Cannabis retail market indicators in five legal states in the US: A public health perspective

Abstract

Purpose.

Adult-use cannabis markets are operating in multiple US states and abroad. Sales and licensing data for alcohol and tobacco are often used to understand consumption patterns and evaluate policy changes. Cannabis market data may provide similar insights, though these newly-legal markets are complex, still evolving, and state data structures can differ. This study describes variation in market indicators and discusses the utility of cannabis market metrics from a public health perspective.

Methods.

We collected data from five early-adopting adult-use cannabis states: Alaska, Colorado, Massachusetts, Oregon, and Washington. Analyses focused on licensed retail outlets and retail sales revenues (pre-tax). Monthly data were collected from the opening of each state’s adult-use market through June 2022. We used Joinpoint software to assess state trends and identify points of inflection in trends. We compared average sales per retailer for June 2019 and June 2022. We describe retailers and revenue per population for 2022.

Findings.

All states showed four distinct periods of growth in retail licensee numbers. The greatest increases typically occurred in the first 3–4 months. Growth rates slowed to <1% per month for Colorado, Oregon, and Washington at months 25, 24, and 34, respectively. The number of cannabis retailers per 100,000 residents in June 2022 ranged widely, from 16.8 in Oregon to 3.0 in Massachusetts.

Colorado, Oregon, and Washington each showed four distinct trend periods in adult-use retail sales: early rapid growth lasting less than a year, subsequent varied growth periods, then declining sales in the most recent months, following early COVID-19 period increases. Alaska and Massachusetts sales demonstrated more stable, consistent growth patterns. Sales per state resident for July 2021-June 2022 also ranged widely, from $382.97 in Alaska to $180.94 in Washington.

Implications.

We found some consistencies and some variations in both point-in-time measures and trends in states’ adult-use cannabis markets. Differences may relate to varied state policies and general contexts (e.g., economies). Market data can be useful for public health monitoring, including understanding the effects of policies intended to protect health and safety. States providing publicly accessible cannabis market data create opportunities for such use. Our results underscore the importance of considering individual state regulatory frameworks and implementation timelines in studies of cannabis legalization.

Introduction

Significant changes in state marijuana laws have occurred over the past decade in the United States. In 2012, Colorado and Washington were the first states to legalize the production, sale, and possession of marijuana (herein referred to as cannabis) for non-medical purposes by adults ages 21 and older (“adult-use”). In 2014, these two states opened the first regulated cannabis marketplaces in the U.S. for legal adult-use sales (“retail sales”). Alaska and Oregon were the next states to legalize adult-use cannabis in 2014 and began retail sales by 2016. In November 2016, four more states voted to legalize adult-use cannabis, including Massachusetts where retail sales began in 2018. As of March 2023, 21 states, two territories, and the District of Columbia (D.C.) have enacted adult-use cannabis legalization, although not all have begun retail sales (and D.C. does not allow legal retail sales). Notably, cannabis production, sales, and possession are still federally illegal in the U.S.

States that have legalized adult-use cannabis sales have each established or identified a government agency that is responsible for regulatory oversight. These agencies are responsible for licensing retailers, assuring compliance with rules and laws about retail sales, and collecting data about sales for the purpose of managing taxes imposed on cannabis marketplaces. Among the five early adopting states indicated above, three states (Alaska, Oregon, Washington) expanded the authority of an existing agency that regulated alcohol (Washington’s agency also regulates tobacco). Colorado’s Department of Revenue added cannabis to a portfolio of business oversight including the lottery and motor vehicles. Massachusetts created a new commission specific to cannabis.

Because no legal cannabis marketplace had previously existed in these states for non-medical purposes, the public health effects of establishing legal sales could not be known. Based on evidence from studies of alcohol and tobacco (1), regulatory design and marketplace-related policies were posited as important levers for protecting public health and safety. Two factors of specific interest in monitoring the marketplace are the availability of retail outlets and retail sales.

Restricting the number or density of sales outlets is an effective intervention for reducing youth initiation, excessive consumption, and related harms from tobacco (1) and alcohol (2,3). However, one argument in support of cannabis legalization is that providing access to regulated products with oversight for quality and safety may limit harms otherwise associated with the use of products from illicit or unregulated marketplaces. In theory, there may be an optimal level of retail access that balances these effects. The amount of storefront or community advertising (e.g., number, design, and content of advertising) and proximity to schools and other sensitive settings may also play a role in how retail “presence” influences behaviors play (4,5).

