How Alcohol Sales Shifted After Canada Legalized Cannabis

Date:

Share post:

By Michael J. Armstrong

Before Canada legalized recreational cannabis in October 2018, it was unclear how the change might affect beverage alcohol consumption. Would consumers drink less or more after cannabis became legal?

Drinking might decrease, for example, if people used cannabis in place of alcohol. That switch potentially could reduce alcohol-related harms. But economically, it would mean any gains in the cannabis industry would likely come at the expense of alcohol producers.

Conversely, drinking might increase if people used alcohol along with cannabis. That could boost alcohol industry profits and government tax revenues, but at the cost of increased health risks of both substances.

In response to this uncertainty, some businesses diversified. One alcohol producer bought a cannabis grower, while a cannabis firm took took over several beer brewers.

Research from the United States into the relationship between alcohol and cannabis use is inconclusive. Some studies report that alcohol use decreased in states that allowed cannabis, while others said usage increased or didn’t significantly change. Those conflicting conclusions might reflect the complex legal situation in the United States, where cannabis remains illegal under federal law, even in states that allow its use.

In Canada, some studies indicate alcohol consumption declined slightly as medical cannabis use became more common. Did similar decreases follow recreational legalization?

To investigate this question, I first collaborated with health science researchers Daniel MyranRobert TalaricoJennifer Xiao and Rachael MacDonald-Spracklin to study Canada’s overall alcohol sales.

Total sales looked stable

We started our research by examining annual alcohol sales from 2004 to 2022. During that period, beer sales gradually fell, while the sale of coolers and other drinks steadily rose. That left total sales basically unchanged.

So consumers were apparently switching from beer to other beverages. But there were no obvious effects from 2018’s cannabis legalization.

This diagram shows how beer sales declined while other beverage sales increased from 2004 to 2022. Total alcohol sales remained roughly constant.
Annual Canadian beverage alcohol sales from 2004 to 2022, in litres of ethanol content per capita. The vertical gray bar marks cannabis legalization. (Statistics Canada), CC BY-ND

We also compared monthly sales during the 12 months before legalization versus the 12 after. This included national average sales by liquor retailers and beer producers. In both cases, sales trends showed no significant changes in October 2018.

However, this research on Canada-wide sales was mainly designed to detect large changes. To find subtler ones, I focused on the province of Nova Scotia.

Some liquor stores sold cannabis

When Canada legalized cannabis, most provinces banned liquor stores from selling it to avoid tempting alcohol drinkers into trying cannabis.

THE CANADIAN PRESS/Andrew Vaughan
The logo of the Nova Scotia Liquor Commission is seen in Halifax in 2013. A store sign that says NSLC beer wine spirits

Nova Scotia did the opposite. Its government-owned liquor corporation became the main cannabis retailer. After legalization in October 2018, most provincial liquor stores kept selling only alcohol, but some began selling cannabis as well.

This unique situation prompted me to study the province’s sales. I focused on the 17 months before and 17 months after legalization.

The corporation’s total alcohol sales initially fell in October 2018, then slowly regrew. As a result, monthly sales after legalization averaged about $500,000 below their earlier levels.

More interestingly, the changes differed between the cannabis-selling stores and the alcohol-only ones. At the alcohol-only stores, sales immediately fell. They averaged $800,000 below previous levels.

But at cannabis-sellers, alcohol sales began growing. Total monthly sales from October 2018 to February 2020 averaged $300,000 above earlier levels.

This diagram shows that after October 2018, alcohol sales rose gradually at liquor stores that sold cannabis but fell quickly at stores selling only alcohol.
Seasonally adjusted Nova Scotia Liquor Corporation retail sales of beverage alcohol in Canadian dollars, from May 2017 to February 2020. The vertical gray bar marks cannabis legalization. (Nova Scotia Liquor Corporation), CC BY-ND

The divergence in sales was larger for beers than for spirits or wines.

Interestingly, alcohol-only stores located near cannabis-selling stores had changes similar to those located farther away, suggesting that cannabis-seller proximity didn’t matter.

Switching substances or stores?

My data can’t say why the sales split occurred, but I can speculate.

Consider the immediate sales drop at alcohol-only stores — this could suggest some consumers switched from alcohol to cannabis right after legalization.

Meanwhile, the lack of a drop at cannabis sellers might mean some consumers simply changed where they shopped. Instead of visiting their local alcohol-only retailer, they went to cannabis sellers to shop for alcohol and cannabis together.

The cannabis sellers’ ongoing growth might reflect people increasingly buying cannabis from licensed stores instead of illegal dealers. They went to those stores to buy weed, but picked up some extra booze while they were there.

Looking ahead

My research so far has focused on the initial post-legalization period, from October 2018 to February 2020.

I plan to study later periods next, when cannabis retailing was more widespread and perhaps more influential.

That will be more challenging, however, because COVID-19 arrived in March 2020. The pandemic disrupted sales of alcoholthough not of cannabis. It will be tricky to separate cannabis effects from pandemic ones, or from Canadian consumers’ evolving drinking habits in general.

