In 1,100 youth and young adults, higher taxes reduced cannabis and THC consumption, but potency-based taxes had the paradoxical effect of increasing consumption of low-THC products.
Cannabis policymakers, youth health advocates, economists studying substance taxation, and parents concerned about teen cannabis access.
What the researchers found
Higher pre-tax prices and tax rates reduced both quantity and THC consumption among youth/young adults. Potency-based taxes reduced high-THC product use but increased low-THC consumption by 30-32%, and tax impacts could be offset by shifting to illegal products.
Why it matters
Youth are particularly vulnerable to cannabis harms, yet tax policy designed to reduce potency could backfire by increasing overall consumption of lower-THC products or driving youth to the illegal market.
The numbers in context
1,100 AYAs ages 15-20. Price elasticity: -0.3. Potency-based taxes increased cannabis quantity 30-32% vs. weight-based. Tax rates beyond 60% of pretax prices showed no additional reduction.
How the study worked
Split-sample volumetric choice experiment with 1,100 nationally representative youth and young adults (ages 15-20), randomized to weight-, price-, or potency-based tax conditions with varying prices, rates, and THC levels.
What this study cannot tell us
Hypothetical purchase tasks may not reflect real behavior. Ages 15-20 includes both legal and underage purchasers. Illegal market availability assumed rather than measured.
How to read the evidence
Nationally representative sample with experimental design, but hypothetical choices and complex tax interactions limit definitive conclusions.
When this study was published
Recent study addressing the critical question of how cannabis tax design specifically affects the most vulnerable age group.
The bigger picture
Cannabis tax policy involves tricky trade-offs for youth protection. Reducing access to high-potency products is good, but if youth just consume more low-potency products or shift to the illegal market, the net health impact may be neutral or negative.
Questions still open
- Is there a tax rate that optimally discourages youth use without driving them to illegal markets? Would tiered tax structures outperform simple potency or weight-based approaches?
Common questions
Do cannabis taxes reduce teen use?
Is taxing by potency better for protecting youth?
Read the original research
How tax structures for retail cannabis shape cannabis use among youth and young adults: evidence from a volumetric choice experiment.
The European journal of health economics : HEPAC : health economics in prevention and care
Citation
Xu, Lei; He, Yanyun; Park, Hojin; Zhang, Shiqi; Ma, Shaoying; Shang, Ce. (2025). How tax structures for retail cannabis shape cannabis use among youth and young adults: evidence from a volumetric choice experiment.. The European journal of health economics : HEPAC : health economics in prevention and care. https://doi.org/10.1007/s10198-025-01875-3
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