Aims: Long-term heavy use of cannabis and alcohol are known to be associated with memory impairments. In this study, we used event-related potentials to examine verbal learning and memory processing in a commonly used behavioral task. Method: We conducted two studies: first, a small pilot study of adolescent males, comprising 13 Drug-Naive Controls (DNC), 12 heavy drinkers (HD) and 8 cannabis users (CU). Second, a larger study of young adults, comprising 45 DNC (20 female), 39 HD (16 female), and 20 CU (9 female). In both studies, participants completed a modified verbal learning task (the Rey Auditory Verbal Learning Test, RAVLT) while brain electrical activity was recorded. ERPs were calculated for words which were subsequently remembered vs. those which were not remembered, and for presentations of learnt words, previously seen words, and new words in a subsequent recognition test. Pre-planned principal components analyses (PCA) were used to quantify the ERP components in these recall and recognition phases separately for each study. Results: Memory performance overall was slightly lower than published norms using the standardized RAVLT delivery, but was generally similar and showed the expected changes over trials. Few differences in performance were observed between groups; a notable exception was markedly poorer delayed recall in HD relative to DNC (Study 2). PCA identified components expected from prior research using other memory tasks. At encoding, there were no between-group differences in the usual P2 recall effect (larger for recalled than not-recalled words). However, alcohol-related differences were observed in a larger P540 (indexing recollection) in HD than DNC, and cannabis-related differences were observed in a smaller N340 (indexing familiarity) and a lack of previously seen > new words effect for P540 in Study 2. Conclusions: This study is the first examination of ERPs in the RAVLT in healthy control participants, as well as substance-using individuals, and represents an important advance in methodology. The results indicate alterations in recognition memory processing, which even if not manifesting in overt behavioral impairment, underline the potential for brain dysfunction with early exposure to alcohol and cannabis.