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Up in smoke: 5 years after legalization, cannabis use higher while companies burn out

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Five years after legalization, the number of Canadians using recreational cannabis keeps getting higher while the sector shows signs of burning out.

According to new research from Statistics Canada(opens in a new tab), one in five Canadians reported using cannabis in 2020 — a six per cent increase from before legalization. Output from the new cannabis industry has meanwhile been shrinking since late 2022.

Canada's Cannabis Act legalized recreational use and sales five years ago, on Oct. 17, 2018.

"During this time, Statistics Canada has been contributing to an improved understanding of the social, health and economic impacts of this policy change," the Statistics Canada report said.

The statistics agency says the rate of cannabis use more than doubled in the country between 1985 and 2017, when it reached 14.8 per cent of adults. By 2022, the number of adults reporting cannabis use in the past year had climbed to more than one in four Canadians, or 27 per cent, according to Statistics Canada(opens in a new tab).

"Cannabis legalization has normalized its use without doubt," Toronto Metropolitan University lecturer and industry expert Brad Poulos told "Much of the stigma is eliminated and many people just look at cannabis the way they do alcohol."

Statistics Canada also noted large regional and demographic discrepancies in usage.

Despite its unofficial status as Canada's cannabis capital, British Columbia was in third place for adult use in 2021 at 26 per cent of people, after first place Nova Scotia at 31.5 per cent and P.E.I. at 28.4 per cent. The only province where less than one in five Canadians used cannabis that year was Quebec, at 15.7 per cent.

Cannabis use in 2021 was also most common in 18- to 24-year-olds (39 per cent) and those 25 to 44 (31.2 per cent). Countering pre-legalization concerns, Statistics Canada observed no increase in use among people 15 to 17, despite increases in all other age groups.

Output from the cannabis sector meanwhile grew until peaking in November 2022, when its gross domestic product reached $11.6 billion. That has since fallen to $10.8 billion, which represents 0.5 per cent of the Canadian economy. Following legalization, many of Canada's largest cannabis companies have shrunk their operations(opens in a new tab), while smaller players have shut down, sold off, or declared bankruptcy.

"Legal sales are growing … but there are simply too many players in most segments for the industry overall to be profitable," Poulos from Toronto Metropolitan University explained. "We’re in a period of industry consolidation and seeing all of the things you see when that happens such as bankruptcies, restructuring and mergers."

After a flurry of openings, the number of bricks-and-mortar pot shops now appears to be stable, according to Statistics Canada, reaching 3,332 in 2023. Those stores made $4.5 billion in sales in 2022, a year-over-year increase since legalization. More Canadians are also getting cannabis legally, with 68 per cent doing so in 2020, up from 47 per cent in 2019.

"Increased legal sales and decreased illicit sales is a big accomplishment," Robert Schwartz, a professor at the University of Toronto's Dalla Lana School of Public Health, told "This has also meant less of the harms associated with charging people for possession of small amounts."

Michael DeVillaer is an assistant professor of psychiatry and behavioural neuroscience at McMaster University who writes extensively about drug policies. With production exceeding demand, DeVillaer notes that Canada's largest cannabis companies have never had a profitable year while losing billions in investors' money.

"At the beginning of legalization, the cannabis industry overestimated the domestic market and was overly optimistic about the development of foreign markets," DeVillaer told "Small or modest gains in sales are unable to save the industry from its enormous accumulated debt."

Statistics Canada also noted that 4.7 per cent of past-year cannabis users, or approximately 300,000 people, experienced impaired control over their cannabis use, making them at-risk for addiction. Impaired control means a strong urge for a substance and difficulty controlling use. Risk factors include being male, single, from a low-income household and starting cannabis use by age 15 or younger. Other reports have found(opens in a new tab) an increase in cannabis-linked disorders and poisoning among youth since legalization.

"There is a need for warning labels and other forms of public education about the dangers of addiction, dependence, cannabis use disorder," Schwartz from the University of Toronto said.

He would also like to see smoking phased out over health concerns.

"Unfortunately, smoking cannabis is still widely acceptable even amongst people who would never smoke cigarettes," Schwartz said. "This is most unfortunate as cannabis smoke has over 20 known carcinogens and smoking anything damages the respiratory system."

Dr. M-J Milloy is a research scientist at the British Columbia Centre on Substance Use and an assistant professor in the University of British Columbia's medical department.

"Despite the warnings of some experts and advocates prior to legalization, during the last five years we have not seen sharp increases in cannabis-related acute harms, for example, in THC-impaired driving, or in youth rates of cannabis use," Milloy told "As a substance use epidemiologist, I have seen no evidence over the last five years that legalization has led to a substantial deterioration of public health in Canada, especially relative to other far riskier substances, such as alcohol or opioids."

Milloy says Canadians have largely been using cannabis safely for more than a century, and he questioned the accuracy of some of Statistics Canada's data.

"Population-level measures of substance should be viewed with healthy skepticism, especially when those estimates are derived from government-run surveys of controlled substances, such as cannabis prior to legalization," Milloy explained. "While Statistics Canada data suggests cannabis use has increased… it is plausible that legalization has led more people to admit to using cannabis now that it is no longer a crime for adults to use non-medical cannabis."


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