Cannabis and tobacco: substitutes and complements

Using survey data from Australia, this paper examines whether the economic relationship, complements versus substitutes, between cannabis and tobacco varies over the life cycle. They are often consumed as a ‘bundle,’ but using a range of approaches, we find compelling evidence that these goods are complements at younger ages and change to substitutes at older ages. The importance of these findings is illustrated by considering the likely impacts of tobacco price changes on cannabis consumption rates over the age spectrum.