Transitions to legal cannabis markets: Legal market capture of cannabis expenditures in Canada following federal cannabis legalization

Background: Canada legalized ‘recreational’ or ‘non-medical’ cannabis in 2018 with a primary objective of displacing illicit cannabis and transitioning consumers to a ‘quality controlled’ legal retail market. To date, there is limited research on legal market capture in jurisdictions with non-medical cannabis markets. Methods: The current analysis used ‘demand-side’ methods to estimate the size of the Canadian cannabis market using data from two sources. First, data from the Canadian Community Health Survey were used to estimate the number of Canadians who use cannabis. Second, data on cannabis expenditures from legal versus illegal sources were analyzed from 5656 past 12-month consumers aged 16–100 who completed national surveys conducted in 2022 as part of the International Cannabis Policy Study. Results: Total estimated expenditures from legal sources were within two percentage points of the ‘actual’ retail sales data from Government of Canada's tracking system. In the 12-month period ending in September 2022, total cannabis expenditures in Canada were estimated at $6.72 billion dollars, 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 and an additional 2 % was spent on plants and seeds. Concentrates accounted for 12 % of legal expenditures, followed by oral liquids (11 %), vaping liquids (10 %), and edibles (8 %, excluding drinks). Conclusions: The findings provide evidence of substantial transition in expenditures from the illegal to the legal market in the five years since legalization of non-medical cannabis in Canada.