Study Aims
In California–as in other states which allow retail sales of cannabis products–consumers obtain cannabis from both licit sources (e.g., licensed outlets, home delivery) and illicit sources (e.g., unlicensed storefront operations, dealers). According to various estimates, the illicit market currently accounts for roughly 60% of all cannabis sales in California (Department of Cannabis Control, 2025). A significant barrier to effective policy and regulation is the lack of a clear understanding of the drivers of consumer behavior in choosing between licit and illicit sources. These drivers may include personal characteristics, such as age, gender, race, ethnicity, and SES, as well as environmental factors, such as distance from licensed outlets, availability of home delivery, price, and product selection and quality. Past research, for example, suggests that perceived quality, price, and accessibility (proximity to outlet) are major factors shaping consumer choice between licit and illicit sources of cannabis (Xing & Shi, 2024).
We also lack a solid understanding of how consumption patterns and potential negative consequences differ between users of licit versus illicit sources. For example, do users of one source consume more or less? Do consumers using licit or illicit sources demonstrate riskier use or experience more problems? For example, riskier use may involve the social and physical settings of use (illegal storefront operations may contribute to crime and disorder, simultaneous or concurrent use with other substances, driving after using, and increased interactions with law enforcement. Finally, we need to understand how price increases associated with tax increases in the legal market affect the balance of illicit and licit purchases (e.g., price increases may drive more people into the illicit market). Better knowledge can inform evidence-based policy and regulation (Ageze et al., 2025). The specific aims of the proposed study are to:
- Assess individual and environmental factors associated with consumer use of licit sources, illicit sources, or a combination of licit and illicit sources of cannabis.
- Assess associations of reliance on licit sources, illicit sources, and a combination of licit and illicit sources with potential outcomes of use.
- Assess the impact of the 2025 excise tax increase on consumer use of licit sources, illicit sources, or a combination of licit and illicit sources.
Methodology
Study Design and Data Sources. The proposed study will employ a natural experimental design using data from a longitudinal cohort of 2,165 youth and adults across 40 California cities. The data are from an ongoing study funded by the National Institute on Alcohol Abuse and Alcoholism to examine local alcohol and cannabis policies, retail availability, and use of alcohol and other substances among youth and adults over time. The 40 cities are located in 20 counties in northern, central, and southern California. These cities (population range: 83,000 – 1.2 million) are demographically diverse and vary in local cannabis regulatory policies and retail availability from both legal and unlicensed stores and delivery businesses. The prospective cohort is being followed for three years (2024-2026) and includes individuals aged 15-49, with 50% being under 21 at baseline in 2024. Annual surveys include questions about cannabis use and cannabis sources. The proposed study will specifically use data from the 2024 survey and a follow-up survey planned for 2026. The timing of these surveys provides a unique opportunity to evaluate changes in consumer use of licit and illicit sources, as a statewide cannabis excise tax increase took effect on July 1, 2025, raising the tax from 15% to 19%. While not relevant to the NIAAA study, this tax increase provides a unique opportunity to examine how changes in the price of cannabis from licensed retailers may affect the use of legal versus illicit cannabis sources. The study will also assess whether the effects of this tax increase vary by city-level characteristics, such as different cannabis policies (e.g., retail bans, taxes and licensing fees) and the availability of cannabis from licensed and unlicensed retailers. To enhance achievement of the proposed study aims, additional items will be added to the 2026 survey to capture the price paid for the most recent cannabis purchase, the product source, and perceived product quality and safety. The additional items will allow us to investigate whether any shifts from licensed to unlicensed sources following the tax increase are related to cannabis price, perceived quality, and perceived safety.
