The biggest takeaway from the agency’s second-quarter report suggests that the gap between legal and black market cannabis prices is widening, with the average cost of a gram of illicit pot continuing to drop while authorized dealers are charging as much as 80 percent more.
To be specific, the average price of an illegal gram of pot was $5.93 in the second quarter, down from $6.23 in the previous quarter and $6.51 in the prior quarter, according to CTV News Canada.
The cost of a gram of legal marijuana was $10.65, up from $10.21 in the previous quarter and $9.82 in the fourth quarter of 2018, based on self-submitted quotes. This price differential between legal and illicit weed prices comes to about 80 percent.
“The share of respondents who reported purchasing illegally due to ‘legal cannabis being too expensive’ rose from 27 percent in the first quarter of 2019, to 34 percent in the second quarter,” the Ottawa-based agency said in a release. Statistics Canada based these conclusions on price quotes gathered using the StatsCannabis crowdsourcing application between April 1 and June 30. Out of 697 price submissions, 572 of were deemed plausible, it said.
According to CBC Canada, the questions asked of survey respondents paints an illuminating picture of a part of Canadian society that used to operate solely in the shadows.
Two reasons were given for choosing illegal product over legal offerings by the 59 percent of those purchasing illegal pot during the second quarter. Over a third said the legal pot was too expensive. The rest of the group said they did so because they preferred the quality of the illegal options, or because it was too difficult to buy the legal products where they live.
There is an obvious reason for the gap in pricing between the legal and illicit pot products. It all has to do with the costs of doing business. Brad Poulos, a lecturer in the Ted Rogers School of Management at Ryerson University in Toronto, says the big difference is that legal pot has a huge pile of added expenses that increases the cost of doing business.
“There’s an excise tax built in. Then, depending on the province, there’s GST and HST on top of that,” he said. “There’s compliance costs that legal cannabis producers have that the illicit market doesn’t have to worry about. Add it all up and there’s quite a cost disadvantage.”
“The higher prices are not out of line with the StatsCannabis data since online retailers would have higher overhead costs than other illegal sources,” the agency said, reports Prince George Matters.
