The ‘sweet spot’ for pricing legal cannabis
McMaster researcher found people prefer sanctioned pot market with ideal price being $10 to $12 per gram
WHEN RECREATIONAL cannabis becomes legal next month, Canadians are likely to prefer buying the drug legally, over the black market, so long as it’s well-priced.
That’s the findings from two studies surveying hundreds of pot users in the United States, where the drug has been legalized, and in Ontario, where it’s about to become legal, by Michael Amlung, a McMaster University psychiatry and behavioural neurosciences assistant professor.
“There is a clear preference in legal cannabis,” he said.
Amlung’s research, funded in part through the Michael G. DeGroote Centre for Medicinal Cannabis Research at McMaster and St. Joseph’s Healthcare Hamilton, found that prices around $10 to $12 per gram is the “sweet spot.”
Lower prices can encourage overuse and higher prices — around $18 to $20 per gram — are likely to push some consumers back to the illegal market, he said.
The federal government has suggested pricing around $10 per gram, however, in Ontario, Doug Ford’s Progressive Conservative government has yet to announce pricing for
“We’re very interested in the tension between a legal market and the so-called contraband or black market of illegal cannabis.” MICHAEL AMLUNG Assistant professor, McMaster
when the Ontario Cannabis Store goes live for online marijuana retail next month.
Amlung said he hasn’t spoken with anyone in the government about his research, but he’s hoping to expedite publication for legalization Oct. 17.
His U.S. study has been accepted for publication by Addiction Journal and posted online earlier this month.
He is presenting the Canadian study findings this week at the Canadian Psychiatric Association conference and it’s under review at the Canadian Journal of Public Health. It’s available online through an open-source preprint, Psy ArXiv.
Much of Amlung’s work focuses on “behavioural economics” — basically the psychology of economic decision-making.
He wanted to know how the availability of legal cannabis affected people’s consumption and what impact price had on use.
“We’re very interested in the tension between a legal market and the so-called contraband or black market of illegal cannabis,” he said, adding that one of the goals of legalization is to reduct the contraband market, so he wanted to look at what would make that the most successful.
Amlung believes there are several obvious reasons why legal cannabis is preferable, including regulation on quality and not wanting to risk criminal charges.
He first focused in eight U.S. states where cannabis is legal, starting with a broader survey of 3,000 people. Hidden within that survey were questions around cannabis use. More than 700 people who answered that they had used cannabis in the last six months were recruited for a followup survey, which asked additional questions about cannabis. Answers showed a clear preference for legal marijuana.
When it became clear legalization was going to happen in Canada, Amlung went back to the ethics board for approval to do a similar study here, where he recruited about 400 people online in and around Hamilton. In a sample of 289 adults, he found very similar results to the U.S.
“The pattern results is mirrored in Canada,” he said.
But Canada is also much bigger than any individual state, so researchers are keen to track what happens here post-legalization.
James MacKillop, also an author on Amlung’s studies and a co-director of the Centre for Medicinal Cannabis Research, said legalization in Canada is “natural experiment.”
In another ongoing study funded by the research centre, MacKillop is surveying a people about cannabis use before legalization, and then six months, 12 months and 18 months after legalization, to measure any changes in attitudes and behaviours.
This study will cover a broader range of questions, but will include questions about preference and pricing.