Availability of legalized cannabis reduces demand for illegal cannabis among Canadian cannabis users: evidence from a behavioural economic substitution paradigm

In the context of cannabis legalization, an important question among clinicians, policymakers, and the public is whether availability of legal cannabis will significantly reduce consumption (demand) of illegal cannabis. Using paradigms from behavioural economics, we tested the prediction that legal cannabis would be an asymmetrical substitute for illegal cannabis, with legal cannabis operating as a superior commodity based on its regulated status. In a sample of 289 adult cannabis users in Ontario, we found evidence of substitutability for both legal and illegal cannabis, but significantly lower substitutability of illegal for legal cannabis, a pattern that was also present for price elasticity (α) and Pmax. Thus, the data indicated asymmetric substitution such that the availability of legal cannabis substantially decreased demand for illegal cannabis, but a significantly smaller effect in reverse. These results suggest that the introduction of legal cannabis into the market may disrupt and reduce illegal purchases, contributing to the reduction of the potential harms associated with the illegal market. However, in revealing price windows in which legal cannabis is preferred over the contraband alternative, these data also have significant implications for pricing policies.