Canada’s Cannabis Retail Boom Sees Modest Consumer Rise
Ever since recreational cannabis was legalized across Canada in 2018, researchers have been studying what that decision changed for Canadians.
We’ve learned, for example, that some patients immediately left the medical cannabis system , presumably to use recreational products instead. Conversely, legalization appeared to have no effect on Canadian alcohol sales .
We’ve similarly seen how cannabis retailing has evolved since it became legal.
Retailers suffered from product shortages during legalization’s first six months, but steadily expanded soon after. Canada went from having some 210 stores in April 2019 to 3,500 in April 2023. The ensuing competition pushed prices down 28 per cent during that period.
Meanwhile, provincial governments have tried various regulatory approaches. Some initially restricted the number of stores to avoid tempting non-users. Québec still has 10 times fewer stores per capita than Ontario does as a result. Other provinces have set minimum prices to discourage people from overindulging. For example, Ontario won’t let wholesale prices drop below $2.28 per gram.
These developments in business and government policy prompted my latest research . I wanted to understand what effect retail expansion had on cannabis use. To do this, I analyzed consumer responses on government surveys collected between 2019 to 2023 . I then compared these responses to the recreational cannabis consumer price index and the numbers of licensed stores in each province.
Did Canadians consume cannabis more widely, more frequently and at younger ages as it became more accessible and affordable? The answer was mostly no.
The percentage of men who used cannabis stayed around 28 per cent between 2019 and 2023 – despite retailers’ massive store growth and notable price cuts.
But usage did grow slightly among women – rising from 21 per cent in 2019 to 23 per cent in 2023. My analysis suggests this was related to the increasing affordability of cannabis, not its retail convenience. More women consumed cannabis when prices fell, not when more shops opened.
A similar contrast appeared between younger and older adults. Cannabis use among Canadians aged 25 and over crept upward from 21 to 23 per cent. That increase again seemed related to falling prices rather than expanding stores. Meanwhile, usage among those aged 16 to 24 varied year-to-year, but remained around 46 per cent.
The average age of first-time use consequently rose from 19.2 in 2019 to 20.8 years old in 2023. This finding also seemed correlated with both falling prices and expanding stores.
One thing that didn’t change much was frequency of use. About one-quarter of cannabis consumers used it five or more days per week in both 2019 and 2023.
However, their product preferences shifted. The percentage who smoked dried cannabis decreased while the percentage of consumers who consumed edibles increased. Some consumers used both types of products, or used other products entirely – such as vapes. Both changes seemed related to prices rather than the number of retail stores. Consumers seemingly traded-up from basic dried cannabis to processed edibles as prices fell.
So overall, Canada’s substantial retail developments came with only modest usage growth.
The apparent relationships between usage and price might partly be coincidental. Product selection and quality also improved, so they likely contributed too. But falling prices do seem to be a plausible explanation for the increased cannabis consumption that was seen.
The lack of relationship between stores and usage might seem surprising. After all, Canada experienced a 16-fold explosion in stores between 2019 and 2023. But this finding correlates with what my previous research found ; it showed that between 2018 and 2020, there was a similar non-relationship between retail expansion of cannabis stores and usage.
So, perhaps the main effect of retail stores was to draw existing users away from illegal dealers, rather than to tempt new ones.
I suspect retailers probably influenced usage somewhat in their local neighbourhoods. For example, someone who walked by a new store daily on their way to work might have decided to try cannabis. But this effect would have been too small to appear in province-level measurements.
The findings from my study suggests some tentative lessons for regulators.
If opening more stores has minimal impact on usage, there’s little need to limit their numbers. Provinces don’t need to ration store licenses, and municipalities (like Markham and Oakville in Ontario) don’t need to ban them.
But since price declines tempt more consumers, it’s important for policymakers to prevent prices from getting too low.
Other countries who are considering legalizing cannabis may want to consider these points, too.
For example, medical cannabis use is surging in Australia, much like it was in Canada a decade ago. And Australia’s Green Party is campaigning for recreational legalization in the upcoming federal election. If that election produces a coalition government, legalization might be on its agenda. They could look at our policies and hopefully improve on them.
Meanwhile in Germany, the previous government legalized recreational use, but not sales. So, Germans must grow their own plants or join a club that does. Commercial products are sold only through the country’s medical cannabis system. Unsurprisingly, medical use is soaring there . Based on what my research suggests, Germany will likely see similar usage growth, whether it allows stores or not. But allowing stores would mean consumers could buy products from licensed sources instead of illicit dealers.
Canada’s cannabis legalization was controversial at the time . But some Canadians say it has become a memorable part of Justin Trudeau’s complicated legacy . Now that he’s no longer prime minister, that’s something he and his biographers can contemplate.
Michael J. Armstrong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.