Patterns of sales may provide useful insights into population-level consumption, and are commonly monitored indicators in tobacco (6) and alcohol prevention (7). In comparison to population surveys about consumption, sales data can be more rapidly available, cheaper to obtain, and potentially provide ongoing time-specific (e.g., weekly or monthly) and geographic area-specific information. Revenue data may also be highly responsive to policy interventions (e.g., price controls and retail licensing restrictions)(6), and thus help to understand whether policies work as intended.

Some studies to date have examined emerging cannabis market data with a public health lens.(8–10) Myran et al. (2022) (11) examined cannabis retail availability across provinces in the first two years following Canada’s nationwide legalization, and Armstrong (2021)(12) examined provincial retail sales. Generally, these studies have documented rapid growth patterns associated with early market opening. Schauer et al. (2021)(13) examined cannabis sales data from the first four adult-use states in the U.S., specifically focusing on retail sales during 2020 relative to 2018 and 2019 to understand effects of the COVID-19 pandemic, documenting sales increases in all these states within that period. However, to our knowledge, no prior peer-reviewed studies have included data from multiple states for the purpose of assessing general patterns in U.S. marketplace indicators and providing guidance about the use of such data for public health purposes.

The purpose of this study was to describe and highlight variation in data from cannabis markets in five of the first states to legalize retail cannabis sales for adults. We focus on three marketplace indicators: the number of cannabis retailers, total retail sales, and average sales per retailer. Our study is the first to examine data from up to 8.5 years of market activity across five early-adopter adult-use cannabis states in the U.S. We demonstrate how cannabis regulatory data can provide cannabis purchasing and product availability insights and discuss important considerations in the use of regulatory data for public health and safety monitoring.

Participants and Methods

Legalized adult-use cannabis states

Five of the initial states to legalize adult-use cannabis and open retail sales marketplaces were included in this study: Alaska (AK), Colorado (CO), Massachusetts (MA), Oregon (OR), and Washington (WA). Table 1 summarizes relevant policy implementation factors for each of these states’ retail cannabis marketplaces.

Table 1:

Characteristics of adult-use cannabis market implementation per state, as of June 30, 2022

State Population in 2019	Legalization pass date (voter initiative name)	Retail Market Open (number of months after legalization passeda)	Months with sales data, from market opening - June 2022	Taxes Applied	Regulated medical sales marketplace
Alaska (AK) 732,000	November 4, 2014 (Measure 2)	10/29/2016 (24 months)	69 months (data available for analysis begin with month 9b)	No retail sales tax. Grower/cultivator tax is applied by weight: $50/ounce mature bud, $25/ounce immature bud, $15/ounce remainder of plant, $1 per cloned plant. State does not have a general sales tax.	No
Colorado (CO) 5.8 million	November 6, 2012 (Amendment 64)	1/1/2014 (14 months)	102 months	Excise tax of 15% at producer-level; 10% of retail sales from opening through 7/2017 and 15% of retail sales thereafter. General sales tax does not apply.	Yes, separately regulated
Massachusetts (MA) 6.9 million	November 8, 2016 (Question 4)	11/20/2018 (24 months)	44 months	Excise tax of 3.75% applied at retail sales through 7/27/17, 10.75% thereafter. State general sales tax of 6.25% applies.	Yes, separately regulated
Oregon (OR) 4.2 million	November 4, 2014 (Measure 91)	10/1/2016c (23 months)	69 months	Excise tax is 17% of retail sales; an additional 3% may be added by local jurisdictions. The state does not have a general state sales tax.	Yes, separate but increasingly integrated
Washington (WA) 7.6 million	November 6, 2012 (Initiative 502)	7/8/2014 (20 months)	96 months	Excise tax of 25% each at producer, processor, and retail sales was applied through 6/30/2015; excise tax of 37% only at retail sales is applied thereafter. State and local retail sales taxes apply (state general sales tax is 6.5%).	No

^a.Months are rounded to the nearest 30-day period (i.e., November is counted as a full month when policies were passed in the first week)

^b.Alaska sales data were available for analysis beginning in June 2017, although sales began October 29, 2016. During this early period the total sales were $28,201,518 (source: AMCO communication) but information about sales by month is not available.

^c.Oregon allowed early retail sales of flower through existing, licensed medical dispensaries; low-dose edible and concentrate sales through dispensaries were added on June 2, 2016; full retail sales of all products through new retail licensees began October 1, 2016, and adult-use sales through dispensaries were not allowed after December 31, 2016. Sales data were not available from early retail sales in dispensaries.

