A recent study says cannabis legalization in Canada has been successful at shifting demand from the illegal to legal markets.

The study, published in the International Journal of Drug Policy, was conducted by researchers in Canada, the US, and the UK. They analyzed data from Statistics Canada’s annual Canadian Community Health Survey, comparing it with data on dollars spent in the legal and illegal market from 5,656  consumers who took part in a national survey. 

The paper concludes that there is evidence of “substantial transition in expenditures from the illegal to the legal market” in the first five years since non-medical cannabis sales were made legal in Canada in 2018. 

Researchers also say the estimated expenditures from legal sources were within just two percentage points of the actual retail sales data from the federal government’s tracking system, further confirming the accuracy of their findings. 

For example, in the 12-month period ending in September 2022, the total amount Canadians spent on cannabis was estimated at $6.72 billion, including $5.23 billion from legal sources and $1.49 billion from illegal sources, for an estimated legal market capture of 78%. 

In 2022, dried flower accounted for 55% of total legal expenditures, while concentrates accounted for 12%, followed by oral liquids (11%), vaping liquids (10%), and edibles (8%, excluding drinks). An additional 2% was spent on cannabis plants and seeds. 

The paper also extensively discusses different methods of gathering and analyzing cannabis consumer choices, with a focus on demand-based estimates versus supply-side estimates. Gathering consumer habits through federal surveys in the lead up to legalization also provides a baseline for better understanding user trends over time. 

Although estimating the size of and sales within the illicit market is much more complex than in the legal, regulated market, such an approach provides an overview that can provide a better understanding of these trends. However, the researchers noted that the expanding array of products on the market in recent years that were not available in the illicit market prior to legalization can muddy such estimates. 

To address some of these gaps, researchers also used novel data from the International Cannabis Policy Survey (ICPS) to estimate the type and frequency of cannabis products used.

Adoption of the legal market differs by province, which the paper says should be addressed in future research.