Shifting tax incidence

Evidence from the Washington State cannabis market

Datos Bibliográficos

ID11680972
AutoresBrooke Hansen (0000-0001-9197-2718, University of Oregon), Benjamin Hansen (Department of Economics University of Oregon Eugene Oregon USA), Kendall Houghton (Center for Economic Studies U.S. Census Bureau Suitland Maryland USA), Keaton Miller (Department of Economics University of Oregon Eugene Oregon USA), Caroline Weber (0000-0001-7751-3523, University of Kentucky, autor de correspondencia)
Año2025
Fecha de publicación2025-08-17
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaJournal of Policy Analysis and Management (JOURNAL)
Identificadores de la revistaISSN: 0276-8739 • E-ISSN: 1520-6688
EditorialWiley (PUBLISHER • GB)
DOI10.1002/pam.70041
OpenAlexW4413341709
IdiomaEN
Referencias citadas41

We study how prices respond when a 25% gross receipts tax remitted by cannabis manufacturers was eliminated in Washington state and the retail excise tax was simultaneously increased from 25% to 37%. Standard theory suggests that this change should have increased welfare for manufacturers, retailers, and consumers; instead, our analysis shows that the reform unexpectedly shifted benefits toward manufacturers at the expense of retailers and consumers, who faced higher tax‐inclusive prices post‐reform. We hypothesize that this outcome was driven by behavioral factors such as anchoring and loss aversion. Our findings add to a growing body of evidence that tax reforms can affect market outcomes in ways not predicted by standard economic models, offering a cautionary lesson for policymakers considering similar reforms

Business · Cannabis · Economics · Incidence (geometry · Psychiatry · Public economics · State (computer science · State income tax · Tax incidence · Tax reform · Computer Science · Consumer Market Behavior and Pricing · Economics of Agriculture and Food Markets · Medicine · Taxation and Compliance Studies