References:

1. Alcohol Policy Information System (APIS) https://alcoholpolicy.niaaa.nih.gov/cannabis-policy-topics/recreational-use-of-cannabis-volume-1/104

2. Prevention Technology Transfer Center (PTTC), Region 10. https://pttcnetwork.org/sites/pttc/files/2020–09/Multi%20State%20Comparison%20Chart_508_0.pdf

3. Population denominators from U.S. Census Bureau, Population Division, December 2019 State Population Totals: 2010–2019 (census.gov)

All these states legalized adult-use cannabis through voter initiatives rather than by traditional legislative action. Retail marketplaces opened between 14 months (Colorado) and 24 months (Alaska, Massachusetts) after voter initiatives passed. Depending on when voter initiatives passed, and when retail sales began, states provided between 44 months and 102 months of data for the current study. We also note some state contextual factors that could affect adult-use cannabis market data: what taxes are applied in cannabis marketplaces (both excise taxes – taxes that are imposed on the sale of specific goods – and general sales taxes), and whether medical cannabis sales occur independently or within the retail sales marketplace.

Retail cannabis marketplace data sources

Adult-use cannabis marketplace data were from administrative datasets maintained by each state’s cannabis regulatory agency. Data from Alaska are from the Alcohol and Marijuana Control Office (AMCO) in the Alaska Department of Commerce, Community, and Economic Development. Colorado data are from the Colorado Department of Revenue, Marijuana Enforcement Division (MED). Massachusetts data are from the state Cannabis Control Commission, Commonwealth of Massachusetts (CCC). Oregon data are from the Oregon Liquor and Cannabis Commission (OLCC). Washington data are from the Washington State Liquor and Cannabis Board (WSLCB).

All states provide some form of publicly accessible form of these data. Massachusetts,(14) Oregon,(15) and Colorado (16) provide cannabis market data in interactive dashboards. Washington (17) provides information through the online posting of files that show monthly sales and numbers of operating retailers. Alaska’s Department of Revenue (18) provides reports of statewide sales per month

We examined data from the start of each states’ legal retail sales through June 30, 2022. We assessed three indicators based on cannabis regulatory data.

Indicator: Licensed cannabis retailers

State regulatory agencies reported the number of current retail licensees within the state per month. In Washington, the WSLCB is only authorized to distribute a limited number of retail licenses, which are allocated by regions and were originally distributed using a lottery system. However, some WA municipal or county areas of the state have acted to ban retail sales, so entities that obtained a license through the lottery system are not allowed to operate and the number of active licensees is less than the number licensed.(19) To remove inactive licensees, we obtained a separate list of sales reported per retail license number and linked it with identified licensee data to eliminate inactive licensees from counts.

Indicator: Adult-use cannabis retail sales revenue

Monthly total retail sales revenue from adult-use cannabis licensees was provided by regulatory agencies or obtained from public reports from each state agency for all months of available data through June 2022. If the state had a separately regulated medical cannabis dispensaries, these sales were not included.

Tax structures vary, as does whether tax was included in the sales reports provided by the agency. Data from CO, MA, OR, and WA were provided as pre-tax sales. AK does not have an ad valorem tax (i.e., a tax which is a percentage of the retail price) on cannabis applied at the retail point of sale so no retail sales taxes are applicable.

Indicator: Average sales per cannabis retail licensee

We calculated average sales per licensee by dividing the total retail sales by the number of active retail licensees within a month. We focused on a single month to isolate the number of retailers operating during a period (the number that reported sales during that month). We compared this indicator for the month of June 2022 (the most recent month of data in our study period) and June 2019 (the last June prior to the COVID-19 pandemic). Sales data for 2019 were inflation-adjusted to 2022 values.

Analysis

We conducted analyses separately for our three indicators.

First, we examined within-state trends over time in licensed cannabis retailers and cannabis retail sales revenue using Joinpoint Regression software (version 4.3.1.0, April 2016).(20) Joinpoint calculates slope values and identifies points of inflection where the trend line slope changes significantly, using a 95% confidence threshold (p<.05). The program starts with the minimum number of joinpoints (0 joinpoints, where the trend is a straight line) and tests whether addition of more joinpoints significantly improves the fit of the model; the simplest model is preferred. We allowed up to three joinpoints, which would result in up to four different slopes. Outcomes were log-transformed so that slopes represent the relative percent change per month.

Next, we descriptively compared indicators across states. For the number of retailers, we focused on June 2022, the most recent month of data. For retail sales we assessed the total for the most recent full year, July 2021-June 2022. We also divided these outcomes by the total state populations(21) to report retailers per 100,000 state residents and sales per capita. Average sales per retailer and state for June 2019 and June 2022 were also compared descriptively, including the rate of change between these years in the number of retailers, amount of sales, and average sales per retailer.

