highly price elastic".

The background section says adult-use cannabis is legally sold in nearly half of US states. It also says little is known about how demand responds to price or whether excise taxes can influence demand in legal markets. The study set out to address both gaps.

Who is affected and what follows

The study does not recommend any specific legal change. Its summary says continued price declines "may lead to increased cannabis demand", but that this effect "could be potentially counterbalanced by well-designed excise tax policies". It does not say what such a policy would look like. The abstract also gives no tax rates, state-by-state results or discussion of limitations beyond the nonrandom retailer sample.

The findings are most relevant to those advising on state tax design, licensed operators and policy submissions in US adult-use markets. Because the abstract covers flower only and the period 2020 to 2023, it does not address other product categories or later years. Anyone intending to rely on the results will need the full text, available through the Wiley link on the PubMed record, for the methods, the states included and the authors' caveats.