Canadian legal cannabis prices nearly 50 percent higher than black market prices

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Marijuana became legal across Canada in October, but that hasn’t stopped the black market from thriving. Product shortages across the country have made it nearly impossible for some to purchase cannabis legally and have cause length wait times for those who have purchased cannabis online. Add to this the high cost of buying cannabis legally and it’s no wonder that people are continuing to purchase cannabis from the illicit market.

Numbers released earlier this week by government agency Statistics Canada found that the average price for a gram of legal recreational cannabis was $9.70 whereas a gram could be purchased from the illicit market for $6.51, a near 50 percent difference.

The agency got these numbers after receiving 385 price quotes using an application called StatsCannabis from when marijuana became legal on October 17 to December 31 of 2018. Half of the respondents reportedly purchased cannabis from a legal supplier.

David Clement, the North American affairs manager for consumer advocacy group Consumer Choice Centre, said that it’s unsurprising that prices of cannabis have risen.     

Clement said that in legalizing marijuana, products are now subject to both federal and provincial taxes in addition to licensing costs and numerous other fees associated with running a cannabis business all the way through the production line to the retailer.

“It costs half a billion [over five years] to enforce the rules and regulations in the Cannabis Act, so in order to generate the revenues to cover that they’ve implemented fees and licenses on licensed producers,” said Clement.

There’s also an issue of adequate access in many of the provinces. Heavy restrictions have created a lack of competition, with some provinces being limited to government-run retail stores.

“The taxes and fees create prices that are high out of the gate, and then a lack of competition prevents those prices from being slowly pushed down,” said Clement.

Industry experts believe that until some of these restrictions and fees are lessened, people will continue flocking to the black market to buy marijuana at much lower prices.

“It’s a constant conversation with Health Canada and with provincial regulators to help streamline the burden to make sure that legal cannabis can compete with the black market on price, because that’s the only way we’re going to displace the black market,” said Jeffrey Lizotte, a cannabis lobbyist and CEO of Next Wave Brands.

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