Results

Indicator: Licensed cannabis retailers

The monthly number of cannabis retail licensees per state is shown in Figure 1. All states showed growth in the number of retail outlets from the opening of their markets.

Figure 1: Active cannabis retail licensees per month and state, January 2014-June 2022.

Notes: Alaska retail data were available for analysis beginning in June 2017, although sales began October 29, 2016.

Table 2 presents results from Joinpoint models that characterize these trends. All states showed four distinct periods of growth in retail licensee numbers. The greatest increases typically occurred in the first year. Alaska, Massachusetts, and Oregon retail numbers grew between 89.3–103.5% per month during their first 3–4 months of operation, while the number of retailers in Washington grew by 51.4% per month in the first 4 months. Colorado grew more slowly in this first phase, at 6.5% per month over 14 months, but there were a relatively large number of retailers operating in Colorado’s first month (N=147) in comparison to the first month in other states (between 2 and 36 retailers), which would result in a smaller relative percent change than states that began with only a few retailers (data not shown).

Table 2:

Periods of significantly different trends in retail license numbers, per state

	Period 1		Period 2		Period 3		Period 4
	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month
Alaska	9–13, 4 months (Jun 2017-Oct 2017)	−7.3	13–23, 10 months (Oct 2017-Aug2018)	4.5*	23–50, 27 months (Aug 2018-Nov 2020)	2.8*	50–69, 20 months (Nov 2020-Jan 2022)	0.9*
Colorado	1–14, 14 months (Jan 2014-Feb 2015)	6.5*	14–25, 11 months (Feb 2015-Jan 2016)	1.8*	25–52, 27 months (Jan 2016-Apr 2018)	0.9*	52–102, 50 months (Apr 2018-Jun 2022)	0.5*
Massachusetts	1–3, 3 months (Nov 2018-Jan 2019)	89.3*	3–6, 3 months (Jan 2019-Apr 2019)	24.3*	6–30, 24 months (Apr 2019-Apr 2021)	9.2*	30–44, 14 months (Apr 2021-Jun 2022)	3.9*
Oregon	1–4, 4 months (Oct 2016-Jan 2017)	103.5*	4–7, 3 months (Jan 2017-Apr 2017)	14.4*	7–24, 17 months (Apr 2017-Sep 2018)	1.8*	24–69, 45 months (Apr 2018-Jun 2022)	0.5*
Washington	1–4, 4 months (Jul 2014-Oct 2014)	51.4*	4–11, 7 months (Oct 2014-May 2015)	12.5*	11–34, 23 months (May 2015-Apr 2017)	4.3*	34–96, 62 months (Apr 2017-Jun 2022)	0.2*

^*monthly percent change is significantly different from zero at p<.05

Notes: Alaska retail licensing data were available for analysis beginning in June 2017, although sales began October 29, 2016.

For all states, growth rates diminished in the longer term. Growth rates slowed to <1% per month for Colorado at month 25 of market sales (January 2016), for Oregon at month 24 (April 2018), for Washington at month 34 (April 2017), and for Alaska at month 50 (November 2020). Massachusetts was still increasing the number of retailers by 3.9% per month through the most recent month of data.

Figure 2 shows the number of active cannabis retail licensees per state, and retailers per 100,000 population in June 2022. Oregon had the most retailers (N=707), followed by Colorado (N=665), Washington (N=443), Massachusetts (N=206), and Alaska had the fewest (N=118). However, when accounting for differences in population levels, Oregon (16.8) and Alaska (16.1) had the greatest number of licensed retailers per 100,000 state residents, followed by Colorado (11.5), Washington (5.8), and Massachusetts (3.0).

Figure 2:

Cannabis retail licensees per state, June 2022 – number and per 100,000 state resident population

Indicator: Adult-use cannabis retail sales revenue

Figure 3 displays monthly retail sales per state. All states showed generally upward trends over the entirety of their operations. Notably, Massachusetts showed a large drop in sales during March-May 2020; this is because the state required adult-use cannabis retail stores to close for 2 months as part of the state’s policy response to reduce the spread of the COVID-19 pandemic (medical dispensaries were permitted to stay open). Other states allowed adult-use cannabis retail sales to continue during this time.(13)

Figure 3: Monthly retail cannabis sales revenue per state, January 2014-June 2022.

Notes: Alaska sales data were available for analysis beginning in June 2017, although sales began October 29, 2016. During this early period the total sales were $28,201,518 (source: AMCO communication) but information about sales by month is not available. Data are not adjusted for inflation.

