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Cannabis legalization: do banking transactions reflect a shift away from the illegal market?

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  • Bohdan Horak
  • Christoph Frei

Abstract

Using data on banking transactions, we analyse how people changed their spending behaviour when recreational cannabis became legal in Canada. In the data set, we identify people with purchases in a cannabis store after legalization. We apply a difference-in-difference approach to compare their spending before and after legalization. People with cannabis purchases after legalization reduced significantly and persistently their cash spending and electronic transfers, indicating a shift from the black to the legal cannabis market.

Suggested Citation

  • Bohdan Horak & Christoph Frei, 2024. "Cannabis legalization: do banking transactions reflect a shift away from the illegal market?," Applied Economics Letters, Taylor & Francis Journals, vol. 31(12), pages 1104-1111, July.
    • Handle: RePEc:taf:apeclt:v:31:y:2024:i:12:p:1104-1111
    DOI: 10.1080/13504851.2023.2176434
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