Study Finds Canadian Legalization Is ‘Displacing Illegal Cannabis Market’

Canada became the second country to ever adopt a national adult-use cannabis legalization measure in 2018 and was the first G-7 nation to adopt the public policy change. The first country to adopt a national recreational cannabis legalization measure was Uruguay in 2013.

Since 2018, Canada’s recreational cannabis market has served as the international leader in size and scope and has also served as the top cannabis commerce public policy model for international researchers to examine.

A team of researchers affiliated with the Peter Boris Centre for Addictions Research, the Department of Psychiatry and Behavioural Neurosciences at McMaster University, and the Michael G. DeGroote Centre for Medicinal Cannabis Research at McMaster University conducted a study analyzing legalization’s impact on Canada’s unregulated cannabis market. The study’s findings were recently published in the academic publication International Journal of Drug Policy.

“We used interrupted time series analysis to evaluate whether recreational cannabis legalization (legislative passage in October 2017/implementation in October 2018) was associated with changes in quarterly national household expenditures on medical cannabis, illegal cannabis, and all cannabis types combined (licensed, illegal, and medical) in Canada from 2001 to 2023, adjusting for price fluctuations.” the researchers stated about their study’s methodology.

“When recreational cannabis legalization was passed, medical cannabis represented 11.8% of the market and illegal cannabis 88.2%. At five years post-recreational cannabis legalization implementation, medical cannabis decreased to 3.7%, illegal cannabis decreased to 24.3%, and licensed cannabis took over 72.0% of the market. The overall cannabis market increased in size by 75% over these 5 years.” the researchers stated about their findings.

“Recreational cannabis legalization in Canada appears to be achieving one of its primary goals by displacing the illegal cannabis market, and medical users also appear to be transitioning to the recreational market.” the study’s authors concluded.

Cannabis is currently legal for adult use at a national level in Uruguay, Canada, Malta, Luxembourg, Germany, and South Africa. Additionally, two dozen states in the U.S. have adopted recreational cannabis legalization measures, and adult-use commerce pilot trials are operating in the Netherlands and Switzerland.