Massachusetts required cannabis retail stores to close for two months (late March to late May 2020) as part of the state’s policy responses to reduce spread of the COVID-19 pandemic; other states allowed retail cannabis sales to continue.

Table 3 shows results from models to assess different trend periods in retail cannabis sales. For adult-use sales, Colorado, Oregon, and Washington each showed four distinct trend periods: an initial growth period lasting less than 1 year, then settling into a second period of more modest growth (4.0% per month for months 7–32 in Colorado; 1.6% per month for months 5–41 in Oregon; 5.7% per month for months 9–27 in Washington). Period 3 within these states included the early months of the COVID-19 pandemic. Finally, each of these states shows significantly declining sales in a final period that includes the most recent months (−2.0% per month in Colorado for the most recent 13 months, −0.8% per month in Oregon for 25 months, and −1.5% per month in Washington for 13 months).

Table 3:

Periods of significantly different trends in retail sales revenue, per state

	Period 1		Period 2		Period 3		Period 4
	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month	Months from opening, total months in this period (dates)	% change per month
Alaska	9–12, 12 months (Jun 2017-Sep 2017)	1673.6*	12–69, 57 months (Sep 2017-Jun 2022)	2.2*
Colorado	1–7, 7 months (Jan 2014-Jul 2014)	13.4*	7–32, 25 months (Jul 2014-Aug 2016)	4.0*	32–89, 57 months (Aug 2016-May 2021)	1.3*	89–102, 13 months (May 2021-Jun 2022)	−2.0*
Massachusetts	1–44, 44 months (Nov 2018-Jun 2022)	6.4*
Oregon	1–5, 5 months (Oct 2016-Feb 2017)	105.8*	5–41, 36 months (Feb 2017-Feb 2020)	1.6*	41–44, 3 months (Feb 2020-May 2020)	12.7	44–69, 25 months (May 2020-Jun 2022)	−0.8*
Washington	1–9, 9 months (Jul 2014-Mar 2015)	31.1*	9–27, 18 months (May 2015-Sep 2016)	5.7*	27–83, 58 months (Sep 2016-May 2021)	1.2*	83–96, 13 months (May 2021-Jun 2022)	−1.5*

Notes: Alaska sales data were available beginning in June 2017, although sales began in October 2016.

^*monthly percent change is significantly different from zero at p<.05 Joinpoint output per state is included as Supplemental Figures 6–10.

In contrast, Alaska and Massachusetts sales have demonstrated more stable, consistent growth patterns. Alaska’s sales have been growing at 2.2% per month for the most recent 57 months, and Massachusetts sales have been growing at 6.4% per month for 44 months (the entirety of the state’s legal market operations).

Figure 4 shows total pre-retail tax cannabis sales, and per capita sales, for each state during July 2021-June 2022. The greatest amounts of sales were in Colorado ($1,508 million), followed by Massachusetts ($1,318 million), Oregon ($976 million), Washington ($913 million), and Alaska ($256 million). In terms of per capita sales, Alaska was the highest ($382.97), followed by Colorado ($290.95), Oregon ($256.06), Massachusetts ($209.74), and Washington the lowest ($180.94).

Figure 4: Retail cannabis pre-tax sales revenue, total (M=millions) and per capita by state, July 2021-June 2022.

Note: Alaska applies tax at the cultivator/grower level rather than retail. In FY21, Alaska collected $29.6 million in tax (10.8% of the total retail sales revenue in that fiscal year). For comparison, if FY22 sales had been reduced by 10.8% to estimate the value of pre-tax retail sales revenue this would have reduced per capita revenue from $382.97 to $341.61.

Alaska does not have a retail tax, and instead applies tax at the cultivator level (in other states cultivators may be called growers or producers). In FY21, Alaska collected $29.6 million in taxes (10.8% of the total retail sales in that fiscal year).(18) For comparison to other states’ pre-tax sales, we subtracted this percentage from retail sales in FY22. Doing so reduced per capita pre-tax sales in Alaska to $341.61, which would still have been greater than in any other state and nearly twice the rate for Washington.

Indicator: Average sales per cannabis retail licensee

Table 4 shows the change in each states’ total revenue and average retail sales per active cannabis retailer in June 2019 and June 2022. Oregon and Washington showed little change in average sales per retailer (−5% and +1%, respectively). Washington had little growth in retail numbers (+2%) and total retail sales (+3%); Oregon had relatively similar growth in retail outlets and total sales (+17% and +24%, respectively). Alaska and Colorado showed similar declines in average sales per retailer (−24% and −21%, respectively). Alaska nearly doubled the number of retailers during this period (+84% increase), and total sales increased by 40%. Colorado increased the number of retailers modestly (18%) and total sales decreased slightly (−7%). The average sales per retailer in Massachusetts dropped by more than half during this period (−77%); the number of active retailers increased by five-fold (from 17 to 206) while total retail sales increased by nearly three-fold (from $43.5 million [adjusted to $2022] to $122.6 million).

