Evolution of the United States Marijuana Market in the Decade of Liberalization Before Full Legalization

• Published date: 01 October 2016
• Date: 01 October 2016
• DOI: 10.1177/0022042616659759
• Subject Matter: Articles

Journal of Drug Issues

2016, Vol. 46(4) 411 –427

© The Author(s) 2016

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DOI: 10.1177/0022042616659759

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Article

Evolution of the United States

Marijuana Market in the Decade

of Liberalization Before Full

Legalization

Steven S. Davenport1 and Jonathan P. Caulkins2

Abstract

The past decade has seen a remarkable liberalization of marijuana policies in many parts of the

United States. We analyze data from the National Survey on Drug Use and Health (NSDUH) for

coinciding changes in the marijuana market from 2002 to 2013, including market size, number

and demographics of customers, and varying means of acquiring the drug. Results suggests

that (a) the national market has grown, especially in terms of the number of daily users; (b)

marijuana users remained economically “downscale” over this period, and in many ways

resemble cigarette users; (c) distribution networks appear to be professionalizing in a sense, as

fewer users obtain marijuana socially; (d) the typical purchase has gotten smaller by weight but

not price paid, suggestive of a trend toward higher potencies; (e) marijuana expenditures vary

by user group; and (f) respondents with medical marijuana recommendations differ from other

users in systematic ways.

Keywords

marijuana, drugs, illicit markets, marijuana market, marijuana expenditures, cannabis, NSDUH

Introduction

Four states have now legalized commercial production and distribution of marijuana for non-

medical use. About two dozen have legalized marijuana for medical purposes, most now with

dispensaries although the particulars vary by state (Pacula & Sevigny, 2014). A constitutional

amendment (“Issue 3”) that would have legalized an oligopoly for commercial marijuana was

defeated in Ohio in November 2015, receiving only 36% of the vote (Ohio Secretary of State,

2015). As of March 2016, the Vermont Senate is considering a bill that would enact commercial

legalization there by 2018. More states will consider marijuana legalization in 2016 and beyond

(Caulkins, Kilmer, & Kleiman, 2016; Malone, 2016).

When considering alternatives to current policy, one would do well to investigate how key

outcomes have been changing in the recent past, as we do here using household survey data from

1Pardee RAND Graduate School, Los Angeles, CA, USA

2Carnegie Mellon University, Pittsburgh, PA, USA

Corresponding Author:

Steven S. Davenport, Pardee RAND Graduate School, 1776 Main Street, Los Angeles, CA 90401, USA.

Email: stevenseandavenport@gmail.com

659759JODXXX10.1177/0022042616659759Davenport and CaulkinsJournal of Drug IssuesJournal of Drug Issues

research-article2016

412 Journal of Drug Issues 46(4)

2002 to 2013. This period saw extensive liberalization in many parts of the United States, leading

up to but not including full-scale commercial legalization.

Although the first state medical marijuana (MMJ) law dates to 1996 (in California), the pro-

liferation of brick and mortar dispensaries, formalization of regulatory approval, and spread to

other states mostly happened after the turn of the century. Likewise, even though voters in

Colorado and Washington approved legalization in the 2012 elections, and individual rights to

possess—and in Colorado to grow—took effect shortly thereafter, it took time to set up the regu-

latory structure for commercial operations; the first stores did not open until in 2014. And Alaska

and Oregon did not pass their laws until 2014, alongside Washington, D.C.’s more limited legal-

ization of possession and home growing.

The legalization debate is complex, encompassing not only harms of (heavy) use (Hall, 2015;

Hall & Degenhardt, 2009; Volkow, Baler, Compton, & Weiss, 2014) but also harms generated by

the illicit markets and related law enforcement (Kleiman, 1992).

Aspects of changing use are well-documented (e.g., Burns, Caulkins, Everingham, & Kilmer,

2013). The past few decades feature an increasing prevalence and intensity of marijuana use,

especially among daily or near-daily (DND) users, who we show have increased sevenfold since

1992 and now account for upward of 75% of reported spending. The demographic profile of

users is also changing. Burns et al. (2013) note that in 2002, there were three youthful DND users

(17 and under) for every DND user who was 50 or older. By 2013, that ratio had inverted, becom-

ing 1:2.5 (Burns et al., 2013).

Although we analyze some trends in marijuana demand, our primary contribution concerns

changes in how users report obtaining marijuana. Historically, ethnographic studies suggested

that marijuana markets differ from those for heroin, crack, and cocaine (Curtis & Wendel, 2000;

Johnson, Golub, & Fagan, 1995). Marijuana sellers are more likely to operate independently

(outside of organized operation), sell indoors, and sell to people within their social circles, rather

than through arm’s length transactions (Office of National Drug Control Policy [ONDCP], 2002,

2004).

In 2001, the national household survey added questions asking respondents how they had

most recently acquired marijuana. Analysis of that first year of data supported the findings from

ethnographic studies: Caulkins and Pacula (2006) reported that most respondents obtained mari-

juana indoors (87%), from a friend or relative (89%), and for free (58%).

Data from subsequent years of this market module have been understudied relative to the use

module, despite many reasons to suspect changes in market behavior, including the following:

 By 2014, more than half of Americans (51%) approved of marijuana legalization, twice as

many as in 1995 (25%; Lidya, 2014).

 The average potency of marijuana used in the United States increased (Mehmedic et al.,

2010) from 5.2% in 2000 to 8.1% in 2010 (Kilmer et al., 2014), partly due to domestic

production taking market share away from imports; meanwhile, while simple prices-per-

gram appear to have increased, potency-adjusted prices may nonetheless be flat or

falling.

 MMJ laws, and especially legally protected dispensaries, which are thought to contribute

both to greater potency (Sevigny, Pacula, & Heaton, 2014) and lower prices (Anderson,

Hanson, & Rees, 2013), have proliferated across states.

This article explores changing patterns of marijuana use and access, including (a) aggregate

volumes of marijuana use and access activity, (b) the intensity of use habits, (c) demographics of

marijuana users relative to cigarette users or to the nation as a whole, (d) the financial burden of

marijuana use borne on users, (e) popular modes of access and characteristics of purchases, and

(f) the increasing use of MMJ recommendations.