Six years after legalization, Canada’s cannabis market faces high taxes, strict regulations, and ongoing competition from the illicit market. In 2018, Canada became the first G7 nation to legalize recreational cannabis, setting a precedent in global drug policy reform. The Cannabis Act aimed to curb illicit sales, ensure consumer safety, and generate economic benefits, but its impact remains debatable today. While legalization has established a regulated industry, challenges persist—ranging from enforcement crackdowns to debates over cannabis as a harm reduction tool for opioid addiction. Legal challenges and new research are reshaping Canada’s cannabis industry, driving changes in regulation, taxation, and market strategy.
Six Years of the Cannabis Act
The Cannabis Act sought to achieve three key objectives: displacing the illicit market, protecting public health, and generating economic benefits. Legal cannabis sales in Canada surpassed $5 billion in 2023. According to Statistics Canada, recreational cannabis sales reached $5.07 billion, marking a 12.2% increase from 2022. However, the illicit market accounts for a significant portion of sales. Industry expert Brad Poulos estimates that in 2023, the unregulated market controlled roughly 40% of cannabis transactions. The 2023 Canadian Cannabis Survey also found that 69% of cannabis consumers reported ‘always’ obtaining their products from legal or licensed sources, up from 48% in 2022.
Regulatory hurdles have contributed to the illicit market’s persistence. Stringent licensing requirements, taxation, and price discrepancies between legal and unregulated products have led some consumers to continue purchasing from unauthorized sources. Additionally, provincial regulations vary significantly, creating inconsistencies in access and enforcement. British Columbia, for example, has seen both legal market expansion and continued police actions against unauthorized dispensaries, reflecting the complexities of implementation. Despite ongoing enforcement, the legal cannabis market has grown significantly across Canada. As of 2024, Edmonton has 176 licensed stores, Winnipeg has 115, and Vancouver has 78. Health Canada is also working on regulatory changes to expand authorized activities for cultivation, nursery operations, and research license holders, further shaping the industry’s future.
Public health data provides further insight into legalization’s effects. A study analyzing hospital data found that cannabis-related hospitalizations in Canada increased 1.62 times between January 2015 and March 2021, rising from 3.99 to 6.46 per 100,000 individuals. The most significant relative increase was observed in hospitalizations due to cannabis-induced psychosis. Regarding youth consumption, the 2023 Canadian Cannabis Survey reported that 43% of individuals aged 16-19 used cannabis at least once in the past year, an increase from 37% in 2022. However, the proportion of youth reporting daily or almost daily cannabis use has remained stable at approximately 20% since 2018. Researchers continue to assess whether current regulatory adjustments sufficiently address these evolving trends.
Cannabis as a Tool for Opioid Harm Reduction
As Canada battles the opioid crisis, researchers investigate whether cannabis can help curb opioid addiction and reduce overdose risks. A University of British Columbia study from 2019 to 2021 found that 57.6% of individuals using both substances turned to cannabis to manage cravings, with stronger effects observed among those experiencing chronic pain. The study also linked cannabis use to a significant reduction in opioid consumption, suggesting potential harm reduction benefits.
Despite these findings, Health Canada has not endorsed cannabis as an alternative to opioid use. As of February 2025, only two cannabinoid-based pharmaceutical products—Sativex and Nabilone—are approved for specific medical uses unrelated to opioid addiction. Cannabis remains an off-label option for pain management, regulated at the provincial level and subject to varying insurance coverage. While Health Canada supports further research, officials stress the need for clinical validation before endorsing cannabis as a harm reduction tool.
Experts caution against overstating cannabis’s role without extensive trials. Frequent, high-dose THC use carries risks, including dependence and cannabis use disorder. Harm reduction advocates argue that cannabis should be one of several options available for individuals seeking alternatives to opioids rather than a definitive replacement. Ongoing studies will determine whether cannabis can play a long-term role in addressing opioid addiction.
The Cost of Legal Cannabis and Access Challenges
High costs remain a significant barrier to legal cannabis access, particularly in marginalized communities. Statistics Canada reports that as of 2024, the average price of dried cannabis from licensed suppliers is $9.70 per gram, compared to $6.51 per gram from illegal sources. This 50% price gap has driven many consumers to continue purchasing from unregulated markets, with only half of recorded purchases coming from legal suppliers.
In response, initiatives like the Cannabis Substitution Project (CSP) aim to bridge this affordability gap. Founded in 2017 by activist Neil Magnuson, CSP distributes free or low-cost cannabis products, including high-dose edibles and pre-rolled joints, to individuals with substance use disorders. The program has received support from local advocates, researchers, and city councillors but operates in legal uncertainty, reflecting broader tensions between harm reduction efforts and regulatory frameworks. The legal landscape remains complex. In May 2022, Magnuson was arrested and charged with cannabis trafficking, underscoring the legal risks associated with alternative distribution models. Additionally, the Cannabis Control and Licensing Act enforces minimum pricing policies that restrict the affordability of legal cannabis for low-income individuals.
