Cannabis legalization: do banking transactions reflect a shift away from the illegal market?

Bohdan Horak and Christoph Frei

Applied Economics Letters, 2024, vol. 31, issue 12, 1104-1111

Abstract: Using data on banking transactions, we analyse how people changed their spending behaviour when recreational cannabis became legal in Canada. In the data set, we identify people with purchases in a cannabis store after legalization. We apply a difference-in-difference approach to compare their spending before and after legalization. People with cannabis purchases after legalization reduced significantly and persistently their cash spending and electronic transfers, indicating a shift from the black to the legal cannabis market.

Date: 2024
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DOI: 10.1080/13504851.2023.2176434

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