People gather outside during a ribbon cutting ceremony by the owners at the new Fire and Flower pot store on April 1, 2019 in Ottawa Photo: AFP/File
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Black market strong six months after Canada legalized cannabis

17 Comments
By Jacques LEMIEUX

High prices, short supplies and lineups at stores: six months after Canada legalized recreational cannabis, consumers are still buying a lot of pot on the black market as legal sources fail to meet demand.

But authorities say the legal market will eventually put street dealers and criminal gangs out of work, once the fledgling industry finds its footing.

"There are clearly still issues in the supply chain," said Minister Bill Blair, Prime Minister Justin Trudeau's pointman on cannabis legalization.

In October, Canada became only the second country in the world to legalize recreational cannabis, five years after Uruguay.

But six months on, people queue in long lines outside outlets, and supplies of many popular strains have dried up.

A patchwork of public and private online portals and bricks and mortar stores have popped up across the country, as each province rolled out their own marijuana retailing framework.

Ontario -- the nation's biggest pot market -- was late to the game, opening only 10 stores out of 25 licensed in the province on April 1, relying until now on a government online portal.

"They're working through it and they're making progress," Blair commented. "And what we see every month is continued progress in displacing of the illicit market and creating a normalized supply chain."

Getting rid of the black market was a key objective in Trudeau's legalization plan.

Many feared a surge in drug-impaired driving and pot-related emergency room visits, but authorities said that has not materialized.

In the last three months of 2018, the lion's share of sales -- 79 percent, valued at Can$1.2 billion (U.S.$900 million) -- were by illicit dealers.

According to Statistics Canada, legal sales -- including medical marijuana, which has been allowed in Canada since 2001 but accounts for only a fraction of total consumption -- amounted to only Can$307 million.

Canada has one of the world's highest rates of cannabis use -- with almost 15 percent of the population or more than five million people having consumed pot.

Its supply shortage can be explained in part by the heavy licensing process imposed by the federal government.

Another reason put forward is the relatively short amount of time growers had to ramp up -- about four months from the time the cannabis legalization law was passed by parliament to its entry into force.

As a result, the average price of dried cannabis in Canada has increased by more than 17 percent since legalization, to Can$8.04 per gram, according to the government statistical agency.

Buyers of legal pot are paying on average 57 percent more than for cannabis purchased on the black market, which actually saw prices fall.

"I've continued buying from my (illicit) dealer because the price of legal cannabis is outrageous," said John, who lives around the corner from downtown Ottawa's first legal pot store.

"I've been paying the same price for pot from this guy for the past 10 years so why would I go to a flashy new store and pay huge mark-ups," he said. "It just wouldn't make sense."

The store near him, Fire and Flower, raked in a whopping Can$50,000 in sales on its April 1 opening day.

In Montreal, Anna Kagadaeva, in her 20s, is more sanguine about the legal market.

"It took me a while before I came to the store because I was told there were lineups and there wasn't much selection," she told AFP.

But she now shops for weed regularly at Quebec's government-run stores because she finds them convenient and it's a safer, healthier and socially responsible choice.

"The supply situation is improving week by week" and "it will pick up significantly towards the end of spring," said Fabrice Giguere of the Quebec Cannabis Society (SQDC), after contracting six new suppliers.

His outlook was echoed by several cannabis company executives, who also predicted a drop in prices as supplies rise.

In Quebec, "our goal is to take 30 percent of the market by the end of October," Giguere said, adding that the SQDC is betting it can grow that figure to 70 percent in five years, displacing the black market.

© 2019 AFP

©2019 GPlusMedia Inc.


17 Comments
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High prices, short supplies and lineups at stores: six months after Canada legalized recreational cannabis, consumers are still buying a lot of pot on the black market as legal sources fail to meet demand.

THATS THE PROBLEM.? Legal sources can not meet demand? As a novice to supply and demand. I'd say increase the supply as its obvious the demand is there. So the citizens of a democracy who voted to legalise are STILL turning to naferious sources to get a product they want? This does not make sence? Get a gallon of bourbon no problem, get violent, drive, cause mayhem but sit at home lust for corn chips...it's your fault because the government is as usual clueless.

