Standardizing Recreational Cannabis Excise Tax Rates in the United States: New Retail Price-Based Measurements by Product Category

TL;DR

This study develops standardized cannabis excise tax measures for different product categories to better understand how taxes affect retail prices and public health outcomes.

Contribution

The paper introduces new retail price-based standardized tax metrics for cannabis products, enabling improved cross-state comparisons and policy evaluation.

Findings

Mean standardized excise taxes were USD 32.58/ounce for flower, USD 180.21/ounce for vaping, and USD 0.024/milligram THC for edibles.

Standardized taxes strongly predicted retail prices, supporting their use as instrumental variables in policy analysis.

Tax incidence varied significantly across states and product categories.

Abstract

Public health relevance—How does this work relate to a public health issue?
Cannabis excise taxes have potential to influence cannabis demand and cannabis-related health outcomes.

Cannabis excise taxes have potential to influence cannabis demand and cannabis-related health outcomes.

Public health significance—Why is this work of significance to public health?
Standardizing category-specific cannabis excise taxes across states may strengthen cross-state comparisons and improve evaluations of how cannabis taxes and prices influence public health outcomes.

Standardizing category-specific cannabis excise taxes across states may strengthen cross-state comparisons and improve evaluations of how cannabis taxes and prices influence public health outcomes.

Public health implications—What are the key implications or messages for practitioners, policy makers and/or researchers in public health?
Substantial heterogeneities exist in cannabis excise tax structures, standardized taxes, and tax incidences across states.Category-specific cannabis excise taxes strongly predicted cannabis retail prices, supporting their use as an instrumental variable candidate.

Substantial heterogeneities exist in cannabis excise tax structures, standardized taxes, and tax incidences across states.

Category-specific cannabis excise taxes strongly predicted cannabis retail prices, supporting their use as an instrumental variable candidate.

Background: Cannabis excise tax structures vary widely across the states in the United States. Standardizing taxes may improve cross-state comparisons and strengthen evaluations of how taxes and prices influence public health outcomes. This study developed category-specific standardized tax metrics for flower, vaping, and edible products by incorporating price and tax structure variations using retail scanner data. Methods: We analyzed cannabis retail scanner data from dispensary point-of-sale systems for flower, vaping, and edible products in 12 states with legal recreational markets from Q1 2020 to Q4 2024. Using retail prices and excise tax policies, we converted taxes in different forms across the supply chain into standardized measures and estimated tax incidence (ratio of standardized taxes to retail prices) for each category. We also evaluated the association between standardized taxes and retail prices. Results: Mean standardized excise taxes were USD 32.58/ounce for flower, USD 180.21/ounce for vaping, and USD 0.024/milligram THC for edible products. Corresponding tax incidences were 13.03%, 13.59%, and 13.09%. Standardized taxes and tax incidences varied considerably across states. Category-specific standardized taxes strongly predicted retail prices, supporting their use as an instrumental variable candidate. Conclusions: Category-specific standardized measures of cannabis excise taxes derived from retail scanner data may support cross-state comparisons and pricing policy evaluation.

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