Every Dollar of Medical Cannabis Sold in Canada Was Associated With a $0.74-0.84 Drop in Alcohol Sales | Research

The takeaway

Analysis of Canadian sales data from 2011-2018 found that each dollar of legal medical cannabis sold was associated with a $0.74-$0.84 decrease in alcohol sales, suggesting medical cannabis acted as an economic substitute for alcohol.

Policymakers and public health professionals evaluating the net health impact of cannabis legalization

$0.74-$0.84 substitution per dollar

What the researchers found

Using fixed effect panel data regressions controlling for retail activity, alcohol prices, education levels, unemployment, and impaired driving penalties, each dollar of legal medical cannabis sold was associated with a $0.74-$0.84 decrease in alcohol sales. This implied that 2017-2018 alcohol sales were approximately 1.8% lower than they would have been without legal medical cannabis.

Why it matters

Alcohol causes far more health harm per user than cannabis. If cannabis legalization leads to meaningful substitution of alcohol for cannabis, the net public health impact could be positive even if cannabis use increases.

The numbers in context

Each $1 of MC sold associated with $0.74-$0.84 decrease in alcohol sales; 2017-2018 alcohol sales estimated 1.8% lower due to medical cannabis; data from 7 Canadian regions; January 2011 to September 2018

How the study worked

Fixed effect panel data linear regressions analyzing monthly per capita sales of alcohol and legal medical cannabis across seven Canadian regions from January 2011 to September 2018. Controlled for changing levels of retail activity, alcohol prices, tertiary education, unemployment, and impaired driving penalties.

What this study cannot tell us

Ecological study using aggregate sales data, not individual behavior. Cannot confirm that the same individuals substituted cannabis for alcohol. Pre-recreational legalization period (before October 2018) may not reflect current dynamics. Canadian market may differ from U.S. or other jurisdictions.

How to read the evidence

Rigorous econometric analysis with multiple controls, but ecological design cannot confirm individual-level substitution

When this study was published

2023 study

The bigger picture

The alcohol substitution effect has been one of the strongest potential public health arguments for cannabis legalization. This economic evidence from Canada supports the theory that legal cannabis can reduce alcohol consumption at a population level.

Questions still open

Has recreational legalization changed the substitution pattern? Is the substitution effect stronger in certain demographics? Does substituting cannabis for alcohol actually produce health benefits at the individual level?

Common questions

Does cannabis legalization reduce alcohol use?

This Canadian study found that medical cannabis sales were associated with reduced alcohol sales at a population level, suggesting substitution. Each dollar of cannabis sold corresponded with roughly $0.74-$0.84 less in alcohol sales.

Is substituting cannabis for alcohol healthier?

The study does not directly address health outcomes, but alcohol causes more health harm per user than cannabis according to most comparative risk assessments. If substitution occurs, the net health impact could be positive, though this needs more research.

Read the original research

Relationships between sales of legal medical cannabis and alcohol in Canada.

Health policy (Amsterdam, Netherlands), 128, 28-33

View on PubMed ↗Publisher’s paper ↗

Citation

Armstrong, Michael J. (2023). Relationships between sales of legal medical cannabis and alcohol in Canada.. Health policy (Amsterdam, Netherlands), 128, 28-33. https://doi.org/10.1016/j.healthpol.2022.11.012