Estimating the economic value of British Columbia's domestic cannabis market: implications for provincial cannabis policy

Dan Werb, Bohdan Nosyk, Thomas Kerr, Benedikt Fischer, Julio Montaner, Evan Wood
International Journal on Drug Policy 2012, 23 (6): 436-41

BACKGROUND: British Columbia (BC), Canada, is home to a large illegal cannabis industry that is known to contribute to substantial organized crime concerns. Although debates have emerged regarding the potential benefits of a legally regulated market to address a range of drug policy-related social problems, the value of the local (i.e., domestically consumed) cannabis market has not been characterized.

METHODS: Monte Carlo simulation methods were used to generate a median value and 95% credibility interval for retail expenditure estimates of the domestic cannabis market in BC. Model parameter estimates were obtained for the number of cannabis users, the frequency of cannabis use, the quantity of cannabis used, and the price of cannabis from government surveillance data and studies of BC cannabis users.

RESULTS: The median annual estimated retail expenditure on cannabis by British Columbians was $407 million (95% Credibility Interval [CI]: $169-948 million). Daily users accounted for the bulk of the cannabis revenue, with a median estimated expenditure of approximately $357 million (95% CI: $149-845 million), followed by weekly users ($44 million, 95% CI: $18-90 million), and monthly users ($6 million, 95% CI: $3-12 million). When under-reporting of cannabis use was adjusted for, the estimated retail expenditure ranged from $443 million (95% CI: $185-1 billion) to $564 million (95% CI: $236-1.3 billion).

CONCLUSION: Based on local consumption patterns, conservative estimates suggest that BC's domestic illegal cannabis trade is worth hundreds of millions of dollars annually. Given the value of this market and the failure and harms of law enforcement efforts to control the cannabis market, policymakers should consider regulatory alternatives.

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