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

https://doi.org/10.1016/j.drugpo.2012.05.003Get rights and content

Abstract

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.

Section snippets

Background

British Columbia (BC), Canada is well-known as the site of a large illegal cannabis industry (Easton, 2004, Hamilton, 2004). The proliferation of this industry has prompted widespread concern related to illegal indoor cannabis “grow ops” as well as the increasing involvement of violent organized crime groups (Hamilton, 2004, RCMP, 2009). While local police agencies continue to allocate substantial public resources towards fighting cannabis cultivation and related activity, recent data from the

Monte Carlo methods

Monte Carlo simulation methods were employed to produce annual retail expenditure estimates of locally consumed cannabis in BC, as well as estimates of the total amount of cannabis consumed. In brief, these methods allow for repeated random sampling based on estimated parameter distributions to derive point estimates and likely ranges (i.e., credibility intervals) for the outcome of interest. Parameter estimates are applied to the model, and inputs are generated randomly from corresponding

Parameter estimates

The parameter estimates entered into the model are presented in Table 1, along with corresponding data sources. As shown, the combined estimates from the 2009 CADUMS and the 2009 Youth Smoking Survey resulted in an estimate of the number of cannabis users in 2009 in BC of 366,032. Of those, 76,917 (21%) were estimated to be daily users, 99,888 (27%) were estimated to be weekly users, 83,645 (23%) were estimated to be monthly users, and 105,582 (29%) were estimated to use cannabis less than

Discussion

In an econometric model estimating annual retail expenditures on cannabis in British Columbia, with parameter estimates derived from government-funded data sources, it was conservatively estimated that approximately $407 million is spent by British Columbians on cannabis at the retail level per year. The bulk of this estimated revenue was generated by adult daily cannabis users, who contributed to over 90% of all potential revenue from provincial cannabis sales. Assuming under-reporting of

Acknowledgments

The authors would like to thank Tim Stockwell and the BC Alcohol and Other Drug Use Monitoring Survey study group for use of their data, as well as the Propel Centre for Population Health Impact for use of the Canadian Youth Smoking Survey data. We would also like to thank Peter Vann and Deborah Graham for their research and administrative assistance. Dan Werb is supported by the Canadian Institutes of Health Research and the Trudeau Foundation. Thomas Kerr is supported by the Michael Smith

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