2 ( +2 / -0 )

I wonder why they have this problem, not in the states...

1 ( +1 / -0 )

It will take a few years for the black market to disappear. They aren't going to go easily.

The government could speed it up if they ensured that legal cannabis is either much better in quality, or equivalent in price, to illegal cannabis. Having it significantly more expensive is going to mean it takes longer for the black market to disappear.

4 ( +4 / -0 )

You can't discuss anything nowadays without ignorants making political references.

All these inventory issues will be addressed soon enough.

1 ( +2 / -1 )

Back in the day, dealers would run dry, charge different prices, it was a much more competitive market than it is now considering all the weed comes from the same few distributors/growers. It doesn't seem like a good way to make big bucks as an private shop keeper. On the plus side, we'll never have to call up a list of friends to score again. That and my city is making big bucks on the taxation of it!

3 ( +3 / -0 )

So banning it, was driving up the price, putting into anti social gangs control? Legalising it suddenly causes a good working law abiding people to reach out to criminal groups to get what is legal? What??? It's legal. That's not right. Grow your own. It's a weed, requires no process, as far as natural products go, ticks all the boxes. How on earth could it be ethically a no brainer? Granted as a Cronic Alcholholic who beats my family regularly drives drunk, I'm very angry about these people who go out of their way to relax and be happy. It makes me mad, stupid people actually being happy and causing no social harm. Death penalty for all of them. A HEMP rope for all of them.

3 ( +3 / -0 )

But six months on, people queue in long lines outside outlets, and supplies of many popular strains have dried up.

Well, there is obviously no shortage of demand. With such a high demand other countries should realize that it should no be illegal. I’m interested in comparative statistics of petty crime, tobacco and alcohol use. Have they changed over the same period?

3 ( +3 / -0 )

No they have not changed...demand that is. Powers that be just didn't realise that the voting public are not zealots about supporting a benign practice that effects such a large percentile. The 10 commandments mentioned nothing about weeds. " if you live in a bubble, that's you're reality " common sence has no part it it. Idiots.

4 ( +4 / -0 )

Just import Oregon's excess supply and the problem will be alleviated somewhat.

The black market won't ever go away.

1 ( +1 / -0 )

Canada will just get progressively (pun intended) more toked up and dumbed down.

-7 ( +0 / -7 )

Don't know if any of you are Canadian, but from the comments, I doubt it. This Canuck will continue to use his original source, from which the product is still far better than what's being retailed. Supply/demand issues may be overcome, but commercial pricing won't compete with private sourcing.

1 ( +1 / -0 )

If they changed the law, they must of researched the demand before hand. It’s like selling train tickets when there are no train tracks.

The amount of tax income lost could of paid for one years daycare across the nation.

0 ( +0 / -0 )

Surprised more people aren't growing their own.

0 ( +0 / -0 )

They are being too cautious giving growers the go-ahead to expand more crops

Until they open up the spigot more, the supply would only keep trickling compared to the high demand

0 ( +0 / -0 )

The black market won't ever go away.

Just like there is a black market in alcohol everywhere, but it is so small as to be unimportant.

They should get more suppliers from Mexico and have them pay for the wall they need between CA and the US.

1 ( +1 / -0 )

the average price of dried cannabis in Canada has increased by more than 17 percent since legalization, to Can$8.04 per gram

Yikes! That's US$192 an ounce! What are these people smoking? haha

-2 ( +0 / -2 )

I visited my local shop the day it opened (it was the second in Toronto). There was no line-up. I walked in and got my bag searched and my ID scrutinized like I had already done something wrong. WTF? All there was was a couple of strains with exorbitant prices, and a ridiculous amount of boring packaging that resembles a collection of off-label poisonous cleaning products. Even booze can have some fun with the labels. Leave it to the government to ruin pot. Needless to say, I didn't buy anything. I've been to Amsterdam. I know the drill. What's happening in these pot shops is just pure fascism. I didn't buy anything and want no part in the legal distribution model. I'll stick to my friends, or friends of friends, until they bring the fun into pot-shopping.

1 ( +1 / -0 )

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