According to new research, Canadian cities may be prompted to reconsider their bans on cannabis stores.
By opening more recreational cannabis stores from 2018 to 2020, it helped to greatly increase Canada’s legal sales. It also barely affected overall user numbers, according to new research from Brock University business professor Michael Armstrong.
“One direct implication of these results is that jurisdictions which add more stores get substantial increases in legal sales but limited increases in prevalence,” according to the findings by Armstrong.
The research indicates, “though does not prove,” that the majority of legal sales involved existing users converting to regulated sources, not necessarily new users consuming cannabis for the first time.
This research could have applications for provinces with a small number of legal cannabis stores. It could also apply to dozens of communities across Canada that still do not allow legal marijuana retailers.
According to Armstrong, Canada’s restrictions on retail promotions such as advertising limits and no free samples “presumably made it harder for new stores to stimulate local demand.”
“Provincial governments might therefore want to update their retailing policies, while municipal governments could reconsider their store bans,” the paper writes.
“An indirect implication of the results is that legal sales – so far – mostly represent market share taken away from illegal sellers, rather than new users entering the market. This implication is clearly interesting and presumably reassuring for Canadian policymakers.”
Armstrong however provides a caveat and says “it must also be considered speculative, as many other variables could have confounded the apparent relationships among stores, sales, and users.”
“Policymakers should also note that even if legal retailing contributes little toward prevalence growth, the health impacts of that growth must nonetheless be addressed,” according to the paper.
“Cannabis retailers should perhaps approach expansion more cautiously, as it seems adding stores does not stimulate demand for cannabis as much as it might for other products.”
