CANNABIS PRICES AND PREMIUMIZATION BEFORE AND AFTER LEGALIZATION AND REGULATION: Preliminary evidence from the California market Robin Goldstein, Daniel Sumner & Alexandra Fafard University of California Agricultural Issues Center I’m calling this “immediately after” meaning less than half a year.

A NOTE ON TERMINOLOGY: “Marijuana” vs. “Cannabis”

Marijuana Cannabis

Marijuana Cannabis

Marijuana Cannabis

Marijuana Cannabis

We surveyed 3 products: 1oz flower, 1/8oz flower, and 500mg oil cartridge.

AIC Retail Price Survey: Oct 2016, before AUMA vote Variable Obs. Mean ($) Std Dev Minimum Maximum RETAIL AND/OR DELIVERY   Retail (yes=1) 565 57% 0.50 1 Delivery (yes=1) 265 47% RETAIL PRICE 1/8 oz dried flower Low price 561 28.2 9.7 8.0 55.0 High price 54.5 16.4 13.0 125.0 1 oz dried flower 503 181.3 68.0 20.0 400.0 341.7 111.5 70.0 1000.0 0.5g Cartridge 327 30.3 7.8 10.0 328 41.5 13.1 15.0 120.0 RATING Google Local 89 4.4 0.6 0.0 5.0 Yelp! 127 4.2 0.9 Weedmaps 556 4.7 0.4 Leafly 105 4.6

Prices correlate positively with THC levels

Prices correlate inversely with package size

Price distribution before the AUMA vote Global Max @ $35 Global Max @ $50 Local Max @ $25 Local Max @ $70

Price distribution movements after the AUMA vote Global Max @ $20 New Local Max @ $60 Local Max @ $75 Low-end mean = $27.34 Low-end change = -2.8% High-end mean = $53.87 Price premium = 97.1% High-end change = -1.1% Price premium change = +3.6%

Low-end 1/8 oz flower prices Price distribution changes in the 4 months after CA Adult Use of Marijuana Act vote: Low-end 1/8 oz flower prices Movement of modal generic marijuana prices in AIC retail survey, November 2016-March 2017 (not quantity-adjusted), with 2 modal prices: the bottom modal price falls from $25 to $20, and the top modal price remaining stable at $35. (In all 3 charts above, X-axis is price, and Y-axis is frequency distribution.)

High-end 1/8 oz flower prices Price distribution changes in the 4 months after CA Adult Use of Marijuana Act vote: High-end 1/8 oz flower prices Movement of modal premium marijuana prices in AIC retail survey, November 2016-March 2017 (not quantity-adjusted), with 2-3 modal prices: the bottom modal price remains stable at $50, the top modal price rises from $70 to $75, and a new third modal price arises at $60. (In all 3 charts above, X-axis is price, and Y-axis is frequency distribution.)

Price distribution changes in the 4 months after CA Adult Use of Marijuana Act vote: High-end and low-end 1/8 oz flower prices

Average prices 2 months before vs. 5 months after CA cannabis regulations took effect on Jan 1 2018: Full sample

Average prices 2 months before vs. 5 months after CA cannabis regulations took effect on Jan 1 2018: Licensed vs. unlicensed retailers

Many thanks to our team of AIC research assistants! Robin Goldstein University of California Agricultural Issues Center Correspondence: robin.s.goldstein@gmail.com

May 2018

Sung from the perspective of a cannabis operator

Economists, yes, they rob I Sold I several licenses Minutes after they took I From my bottomless money pit Sung from the perspective of a cannabis operator

But my hands were made strong By the hand of the AIC We look forward to this equilibrium Triumphantly

Won't you help to sing These songs of freedom From all the pesticides Regulation’s on

Legalize yourselves from mental slavery None but our forms can free our minds Have no fear for the California agencies Just turn cannabis to wine

How long shall they squeeze our profits While we stand aside and look? Ooh…some say it's just a part of it We've got to submit de books

Won't you help to sing These songs of freedom From all the pesticides? Regulation’s on Taxation’s on Vacation’s gone Guitar solo

Vaporize your irregularities Sign de papers, pay de fees Internalize the vocabularities Call it cannabis, not weed

How long shall they eat our profits While we stand aside and puff? Some say it's just a part of it We've got to fulfill de Gov

Won't you help to sing These songs of freedom From all the pesticides Regulation’s on All those pesticides Taxation’s on Songs of freedom.

Sung from the perspective of a cannabis operator