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Legal or Illegal – Where will cannabis be bought post-legalization?

To understand where cannabis buyers will purchase post-legalization (October 17th), Dig Insights conducted a market simulation exercise. This was part of its annual project that tracks Cannabis related usage and attitudes. A total of 676 Canadians who currently purchase cannabis completed the exercise.

Note that this exercise assumed the current black market environment and new legal channels will exist side-by-side. In reality, it is likely the black market will be disrupted post legalization.

The market simulation was conducted using a Choice Based Conjoint (CBC) approach to understand the effect of various elements – in this case, purchase channel and price per gram – on demand. Conjoint = ‘consider jointly‘.

Conjoint allows you to assess the relative difference between levels for a given attribute (i.e., the price per gram jump from $9 to $10 may have more impact on sales than going from $12 to $13).

Marijuana purchase options research exercise

Before entering the exercise, respondents said how much cannabis they normally purchase, where they buy it, and the price they pay for it. In the exercise, they would see the amount they normally purchase and their current purchase avenue was often an option. This ensured the likelihood of people switching purchase avenues was collected.

Each respondent completed 10 screens.  On each, they had to choose the option they would be most likely to purchase. From screen-to-screen, the prices and available purchase avenues varied. This allowed Dig to model scenarios with different prices and different available purchase channels. If none of the options were viable, they could opt to purchase no cannabis.

Prices being equal, nearly half of cannabis buyers plan to keep buying illegally

If legal and illegal channels both charge $9/gram, 4-in-10 Canadians cannabis buyers will continue to do so illegally. Newfoundland and Saskatchewan (both of which will have privately owned retail stores) are the most likely to purchase legally at 73% and 68%, respectively.

The fact that many people don’t report being likely to switch shouldn’t be surprising. Nearly 3-in-4 cannabis buyers report being satisfied with their current purchase situation and 2-in-3 never fear police intervention.

Private dispensaries are more likely to convert buyers to purchasing legally

One factor working against legal avenues is that people seem more likely to purchase from privately-owned dispensaries. On average, in provinces with a private retail model, 61% would purchase legally (assuming equal prices) compared to 55% for provinces with a public model.

Interestingly, BC cannabis buyers are the least likely to purchase legally (49%) despite both public and private retail channels being available. This could be due to a robust collection of illegally operated dispensaries.

Cannabis purchasers are price sensitive

Despite the fact 6-in-10 would purchase cannabis legally if prices are equal, buyers are very price sensitive.

Cannabis buyers planned purchase avenue

If the illegal market can undercut the legal market by even $2/gram, they could keep nearly two-thirds of their existing buyers (or twice as many customers compared to equal pricing).

On the flip side, the loyalty to current purchase avenues isn’t strong. If the price of illegal cannabis exceeds legal cannabis by $2, legal would capture 84% of buyers. Some will continue buying illegally but not unless they’re getting a discount (or at least a fair deal).

The heaviest consumers are the hardest to convert

When asked where they plan to purchase cannabis post-legalization, half of Moderate (consume a few times a week to a few times a month) and Light (consume monthly or less often) users plan to purchase through their current purchase avenue, i.e. illegally. This compares to two-thirds of Daily users. So for those valuable Daily users who are potentially consuming 1 gram per day on average – or $3,000+ worth of cannabis per year – they are going to be the hardest to get. Competitive pricing may be key to winning over these highly valuable consumers.


You can run your own simulations using Dig’s cannabis simulator. All you need to do is to enter your name and email to get access.


For more information on Dig’s work in the cannabis space or to purchase the full Cannabis report, please contact

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