Estimated expenditures on unlicensed adult-use cannabis fell to 785 million Canadian dollars ($600 million) in the latest quarter, almost half what they were before Canada legalized marijuana in late 2018.
The Statistics Canada data shows that spending on recreational cannabis products via regulated channels reached CA$648 million in the same period.
The underground market is the biggest competitor for legal cannabis businesses.
Legal businesses have become more competitive by gradually lowering prices, improving quality and offering a better selection of products – including vape pens and edibles.
Access to physical legal stores is another factor driving sales.
The number of regulated adult-use cannabis stores in Canada surpassed the 1,000 mark last month – about three times higher than the same period one year ago.
Quarterly expenditures on illicit cannabis peaked at an estimated CA$1.47 billion in the fourth quarter of 2013, according to the Statistics Canada data.
The data can be found here.