40% of Canada’s cannabis consumers still using black market due to high prices

Prohibitionist resisting adult-use cannabis legalisation are bound to point out that the black market is still thriving somewhat in Canada, where recreational cannabis has been legal for a year now. But the reason? High prices for the shiny branded stuff compared to what Canadians can get hold of illegally.

The figure comes from Statistics Canada, which says that just 29% of cannabis users say they get all of their product from a legal source. Four in 10 Canadians said they bought at least some of their cannabis from illegal sources, including street dealers, between April and June of this year.

Economics professor Michael Armstrong said three factors – cost, location and supply – have kept the black market booming. “[In] Ontario, we had no stores for six months. Now we’ve got 25 and we’re still waiting for the next 50. That means the legal industry is missing an opportunity to sell product and take a bigger bite out of the black market,” he said.

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“We haven’t disrupted the black market significantly at this point, but that was to be expected,” said Abbotsford Police Chief Mike Serr, who chairs the Canadian Association of Chiefs of Police drug advisory committee. “If there is a strong, vibrant dark market out there selling illegal drugs, people will go to that and we need to direct them to the legal market.”

Another survey seems to show that many Canadians are often unaware that they are breaking the law when buying cannabis. Conducted by Abacus Data, it found that one third of Canadians who purchase cannabis edibles and topicals have not aware that the products they are purchasing are distributed unlawfully. This figure is of course likely to fall now that edibles, including beverages – as of this week – have been legalised.

A follow-up survey conducted by Abacus Data found that one in five Canadians who purchased dried flower or capsules from an illegal online retailer was not aware that it was illegal for them to do so. 

The initial survey, of 2,347 adults, also found that: 

  • 15% of Canadians say they have purchased dried flower since legalisation and 4% purchased capsules. 
  • 55% purchased in a physical retail store, 28% in a legal online store. 
  • But 1 in 5 say they purchased on “another online store or website” and 31% purchased from “another source”, ie a black market source.

Cannabis company Hexo has launched a “value” cannabis brand called Original Stash that will retail at what it called “black market prices” – a one-ounce bag of the flower will cost $125.70 in Canadian dollars (£73.74), or $4.49 per gram (£2.63). According to Statistics Canada, that compares to a general price of $10.23 a gram from regulated stores and $5.59 from an illegal source. The price of legal weed did fall by 3.9% in the last quarter, but the price of illegal alternative fell by 5.9%.

HEXO said in a press release that off-market products can be difficult to distinguish from aboveboard offerings. “Illegal cannabis websites are well built, allow consumers to purchase online, and products are delivered to their doors,” it said. “Illicit cannabis distributors have gone as far as include the mandated Health Canada warnings and THC disclaimers.”

It claimed that Original Stash would “disrupt the illicit market, educate consumers about the value of a regulated and tested product, and drive them to purchase their cannabis legally” because, it claims, it is offering not only a competitive price but a better quality of product. “Illegal cannabis products can – and often – contain heavy metals, pesticides, and other contaminants.”

Original Stash’s first product, OS.210, is a hybrid sativa dried flower blend at 12%-18% THC.

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