Triangulating web & general population surveys: Do results match legal cannabis market sales?

BACKGROUND: This paper combines complementary attributes of web and general population surveys to estimate cannabis consumption and spending in Washington State. It compares those estimates to legal sales recorded by the state's seed-to-sale tracking system, and thus exploits a rare opportunity to contrast two independent estimates for the same cannabis market. This sheds light on the question of whether nontrivial amounts of black market sales continue even after a state allows licensed production and sale. METHODS: Prevalence of past-month use is estimated from the 2015/16 U.S. National Survey on Drug Use and Health, adjusted for under-reporting. Estimates of consumption and spending per user broken down by age, gender, and frequency of use are developed from RAND's 2013 survey of cannabis users in Washington State. Supply side estimates come from the Washington State Liquor and Cannabis Board's seed-to-sale tracking system. They are expressed in terms of spending, equivalent-weight of flowers, and THC, with THC for edibles imputed using a machine learning technique called random forests. RESULTS: For the period July 1, 2016 to June 30, 2017, Washington's seed-to-sale data record sales from licensed cannabis stores of $1.17B and across all products an amount of THC that is equivalent to roughly 120-150 MT of flower. Survey responses suggest that amounts spent and quantities consumed are larger than that, perhaps on the order of $1.66B and over 200 MT, respectively. CONCLUSION: A perfect match is not expected because of sales to tourists, residual black market activity, production for medical purposes, and diversion across state lines. Nonetheless, the results suggest that three years after state-licensed stores opened, there remained considerable consumption of cannabis supplied outside of the licensed system.

Big data on a big new market: Insights from Washington State's legal cannabis market.

INTRODUCTION: Voters in eight U.S. states have passed initiatives to legalize large-scale commercial production of cannabis for non-medical use. All plan or require some form of "seed-to-sale" tracking systems, which provide a view of cannabis market activity at a heretofore unimagined level of detail. Legal markets also create a range of new matters for policy makers to address. DATA: Publicly available data were obtained on approximately 45 million individually priced items purchased in the 35 million retail transactions that took place during the first two and a half years of Washington State's legal cannabis market. Records include product type (flower, extract, lotion, liquid edible, etc.), product name, price, and potency with respect to multiple cannabinoids, notably THC and CBD. Items sold can be traced back up the supply chain through the store to the processor and producer, to the level of identifying the specific production batch and mother plant, the firm that tested the product, and test results. METHOD: Data visualization methods are employed to describe spatial-temporal patterns of multiple correlated attributes (e.g., price and potency) broken down by product. Text-analytic methods are used to subdivide the broad category of "extracts for inhalation" into more homogeneous sub-categories. To understand the competitiveness of the legal cannabis market in Washington we calculate the Herfindahl-Hirschman index (HHI) for processors and retailers. RESULTS: Cannabis prices fell steadily and proportionally at the processor and retailer levels. Retail and wholesale price maintained a roughly 3:1 ratio for multiple product types after some initial fluctuations. Although a wide range of edibles are sold, they account for a modest share of consumer spending; extracts for inhalation are a larger and heterogeneous market segment. The HHI indicates the cannabis market is highly competitive at the processor level, but less so for retail markets at the county level. CONCLUSIONS: Washington's state-legal cannabis market is diverse and rapidly evolving in terms of pricing, products, and organization. Post-legalization, researchers and policy makers may need to think in terms of a family of cannabis products, akin to how we think of new psychoactive substances and amphetamine-type stimulants, not a single drug "cannabis."