Alcohol sales changes in a Canadian province after recreational cannabis legalization

What is it about?

Cannabis legalization’s impacts partly depend on how it affects use of other substances like alcohol. This study analyzed alcohol sales in the Canadian province of Nova Scotia, where some government liquor stores sold both cannabis and alcohol. The study compared monthly alcoholic beverage sales during the 17 months before cannabis legalization and 17 months afterward, i.e., from May 2017 to February 2020. After legalization, cannabis-selling stores saw their alcohol sales increase initially by 0.55%, followed by monthly growth of 0.29%. By contrast, alcohol-only stores saw sales initially decrease by 2.91%, followed by monthly growth of only 0.06%. Post-legalization alcohol sales consequently averaged 3.1% above pre-legalization levels at cannabis sellers but 2.4% below at alcohol-only stores. This left total alcohol sales 1.2% below their earlier levels. The effects were larger for beers than for spirits or wines. These results indicate that cannabis legalization had only small impacts on alcohol sales in Nova Scotia. They also imply those impacts were complex: a few consumers quickly replaced alcohol with cannabis when it became legal to use; a few bought more alcohol as they increasingly bought their cannabis from licensed stores instead of illicit dealers; and a few switched stores so that they could buy cannabis and alcohol on the same shopping trip.

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Why is it important?

This study addressed a research gap by examining a jurisdiction where cannabis and alcohol were sold by one government agency instead of many competing businesses. Cannabis policy is not a binary illegal-vs-legal choice: rather, governments have many options in between full criminalization and unregulated commercialization. Most research on cannabis legalization has examined U.S. states where retailers were either commercially operated or non-existent. This study instead examined a case where cannabis retailing was government-owned.