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Store Proximity Reduces Illicit Market

Adults who live near licensed cannabis retailers are more likely to obtain cannabis from legal sources according to a new study from the School of Public Health Sciences at the University of Waterloo.

About the Study

The 2023 study explores how the accessibility of legal cannabis in Canada influences how consumers sourced their cannabis in the first three years of legalization (2019-2021).

The aims of this study were to examine 1) the distance between respondents’ homes to legal retail stores 2) the cannabis sources used in the past 12 months and 3) the association between cannabis sources used and distance to legal retail stores.

Data was analyzed from Canadian respondents participating in the International Cannabis Policy Study from 2019 to 2021. The 15,311 respondents were past 12-month cannabis consumers of legal age to purchase cannabis.


Respondents lived closer to a legal retail store in 2021 (1.5 km) versus 2019 (6.8 km) as the number of retail stores has increased.

Respondents in 2020 and 2021 had higher odds of obtaining cannabis from legal sources (e.g., legal stores: 47.9% and 60.0% vs. 38.6%, respectively) and lower odds of obtaining cannabis from illegal sources compared to 2019 (e.g., dealers: 22.6% and 19.9% vs. 29.1%).

Respondents who lived closest to legal stores had higher odds of sourcing from legal stores, and lower odds of sourcing from legal websites or growing their own cannabis.


The study concludes that legal cannabis stores are increasingly accessible to people living in Canada and this was only three years after legalization. Now that we have even more stores in Canada, that proximity is closer.

Household proximity to a legal cannabis store was associated with sourcing cannabis from legal retail stores, but only among those who live very close (less than 3 km).

Findings suggest that proximity to legal cannabis stores may aid uptake of the legal market yet there may be diminishing returns after a certain point.

Overtaking the Illicit Market

The number of Canadians purchasing cannabis from the legal market has gradually increased since legalization: 37% in 2020, 43% in 2021, and 48% in 2022 according to the Canadian government’s annual Cannabis Survey.

However, provinces and retailers continue to struggle to capture the remaining market.

In June, Cannabis NB, which was the sole retailer of recreational cannabis in New Brunswick until recently, shared its challenges to shift the illicit customer base to the legal market.

Also that month, Canada’s federal Competition Bureau released recommendations to improve competition in the cannabis industry, further displace the illicit market, and bolster the legal cannabis industry. The Bureau says, “Without the ability to compete vigorously and effectively against an entrenched illicit market, businesses operating in Canada’s nascent legal industry cannot, and will not, succeed.”

Their report identified five barriers to competition: licensing requirements and regulatory compliance costs, THC limits for edible cannabis products, prohibitions on cannabis promotion, packaging, and labelling, excise duty framework, and lack of industry standardization.

Tags: cannabis consumer (8), cannabis consumption (24), cannabis purchases (7), consumer data (25), illicit cannabis market (8)