Alcohol sales changed subtly after Canada legalized cannabis – The Conversation

 

Report on the Impact of Cannabis Legalization on Alcohol Consumption in Canada and its Relation to Sustainable Development Goals

Introduction: Policy Context and Sustainable Development Implications

Following the legalization of recreational cannabis in Canada in October 2018, significant questions arose regarding its potential impact on beverage alcohol consumption. This report analyzes sales data to assess these impacts, framing the findings within the context of the United Nations Sustainable Development Goals (SDGs), particularly SDG 3 (Good Health and Well-being) and SDG 8 (Decent Work and Economic Growth).

• Substitution Hypothesis: A potential decrease in alcohol consumption, as consumers might substitute cannabis for alcohol. This outcome could advance SDG 3 by reducing alcohol-related health harms. Economically, however, this could negatively impact the alcohol industry, a consideration under SDG 8.
• Complementarity Hypothesis: A potential increase in alcohol consumption if consumers use both substances concurrently. This would pose a challenge to SDG 3 by increasing combined health risks, even while potentially boosting economic activity and tax revenues for governments (SDG 8).

The inconclusive nature of research from the United States, complicated by its fragmented legal landscape, underscores the importance of analyzing the Canadian federal legalization model.

National-Level Analysis of Alcohol Sales

Overall Sales Trends (2004-2022)

An examination of national annual alcohol sales data revealed no significant aggregate change following cannabis legalization. Key findings include:

1. Total alcohol sales remained fundamentally stable.
2. A gradual decline in beer sales was offset by a steady rise in the sales of coolers and other beverages.
3. No discernible large-scale impact on total sales volume was observed immediately following the October 2018 policy change.

This macro-level stability suggests that, in the short term, cannabis legalization did not drastically alter national consumption patterns, indicating a neutral initial impact on the public health and economic targets outlined in SDG 3 and SDG 8.

Provincial Case Study: Nova Scotia’s Co-Location Retail Model

Policy and Methodology

Nova Scotia presented a unique case by authorizing its government-owned liquor corporation (NSLC) to act as the primary cannabis retailer. This resulted in a retail environment where some stores sold only alcohol while others sold both alcohol and cannabis. This policy provides a natural experiment to study consumer behavior, with direct relevance to SDG 12 (Responsible Consumption and Production) by testing how retail environments influence purchasing decisions.

Analysis of Divergent Sales Data

A comparative analysis of sales data from 17 months before and after legalization revealed divergent trends between the two store types:

• Alcohol-Only Stores: Experienced an immediate and sustained drop in alcohol sales, averaging approximately $800,000 below pre-legalization monthly levels.
• Co-located Cannabis & Alcohol Stores: Experienced an increase in alcohol sales, with monthly averages rising by approximately $300,000 above pre-legalization levels.

The divergence was most pronounced for beer sales. Proximity of an alcohol-only store to a co-located store did not appear to be a significant factor in these trends.

Interpretation in Relation to Sustainable Development Goals

The contrasting results from the Nova Scotia case study suggest two concurrent phenomena with different implications for the SDGs:

1. Evidence of Substitution (Supporting SDG 3): The decline in sales at alcohol-only stores may indicate that a segment of consumers actively substituted cannabis for alcohol, a positive outcome for public health objectives under SDG 3.
2. Evidence of Retail Channel Consolidation and Complementary Purchasing (Challenging SDG 3 & SDG 12): The growth in alcohol sales at co-located stores suggests that consumers may have shifted their purchasing location for convenience (a “one-stop-shop” effect). This environment may also encourage complementary or impulse purchases of alcohol when acquiring cannabis, a pattern that could undermine progress toward SDG 3 (Good Health and Well-being) and SDG 12 (Responsible Consumption).

Conclusion and Future Outlook

Summary of Short-Term Impacts

The immediate aftermath of cannabis legalization in Canada did not result in a simple nationwide increase or decrease in alcohol consumption. Instead, the effects appear nuanced, influenced heavily by retail policy. The data suggests that while some consumers may be substituting cannabis for alcohol, the convenience of co-located retail channels may simultaneously encourage alcohol sales.