Table 4:

Changes in retail number, retail sales revenue, and average sales revenue per retailer, June 2019 to June 2022

State (Retail Sales Start Date)	Month	Retail #	Total Retail Sales Revenuea	Average Sales Revenue per Retailera
Alaska	June 2019	64	$ 16,927,942	$ 264,499
(October 2016)	June 2022	118	$ 23,636,912	$ 200,313
	% change	+84%	+40%	−24%
Colorado	June 2019	565	$ 137,057,456	$ 242,580
(January 2014)	June 2022	665	$ 127,157,358	$ 191,214
	% change	+18%	−7%	−21%
Massachusetts	June 2019	17	$ 43,506,523	$ 2,559,207
(Nov 2018)	June 2022	206	$ 122,554,432	$ 594,924
	% change	+1112%	+182%	−77%
Oregon	June 2019	605	$ 74,581,050	$ 123,274
(Oct 2016)b	June 2022	707	$ 82,836,927	$ 117,167
	% change	+17%	+11%	−5%
Washington	June 2019	433	$ 101,718,756	$ 234,916
(Jul 2014)	June 2022	443	$ 105,238,370	$ 237,558
	% change	+2%	+3%	+1%

^a.Retail sales for June 2019 are inflation-adjusted to 2022 value.

^b.Oregon began early retail sales through existing medical dispensaries in October 2015; state licensee sales began October 2016

Discussion

To our knowledge, this is the first peer-reviewed study to characterize cannabis marketplace trends and contrast indicators across five U.S. states that have had legal adult-use sales for up to eight years.

Long-term trends and market maturity

Similar to studies focusing on the first two years of Canadian national legalization, we found early growth in state marketplaces.(11) Three states that had been operating for at least 5 years (Colorado, Oregon, Washington) showed only minimal increases in the number of retail licensees after 2–3 years, peaks in sales during early 2020-early 2021, and declines in sales during the most recent 1–2 years of data leading up to June 2022. Massachusetts, still within the first four years of its market opening, showed relatively greater volatility.

A previous study that examined data from four of the five states in this study documented increases in sales during the initial period of the 2020 COVID-19 pandemic.(13) With the addition of 2021–2022 data in this analysis, we confirmed that sales in the original four states studied did reach historical highs in early 2020 through early 2021; we also identified decreases in sales for three of those four states (Colorado, Oregon, Washington) after the initial increases during the COVID-19 period, so that in June 2022 inflation-adjusted sales were close to pre-pandemic (June 2019). Alaska and Massachusetts, however, continued to show increases in sales. An explanation may be that these two states have not yet reached market maturity. Although growth has slowed, the number of cannabis retailers in Alaska and Massachusetts was still most recently expanding by 2–4% per month. In the other states the number of retailers was growing at less than 1% per month since 2016 (Colorado), 2017 (Washington), and 2018 (Oregon). This suggests that market maturation and significant societal events (e.g., a pandemic) may be independent effects. One implication of this observation is that fully mature markets may perform better for use in studies that seek to isolate policy effects.

State variation in cannabis market indicators

Based on the most current data, Alaska had among the greatest number of retail licensees and sales values after population adjustment. Alaska is currently the only state to solely tax cultivators, and one recent examination of state cannabis taxes suggested that Alaska may have the highest tax payments per ounce among states.(22) Alaska has higher costs of living than other states; U.S. federal poverty threshold guidelines for Alaska are 25% greater than those for the “lower 48” contiguous states.(23) Further, Alaska has by far both the largest geographic area and the lowest population density of any state,(24) which could affect business location choices. Therefore, differences in Alaska’s retail cannabis markets may be related to unique state contexts, tax structure, and/or higher average price points for cannabis products, than to different population responses to the legal cannabis marketplace.

Washington uniquely addressed concerns about effects of access to cannabis by limiting the number of cannabis retail licenses that were allowed per city and county, initially to 334 and later to a maximum of 556 statewide after allowing for consolidation of unregulated medical dispensaries.(25) Due to the presence of local bans on retail cannabis operations, fewer than this maximum are operating: 443 cannabis retail stores reported sales in June 2022. Likely because of having fewer retail sales outlets, Washington’s total sales have been consistently lower than Colorado’s, despite having a 24% larger population. Further, Washington’s number of retailers, sales, and average sales per retailer appeared more stable than other legal states. Additional studies are needed to determine whether Washington’s policies are also positively affecting population-level health and youth prevention outcomes.

