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article imageHigher pot prices driving Canadians to black market

By Karen Graham     Jan 11, 2019 in Politics
Ottawa - Canadians are paying nearly 50 percent more for their legal cannabis when compared to illegal sources, according to an analysis of price quotes by Statistics Canada on Wednesday.
Statistics Canada, in a new analysis released on Wednesday, said the average price of a legal gram of medical or non-medical marijuana during the fourth quarter last year was $9.70, compared to the black market price of $6.51. This price differential comes to 49 percent.
These conclusions were based on a survey of price quotes gathered using the StatsCannabis crowdsourcing application between Oct. 17 — when adult-use pot was legalized in Canada — and Dec. 31.
Prior to legalization on October 17, 2018, the average price of one gram of dried marijuana was $6.83, based on a survey with over 19,000 submissions to StatCan’s “StatsCannabis” crowdsourcing application. The legal and illegal prices quoted on Wednesday reflect 385 price quotes that StatCan determined to be “plausible following statistical testing."
Cannabis prices closely watched
According to BNN Bloomberg Canada, the marijuana price index has been closely watched by industry executives, government officials, retailers and consumers since recreational pot use was made legal. Canada is only the second nation to legalize recreational pot.
One of the lucky Canadians who managed to buy marijuana on the first day of legalization at a cannab...
One of the lucky Canadians who managed to buy marijuana on the first day of legalization at a cannabis store in Quebec City, Quebec
Alice Chiche, AFP
Canadian officials stated that the move was primarily to stamp out the black market and drive revenues into government coffers. There is still the belief that cannabis prices will come down, much as they did in many U.S. states where more supply is now available and licensed producers compete with the black market.
The two legal and illegal price findings are linked, believes Matei Olaru, CEO of the cannabis-focused technology and media company Lift & Co. "This study is definitely indicative of the things [like] the tax and the lack of competition," he said.
"You basically have pressure to increase revenue, an ability to increase prices to get there by virtue of this lack of competition, and essentially a new market that is taxed very heavily."
"I would venture to guess that any producer, depending on where they operate, is less than impressed because of the rollout [after legalization]," Olaru told Stephen Quinn, host of CBC's The Early Edition. "Price is definitely top of mind to consumers."
Most analysts seem to believe that part of the problem with the higher prices may be partially due to legal marijuana opening up an entirely new consumer goods industry, while marketing hasn't caught up with demand yet.
"The regular consumer packaged goods industry is driven by advertising and consumer insights to help target that advertising," Olaru said. This is because producers are limited in how they advertise their products.
More about Statistics canada, marijuana prices, Shortages, Black market, Survey
 
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