How cannabis legalization affects organized crime, research

The five years following the legalization of recreational cannabis in Canada have produced enough data for researchers to address important questions, such as how legalization does or does not affect organized crime.

A recent study published in Sociological studyexamines how the transition to a legal market has changed criminal enterprises that were once heavily involved in the illegal cannabis trade.

Key insights into organized crime and cannabis

The research conducted by scientists Martin Bouchard, Naomi Zakimi -from Simon Fraser University– and Benoît Gomis – from the University of Toronto– shows that the legal cannabis market now dominates in Canada, They will account for over 71% of household spending on cannabis in 2023. However, almost 29% of the market still belongs to unlicensed sellers.

The study’s most notable findings include:

1. A shrinking illegal market: Sales of legal cannabis have increased steadily since legalization and are gradually displacing the black market.
2. The resilience of organized crime: Criminal organizations are adapting by either diverting legal cannabis to the unlicensed market or shifting their activities to illegal drugs.
3. Challenges for consumers: High prices, inconsistent quality and limited accessibility in the legal market continue to drive some consumers to switch to cheaper, unlicensed alternatives.
4. Cross-border smuggling: Despite legalization, some unlicensed products are being smuggled from Canada to markets abroad, particularly the United States
5. Shifting the criminal focus: As cannabis becomes less profitable, many criminal groups are turning their attention to more dangerous drugs like opioids.

Also Read: Legal Weed = Less Crime: FBI Data Shows Surprising Benefits of Legalizing Cannabis

Methods and indicators

To reach these conclusions, researchers conducted a comprehensive review of more than 5,000 sources, including academic papers, media reports and government publications.

The key indicators used to assess the impact of cannabis legalization on organized crime include several metrics, such as price comparison between legal and illegal cannabis markets, the balance between supply and demand, and cash in circulation.

Lower legal cannabis prices tend to draw consumers away from illegal sources, so price monitoring is critical. Estimates of cannabis demand and legal supply are also analyzed to measure how well the legal market is meeting consumption needs, which could reduce reliance on the illicit market. Other indicators include tracking illegal cannabis seizures by law enforcement, examining criminal justice data for links to organized crime, and analyzing cash in circulation as an indicator of illegal market transactions.

These methods, along with interviews and internal documents, provide a more nuanced understanding of how organized crime responded to legalization.

• Get Benzinga’s exclusive analysis and top cannabis industry and market news delivered to your inbox every day for free. Subscribe to our newsletter Here. If you’re serious about business, you can’t afford to miss out.

Recommendations for policy makers

An important insight is that the connection between unlicensed and licensed cannabis is persistent and complex.

“Policies and law enforcement actions aimed at combating the illegal cannabis trade in Canada can have real consequences legal Production, sale and consumption of cannabis. The legal market may need to compete by learning from consumer preferences established in the illegal market.”

Therefore, a comprehensive approach is required.

“Regulators and policymakers would do well to gauge expectations: illicit activity along cannabis supply chains will persist and its complete elimination is an unrealistic goal,” the researchers add.

Cover image: Courtesy of the California Department of Cannabis Control.