Long-Term Considerations and Challenges

Further research is required to understand the long-term trajectory of these trends and their alignment with sustainable development objectives. Key considerations include:

• Data Disruption: The onset of the COVID-19 pandemic in March 2020 complicates the analysis of subsequent periods.
• Generational Shifts: The consumption habits of younger cohorts, who are entering legal age in a dual-market environment, must be monitored to assess long-term public health outcomes (SDG 3).
• Policy Refinement: Policymakers must continue to evaluate retail models to ensure they promote public health and responsible consumption (SDG 12), mitigating unintended consequences of market integration.

While alcohol consumption currently remains more prevalent than cannabis use, the evolving relationship between these two legal substances will be a critical area for ongoing policy monitoring and public health research.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 3: Good Health and Well-being

• The article’s central theme is the public health impact of cannabis legalization on alcohol consumption. It directly investigates substance use patterns, mentioning potential outcomes like a reduction in “alcohol-related harms” or an increase in “health risks” from the combined use of both substances. This aligns with the goal of ensuring healthy lives and promoting well-being.

SDG 16: Peace, Justice and Strong Institutions

• The article discusses the implementation of a major legal and policy change: the legalization of recreational cannabis in Canada. It examines how different government institutions, specifically the “government-owned liquor corporation” in Nova Scotia, managed the retail and regulation of this newly legal substance. This relates to the development of effective, accountable, and transparent institutions to manage public policy and the rule of law.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 3: Good Health and Well-being

• Target 3.5: Strengthen the prevention and treatment of substance abuse, including narcotic drug abuse and harmful use of alcohol.
  
  The entire article is an analysis of the relationship between the “harmful use of alcohol” and the use of cannabis, a narcotic drug. The research described aims to understand if the legalization of one substance affects the consumption patterns of the other, which is a critical aspect of strengthening prevention strategies. The text explores whether people “used cannabis in place of alcohol” (a potential harm reduction) or “used alcohol along with cannabis” (a potential increase in harm).

SDG 16: Peace, Justice and Strong Institutions

• Target 16.6: Develop effective, accountable and transparent institutions at all levels.
  
  The article analyzes the specific retail strategy implemented by the Nova Scotia government, where the “government-owned liquor corporation became the main cannabis retailer.” By studying the sales data from these institutions before and after the policy change, the research evaluates the effectiveness and outcomes of this specific institutional approach to managing legalization. The discussion of people switching from “illegal dealers” to “licensed stores” also speaks to the effectiveness of the new institutional framework.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Indicators for Target 3.5

• Alcohol per capita consumption: This is an official indicator (3.5.2) and is explicitly used in the article. The research examines “Annual Canadian beverage alcohol sales from 2004 to 2022, in litres of ethanol content per capita” to track trends in alcohol consumption.
• Volume and value of alcohol sales: The article repeatedly uses sales data as a proxy for consumption. It analyzes “Canada’s overall alcohol sales,” “monthly sales,” and specific dollar amounts, such as monthly sales averaging “$500,000 below their earlier levels” in Nova Scotia, to measure changes in alcohol use.
• Prevalence of cannabis use: While not an official SDG indicator, it is a necessary metric for this analysis. The article implies its use by stating that “alcohol drinking is still three times more common than cannabis use,” indicating a comparison of prevalence rates for both substances.

Indicators for Target 16.6

• Market share of legal vs. illegal cannabis: The article implies this indicator when speculating that sales growth at cannabis-selling stores might “reflect people increasingly buying cannabis from licensed stores instead of illegal dealers.” The shift in market share from the illicit to the legal market is a direct measure of the effectiveness of the new legal and institutional framework.
• Performance of state-owned enterprises: The analysis of sales data from the “Nova Scotia Liquor Corporation” serves as an indicator of the performance of this government institution in its dual role as an alcohol and cannabis retailer. The divergence in sales between stores that sold cannabis and those that did not is a measure of the policy’s impact on the institution’s operations and outcomes.

4. Table of SDGs, Targets, and Indicators

SDGs	Targets	Indicators
SDG 3: Good Health and Well-being	3.5: Strengthen the prevention and treatment of substance abuse, including narcotic drug abuse and harmful use of alcohol.	Alcohol per capita consumption (litres of ethanol content per capita). Total volume and monetary value of alcohol sales (e.g., monthly sales in Canadian dollars). Prevalence of cannabis use (implied by comparing its commonality to alcohol use).
SDG 16: Peace, Justice and Strong Institutions	16.6: Develop effective, accountable and transparent institutions at all levels.	Market share of legal cannabis sales versus illegal sales (implied). Sales performance of government-owned retail corporations tasked with implementing the new policy.

Source: theconversation.com