Noise from Statistics Canada on the state of Canada’s cannabis markets is troubling. Why should the consumer buy legal when the illegal stuff is cheaper and better?
Among several key trends, the report indicates the price of legal marijuana has seen a rapid increase since it became legal in October. The increase in price has been so high that legal cannabis is now significantly more expensive than weed purchased on the illegal market. The numbers are misleading since illegal marijuana markets don't have a central clearinghouse to broadcast prices. Be as it may, the "news" is excellent for public officials who calculate revenue sharing data.
The new figures from Statistics Canada come from data gathered throughout the last quarter of 2018. More specifically, the data comes from an updated version of the organization’s crowdsourcing app.
This program allows individuals in Canada to input their data. These numbers are then collected, aggregated, and analyzed. In total, this new data set includes marijuana price quotes from 385 respondents.
As reported by CBC, roughly half of those 385 price quotes were from legal cannabis stores. The others were from illegal suppliers.
When comparing stats from Oct. 17, the date on which recreational marijuana became legal in Canada, and the end of the year, analysts noticed some clear trends. Most immediately, they noted a sharp increase in the price of legal weed.
This increase put the average price of legal weed well above the average price of illegal marijuana. By year-end, the average price for cannabis from a legitimate recreational supplier was $9.70 per gram. That price is significantly higher than prices for weed on the illegal market. According to the new stats, illegal cannabis cost an average of $6.51 per gram. Beyond changes in price, analysts also noted a few other potentially essential trends. For example, they found that more consumers reported making their first marijuana purchases in the weeks following legalization. Specifically, 7.7 percent of those who provided data said they made their first-ever cannabis purchase last fall. Additionally, the stats showed that 49.8 percent of male consumers bought weed at a legal supplier. Meanwhile, 41.6 percent of female consumers said they bought marijuana from a licensed supplier.
Analysts have identified potential reasons for legal weed’s rapid price increases. Most notably, North American affairs manager at the Consumer Choice Centre, David Clement, said that the price changes had to do primarily with the often-expensive legal framework surrounding the industry. “It costs half a billion a year to enforce the rules and regulations in the Cannabis Act,” Clement said. “So in order to generate the revenues to cover that they’ve implemented fees and licenses on licensed producers.”
He added: “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.”
The new numbers come on the heels of a somewhat rocky rollout of Canada’s nationwide legalization. In the weeks following legalization, many legal retailers ran into serious supply issues. In short, retailers were unable to keep up with consumer demand. This was compounded when it became clear that cultivators were themselves not producing enough to supply retailers. As a result, experts predicted ongoing shortages around the country as growers focused on scaling up to meet demand — initially, many projected shortages for up to 18 months. But more recently, some experts have extended that timeline to as long as three years.
What does the noise mean?
Legal marijuana versus illegal marijuana will never have a clear winner. Both factions will survive, and both will prosper within the euphoric crazy of consumer marijuana consumption. The laws of probable economics, primarily supply and demand will rule the day. Nothing will change the fact that marijuana is a crop, a commodity like a tobacco, or coffee beans. When prices for marijuana declines to more realistic levels ($500 per pound) a level playing fuield will favor legal marijina cvonsumtion.