Medical cannabis legalization and the use of illicit drugs, alcohol, and tobacco.

Abstract

Purpose: Amidst the global shift toward cannabis legalization, this study examines medical cannabis (MC) sales as an indicator of economic activity and innovation. It explores associations between MC sales, and variables including tobacco use, alcohol consumption, amphetamine, cocaine and cannabis prevalence, and gross domestic product (GDP), using a fixed effects (FE) panel regression model. It also evaluates associations between cannabis legalization and MC sales over time using a dynamic Difference-in-Differences (DiD) approach with multiple time periods.  METHODS: Panel data from 20 countries, including 14 with legalized medical cannabis and 6 without, are analyzed. The dynamic DiD approach estimates the average association for legalizing countries across multiple time periods, enabling comparisons of post-legalization outcomes with those of non-legalizing countries. RESULTS AND CONCLUSIONS: The findings indicate a strong negative association between tobacco use and MC sales, while cannabis consumption shows a positive association with MC markets. Amphetamine use is negatively associated with MC sales, suggesting substitution dynamics. Legalization is associated with an average annual increase of 26.06 tons of MC sales in legalizing countries. Event study estimates confirm a sustained growth trajectory in MC sales following legalization. A robustness check, which excludes the United States-a major outlier in market size-yields a slightly lower average effect of 20.05 but still supports the persistent market expansion. Given the ecological nature of the design, these results should be interpreted as population-level associations rather than individual-level causal effects. Nonetheless, they highlight the potential economic relevance of cannabis legalization in expanding regulated markets and reshaping consumer behavior. The study contributes to debates on legalization, public health, and economic policy by providing empirical evidence on the associations between legal reforms and market dynamics.