Semi-log plots of two agonists with different K_d.

To understand potency, you have to understand efficacy first. Efficacy is the relationship between receptor occupancy and the ability to initiate a response at the molecular, cellular, tissue or system level. The response is equal to the effect, or (E). The agonist, the ligand, drug or hormone that binds to the receptor and iniates the response is abbreviated A. Below a certain concentration of agonist ([A]), E is too low to measure but at higher concentrations it becomes appreciable and rises with increasing agonist concentration [A] until at sufficiently high concentrations it can no longer be increased by raising [A] and asymptotes to a maximum E_max.

The E_max is the maximum possible effect for the agonist. The concentration of A at which E is 50% of E_max is termed [A]₅₀. The term "potency" refers to the [A]₅₀ value. The lower the [A]₅₀, the less the concentration of a drug is required to produce 50% of maximum effect and the higher the potency.

Higher Potency does not necessarily mean more side effects.

Potency is also the THC content of different varieties of Cannabis.

References

• "Integrated pharmacology", third edition by Clive Page, Curtis Walker