Explaining Unusual Cash Patterns in 2018

There was an unusually large decline of bank notes in circulation in October 2018. Some have argued that this was due to the legalization of cannabis in Canada in mid-October. We consider whether that explanation is consistent with the evidence and conclude that the unusual cash patterns observed in 2018 are more likely the result of an operational event specific to Toronto. Nevertheless, it would be useful to continue monitoring developments in cannabis consumption and its impact on the demand for cash.