We have described variation in statewide indicators; however, community-level marketplaces and their effects could also vary widely within any state. Retail licensee operation can be affected by factors including “opt-out” provisions that allow local governments to ban retail operations in specific cities or county areas, and licensing limits at the state level (e.g., Washington).(19) State or local policies dictating where cannabis retailers can operate may result in limited areas where cannabis businesses can operate in some communities, potentially raising concerns about inequitable distributions.(26)(27)(11) Further, community-based advertising associated with retail storefronts can be highly visible (28) and potentially amplify the effect of simple retail presence on behaviors. Thus, monitoring of cannabis retailer licensees for public health purposes should incorporate consideration of policy contexts and geospatial distributions as well as simple state or regional numbers.

Using revenue data to inform public health action

Revenue data can be useful for providing inferences about population consumption. Although an imperfect measure of the amount of cannabis sold due to variations in prices and products across jurisdictions and over time, the data can still be highly useful. For example, visual inspection of the trends suggests there are seasonal variations in cannabis sales patterns. This could in part be related to seasonality of regional harvesting and subsequent effects on supply and pricing, or cannabis-themed holidays (“4/20”). Such insights could inform planning for public health campaigns, focusing on time periods of increased purchasing (and, potentially, consumption).

Drawing inferences about how cannabis use influences the use of other substances is possible: using Washington State cannabis sales data from July 2014 to December 2016, Miller and Seo found indications of substitution effects, where cannabis sales were associated with reduced alcohol and tobacco sales.(29)

Using cannabis revenue data as a proxy for cannabis use measured by surveys might be best done in stable marketplaces. For example, using data from the first two years of legal sales in Canada as well as population-based behavior surveys from 10 provinces, Armstrong found weak relationships between growth in legal stores and cannabis use prevalence, speculating that in early markets the transition from illicit sources to legal sources might undermine direct correlations between population prevalence and market data.(12)

Future studies could examine relationships in more mature markets between cannabis market indicators and public health metrics, such as emergency department visits, and contrast such associations among states with different regulatory and other contexts (e.g., Washington and Alaska).

Special considerations for use of cannabis marketplace data

In response to public interest, most states are offering open access to selected cannabis marketplace data in some form. These resources can support examination of cannabis market data by people working in prevention and public health, as well as researchers. However, as described in this report, there are many specific factors that should be considered when examining data, to avoid inaccurate conclusions about their meaning.

Different states have different tax structures and policies. As noted in our summary of state contexts (Table 1), Washington currently has the highest state cannabis excise tax at retail (37%), followed by 17% in Oregon, 15% in Colorado, and 10.75% in Massachusetts, while Alaska does not have a retail tax. We also noted that states vary in their allowances about applying state and local general sales taxes, as well as local retail excise taxes. To compare per capita sales across states we used retail sales data without retail sales tax for consistency. Anyone working with market data should clearly define whether state and local taxes are included when reporting on the data and consider what effect this might have on their results. For example, summaries of pre-tax sales data, as in this study, underestimate the total tax-inclusive out-of-pocket purchasing costs to consumers.

The number of retail cannabis outlets and their sales can also be affected by whether there is an independent medical cannabis marketplace in the state. Alaska and Washington do not have – and have never had — a separate, regulated medical cannabis marketplace, and so retail sales reported are inclusive of any medical products or products intended for medical use that were purchased in retail outlets. Colorado has an entirely separate medical cannabis marketplace, and reports sales separate from retail. Massachusetts also has a separate medical marketplace, though some medical sales may be included for co-located medical/retail outlets. Oregon has a separate medical sales marketplace; however, the number of medical dispensaries in the state has declined dramatically since retail sales began, as most dispensaries converted to retail sales and retailers can sell to medical patients: there were 425 licensed medical cannabis dispensaries when Oregon’s adult-use marketplace opened in October 2016,(30) but numbers declined rapidly and only one dispensary was still operating in the state as of July 2022.(31) Thus, in Oregon medical sales may be increasingly embedded within the state’s retail sales market and this could have increased retail sales in Oregon relative to states where the status of medical marketplaces remained consistent.