My guess is that cannabis legalization had little short-term impact on existing drinkers overall. Most Canadians didn’t suddenly consume cannabis with their cabernet or replace vodka with vapes.

Instead, we might see gradual long-term shifts. Young Canadians now reach legal age in a context where cannabis and alcohol are both allowed. Some folks who previously would have started drinking alcohol might now choose cannabis instead, or in addition.

For now, alcohol drinking is still three times more common than cannabis use. Whether that continues, only time will tell.

About the Author: Michael J. Armstrong is an Associate Professor, Operations Research, at Brock University.

This article originally appeared in The Conversation.

More from Retail Insider:

RELATED ARTICLES

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Canadian Retailers Push Sustainability Deeper Into Operations as Business Case Evolves

Canadian retailers are integrating sustainability into stores, logistics, packaging, resale and supply chains as regulation and business economics evolve.

Daily Synopsis: August 24, 2026

Canadians still head to malls, Ilia Beauty grows out of Vancouver roots, Reformation opening at CF Toronto Eaton Centre Sept. 1, Toronto camera store closing after 25 years, and other news.

Casavogue Highlights Made-in-Italy Design from Calligaris

Casavogue showcases Calligaris, the Italian furniture brand known for refined extendable dining tables, elegant chairs and Made-in-Italy craftsmanship.

Westcliff acquires Kingsway Mall in Edmonton

On a 41.8-acre site, the 880,049-square-foot shopping centre features more than 160 stores and services.

Walmart+ Takes Bigger Role as Walmart Expands Canadian Digital Strategy

Walmart is expanding its Canadian digital strategy as Walmart+ membership, e-commerce, Marketplace and fulfillment investments gain importance.

Ottawa’s Tariff Retaliation Risks Raising Grocery Prices for Canadians

Sylvain Charlebois warns that Canadian counter-tariffs on U.S. food, ingredients and agricultural inputs could raise grocery prices and increase costs across the food supply chain.

AI’s Growth Reveals a Hidden $381.3 Million Problem for Retail Brands: Outdated and Unmanaged Enterprise Content

88% of retail executives say high-quality, well-maintained digital content will be more important to their business success over the next two years than it has been in the past

AI Is Shaping Back-to-School Shopping for Canadian Consumers: Accenture

AI is influencing how Canadians plan back-to-school purchases, with parents using AI tools to compare prices, build shopping lists and find products.

Canadian, U.S. and Mexican franchise groups sign trilateral agreement

The agreement is intended to help franchise businesses better understand and enter each other's markets, including through greater information sharing on regulations, intellectual property, costs, supply chains, consumers and market-entry strategies.

From The Desk: Strategic Adaptation and Growth Define Canadian Retail in August 2026

Canadian retail shows resilience and strategic growth with expansions, AI-driven transformations, and evolving consumer behaviours amid economic challenges.

Daily Synopsis: August 21, 2026

FreschCo opens 1st Atlantic stores, Apple stores prepare for product expansion, Lordco expands in Western Canada, thrift stores deal with excess donations, Columbia House Records shuting down, and other news.

Canada/U.S. trade talk collapse to lead to immediate and significant impact on small business: CFIB

"A full 40% of small Canadian exporters will be directly hit by these tariffs and nearly one-third expect their revenues will drop by 50% or more as a result."

Joe Mimran Outlines Product and Global Growth Plans for Roots

Joe Mimran discusses plans for Roots product, stores and U.S. growth as Marquee Brands and Roots CEO Meghan Roach point to significant international expansion.

Shoppa.ca launches online marketplace for Canadian-owned businesses

The marketplace includes businesses from across the country and products in categories including beauty and skincare, apparel, home and living, pets, kids and baby, food and wellness.

Canadian retail sales surpass $74 billion in June: Statistics Canada

Core retail sales rose 1.2% in June, posting their second consecutive monthly gain.

Good Earth Coffeehouse opens new location at Indigo Metrotown in Burnaby

The opening adds another location to Good Earth's network of more than 50 coffeehouses across Canada.

TJX Says Winners, Marshalls and HomeSense Are Gaining Major Market Share in Canada

TJX says Winners, Marshalls and HomeSense are gaining major market share in Canada as customer transactions rise and the retailer expands in prominent malls and downtown locations.

Home Depot Canada Sales Accelerate Despite Challenging Housing Market

Home Depot Canada outperformed the broader company in Q2 as comparable sales, transactions and unit growth improved despite a subdued housing market.

AutoCanada Sees Canadian Auto Market Remaining Challenging

AutoCanada says affordability pressures continue to weigh on Canadian vehicle buyers as it improves dealerships, used sales and collision operations.

Canadian sponsorship spending reaches $4.7B as industry study marks 20 years

Professional sport continues to account for the largest and most significant sponsorships, but the study found that brands are spreading spending across a broader range of categories.