Dispensary Raids and Policy Tensions
Enforcement against unlicensed cannabis dispensaries in Vancouver has intensified in 2024 and 2025. On January 29, 2025, Vancouver police and the Community Safety Unit raided two cannabis dispensaries linked to activist Dana Larsen, targeting The Medicinal Cannabis Dispensary locations at 649 East Hastings and 1182 Thurlow. On October 31, 2024, law enforcement raided a cannabis store and smoke shop located on Indigenous land in Winfield, British Columbia.
Authorities justified these enforcement actions based on non-compliance with Health Canada regulations, citing concerns over unauthorized sales and distribution. Health Canada has proposed regulatory amendments, which were open for consultation until July 8, 2024, aiming to streamline regulations while maintaining public health and safety standards. Activists argue that enforcement actions disrupt harm reduction initiatives despite these regulatory efforts. Dana Larsen stated that the recent raids impacted their ‘Get Your Drugs Tested’ program, which provides free substance testing services and plays a role in harm reduction efforts for those struggling with addiction.
The tension between enforcement and harm reduction is not new. In previous years, dispensaries operating outside the legal framework have faced police action, yet demand for these services has persisted. Advocates argue that punitive measures undermine harm reduction goals, calling for policy reforms that recognize the role of alternative cannabis distribution models in public health efforts.
British Columbia’s Evolving Cannabis Industry
British Columbia remains a central hub for Canada’s cannabis industry, with high per capita consumption and steady legal market growth. In December 2024 alone, BC reported total cannabis sales of $67.36 million, reflecting a 6.0% year-over-year increase. The province’s cannabis sector now contributes over $2 billion annually to local economies. However, aligning public policy with consumer habits remains a challenge.
The legal market continues to evolve, with projections estimating BC’s cannabis production industry will reach $3.3 billion in 2025, supporting 386 businesses and nearly 22,000 employees. However, regulatory inconsistencies persist, as some municipalities welcome retail expansion while others impose restrictions that limit consumer access. Indigenous communities are actively seeking greater jurisdiction over cannabis regulation. The First Nations Leadership Council has called for legal reforms that align with the United Nations Declaration on the Rights of Indigenous Peoples, advocating for sovereign control over cannabis production and sales in their territories.
Health and Safety Concerns After Legalization
Since legalization, concerns about impaired driving, youth access, and mental health effects have remained central to public health discussions. A 2022 report from the Canadian Centre on Substance Use and Addiction found that while self-reported cannabis-impaired driving incidents remained stable post-legalization, cannabis is now one of the most commonly detected substances in fatal traffic accidents. The report indicated that 26% of cannabis users admitted to driving under the influence, a figure comparable to the 28% recorded in 2017. Additionally, random roadside surveys between 2016 and 2018 found that 7.6% of drivers tested positive for cannabis, nearly double the 4.4% who tested positive for alcohol. Despite these findings, public perception of cannabis-impaired driving remains a concern, with 56% of Canadians believing incidents have increased since legalization, up from 49% in 2020. Law enforcement agencies continue monitoring trends, regularly reviewing roadside testing protocols to improve accuracy.
Mental health professionals emphasize the importance of continued education on responsible cannabis use. Frequent cannabis use has been linked to higher dependence risks, especially for individuals with pre-existing psychiatric conditions. Despite regulatory oversight, misinformation about cannabis’s medical benefits persists, complicating public understanding. Efforts to promote evidence-based cannabis education remain crucial in addressing these concerns.
Key Lessons from Six Years of Legal Cannabis
Canada’s cannabis policy has produced measurable successes and persistent challenges over six years. While the legal market has generated significant revenue and provided safer consumer options, the persistence of illicit sales, legal barriers, and access disparities highlight areas for improvement. British Columbia, in particular, serves as a case study for both the successes and ongoing struggles of legalization.
Adjustments to taxation, enforcement, and harm reduction strategies may be necessary to ensure that legalization continues to meet its intended objectives. The Canadian experience provides valuable insights for other nations considering similar reforms, demonstrating the potential benefits and complexities of cannabis regulation. As Canada evaluates the next phase of legalization, policymakers are weighing industry data, market trends, and regulatory changes for cannabis reform that will determine the future of the cannabis market.
Kris has been at the forefront of Downtown Eastside initiatives for over 15 years, working to improve the neighbourhood. As a consultant to several organizations, he played a key role in shaping harm reduction strategies and drug policies. A strong proponent of decisive action, Kris’s work focuses on driving tangible change and advocating for solutions that address the complex challenges facing the community.
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