Additional cannabis marketplace metrics

This report focused on readily accessible cannabis market metrics. Other valuable indicators from a public health lens may also be possible to obtain from market data. One such metric of interest is trends in sales of specific cannabis product types. Cannabis edibles, vaping products, and concentrates (i.e., manufactured products) are becoming more readily available in legal markets,(8–10,32) and their availability has been associated with increased reports of product-specific health harms(32). Monitoring sales of specific product types may be especially important for recent specific policy proposals: exploring price controls for specific types of cannabis products that contain high concentrations of THC; and revisiting purchasing limits, including by product types, to encourage moderate consumption. THC concentration and price can vary substantially among these products;(33) therefore, monitoring only sales value by product type may not be ideal for understanding how much “exposure” is occurring at a population level.

Monitoring prices is also useful because price is a known factor affecting both legal and illicit market cannabis consumption, and price control strategies are a proven approach for preventing excessive consumption and reducing public health harms.(1) Metrics such as average/median price can be difficult to create for manufactured products because, as previously noted, there are many product variations within each product group. Monitoring the price for sentinel products or groupings that have similar attributes, such as the price of flower per gram or of edibles, may be one feasible approach. Analysts could also focus on the price per milligram of THC for different product. This may also support comparison of metrics across jurisdictions, which may vary substantially. For example, median price per gram for flower in June 2022 was $4.29 in Oregon(15), $10.16 in Massachusetts.(14), and $11.21 in Alaska (personal communication, March 15, 2023, Alaska METRC tracking system).

Notably, the emergence of cannabis delivery services could change the landscape of “access” beyond brick-and-mortar stores. Sales data that designate whether products are purchased instore or via delivery services could be helpful for understanding effects of these policies on purchasing patterns and their implications for consumption.

Limitations

There are some important limitations of market data. First, sales data are reported in aggregate and cannot provide information about individual purchasers and their demographic characteristics (e.g., to understand whether the same individuals are purchasing more over time or if new individuals are purchasing). One specific limitation is that unless there are restrictions on purchasing by state residence, some total sales could be generated by non-state residents (e.g., “cannabis tourists” or people who do not have access to legal cannabis where they live). For example, Massachusetts, which borders five states, is the first east coast state to legalize adult-use cannabis. Thus, per capita, or population-adjusted estimates that use state resident populations as a denominator could be affected. Second, when examining trends in data, early marketplaces that are transitioning from “0” or other small values can show relative changes in growth that are very large. We examined monthly trends over a long period of time, focused on changes in trend rather than on the value of early growth rates, and also isolated recent population-adjusted annual estimates to avoid excessive focus on large relative changes observed during early market periods. Third, sales from adult-use marketplace data do not provide information about cannabis legally grown at home.

The availability and size of the illicit cannabis market is a known limitation of examining legal market data alone as a proxy for cannabis consumption. One study in Washington State (34) estimated that between 40 and 60 percent of total THC obtained by state residents was being purchased from state-licensed stores in the third year after implementing a legal sales market. Surveys to assess sources of products among people who use cannabis may be helpful both for understanding what alternative or illicit sources they are using, and their reasons for doing so. Further complicating the cannabis market landscape, the 2018 Federal Farm bill that legalized hemp and hemp derivatives resulted in emergence of a new marketplace (including online sales) of impairing hemp-derived products that mirror some of the products in the adult-use marketplace. Finally, our analysis was conducted among early-adopting states; states that have legalized more recently could show different patterns of market growth and indicators, perhaps particularly those bordering already legalized states. If adult-use cannabis is federally legalized in the U.S. in the future, cannabis marketplace metrics could change dramatically.(35)

Conclusions

We found some consistencies and some large variations in both point-in-time measures and trends in states’ adult-use cannabis market indicators. The differences we identified may relate to unique state policies, and thus provide insights into how we can examine the effectiveness of specific policies for preventing excessive consumption and associated risks. Market data can be useful for public health monitoring, and for creating dialogue among those working to protect public health and safety, if consideration is also given to nuances and limitations of the data. States that are providing publicly accessible websites with cannabis market data create opportunities for greater use in support of these purposes. Our results underscore the importance of considering individual state regulatory frameworks and implementation timelines in studies of cannabis legalization, rather than assuming they are all the same.

Highlights.

• Cannabis market data can provide insights for public health planning and evaluation

• In June 2022, cannabis retailers varied from 16.8 (OR) to 3.0 (MA) per 100,000 residents

• FY22 pre-tax cannabis sales per resident varied from $382.97 (AK) to $180.94 (WA)

• Markets grew rapidly early on; CO and WA showed declining licensed sales after 7 years

• Regulatory frameworks and market maturity may affect market indicators