Canadian Legal Cannabis Captured 72% of the Market Within 5 Years, but Total Spending Rose 75%
Five years after legalization, legal cannabis captured 72% of the Canadian market while illegal cannabis dropped from 88% to 24%, but total cannabis spending grew 75%, raising questions about population-level consumption increases.
Quick Facts
What This Study Found
Before legalization, illegal cannabis was 88.2% and medical 11.8% of the market. By 5 years post-implementation, legal recreational cannabis held 72.0%, illegal dropped to 24.3%, and medical to 3.7%. The overall market grew 75% in size. Illegal expenditures increased between passage and implementation but decreased significantly after legal sales began.
Key Numbers
Pre-legalization: 88.2% illegal, 11.8% medical. 5 years post: 72.0% legal recreational, 24.3% illegal, 3.7% medical. Total market grew 75%. Illegal expenditures showed significant decreasing trend post-implementation. Medical had decreasing trend from passage.
How They Did This
Interrupted time series analysis of quarterly national household cannabis expenditure data from 2001 to 2023 in Canada. Examined medical, illegal, and total cannabis expenditures, adjusted for price fluctuations. Assessed changes at both legislative passage (October 2017) and implementation (October 2018).
Why This Research Matters
Displacing the illegal market is a primary goal of legalization. Canada has largely achieved this (illegal market down to 24%), but the 75% growth in total spending suggests legalization also expanded overall consumption, which could have public health implications.
The Bigger Picture
Canada is the most mature national legal cannabis market, making these data essential for other countries considering legalization. The trade-off between illegal market displacement (success) and overall market growth (concern) represents the central tension in cannabis legalization.
What This Study Doesn't Tell Us
Illegal cannabis expenditure data is inherently uncertain. National household survey methodology may not capture all spending. Price adjustments are approximate. The growing legal market may capture previously unrecorded spending rather than representing truly new consumption.
Questions This Raises
- ?How much of the market growth represents previously uncounted illegal spending versus genuinely new consumption?
- ?Will the illegal market share continue to decline?
Trust & Context
- Key Stat:
- Illegal market share dropped from 88% to 24% in 5 years
- Evidence Grade:
- Interrupted time series analysis of national expenditure data over 22 years. Strong methodology, though illegal market estimates carry inherent uncertainty.
- Study Age:
- Published in 2025 with data through 2023.
- Original Title:
- Association of recreational cannabis legalization with changes in medical, illegal, and total cannabis expenditures in Canada.
- Published In:
- The International journal on drug policy, 139, 104793 (2025)
- Authors:
- McDonald, André J(8), Cooper, Alysha, Doggett, Amanda(7), Halladay, Jillian, Belisario, Kyla, MacKillop, James
- Database ID:
- RTHC-07100
Evidence Hierarchy
Looks back at existing records to find patterns.
What do these levels mean? →Frequently Asked Questions
Has Canada eliminated its illegal cannabis market?
No, but it has been dramatically reduced from 88% to 24% of market share within 5 years. The remaining illegal market may serve price-sensitive consumers or areas with limited legal retail access.
Is the 75% market growth a concern?
It depends on interpretation. Some growth reflects previously unrecorded illegal spending being captured in legal data. But some likely represents genuinely new consumption, which could have public health implications if heavy use patterns increase.
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Cite This Study
https://rethinkthc.com/research/RTHC-07100APA
McDonald, André J; Cooper, Alysha; Doggett, Amanda; Halladay, Jillian; Belisario, Kyla; MacKillop, James. (2025). Association of recreational cannabis legalization with changes in medical, illegal, and total cannabis expenditures in Canada.. The International journal on drug policy, 139, 104793. https://doi.org/10.1016/j.drugpo.2025.104793
MLA
McDonald, André J, et al. "Association of recreational cannabis legalization with changes in medical, illegal, and total cannabis expenditures in Canada.." The International journal on drug policy, 2025. https://doi.org/10.1016/j.drugpo.2025.104793
RethinkTHC
RethinkTHC Research Database. "Association of recreational cannabis legalization with chang..." RTHC-07100. Retrieved from https://rethinkthc.com/research/mcdonald-2025-association-of-recreational-cannabis
Access the Original Study
Study data sourced from PubMed, a service of the U.S. National Library of Medicine, National Institutes of Health.
This study breakdown was produced by the RethinkTHC research team. We analyze and report published research findings without making health recommendations. All interpretations are based solely on the published abstract and study data.