Relationships between sales of legal medical cannabis and alcohol in Canada

Abstract

The extent to which legalizing cannabis use might lead to increased or decreased alcohol use has important implications for public health, economic growth, and government policy. This study analyzed Canada’s monthly per capita sales of alcohol and legal medical cannabis using fixed effect panel data linear regressions. The data covered seven Canadian regions from January 2011 to September 2018, and controlled for changing levels of retail activity, alcohol prices, tertiary education, unemployment, and impaired driving penalties. The analysis estimated that each dollar of legal medical cannabis sold was associated with an average alcohol sales decrease of roughly $0.74 to $0.84. This suggests that medical cannabis was an economic substitute for alcohol in Canada, and that the country’s 2017-2018 alcohol sales were roughly 1.8% lower than they would have been without legal medical cannabis. The results therefore indirectly imply that reduced alcohol consumption might have partly offset cannabis legalization’s health and economic impacts.