The price of legal cannabis was on average 56.8 percent higher than the purchase price from illegal sources, according to Statistics Canada’s Crowdsourced cannabis prices, first-quarter 2019 report released on Wednesday.
Prior to legalization, Canadians were paying $6.85 per gram of dried cannabis in 2018, based on StatsCannabis Crowdsourcing data. Post-legalization, the price per gram went up to $8.04, a 17.3 percent increase in price.
Nick Pateras, vice president of strategy at cannabis data firm Lift & Co. told Yahoo Canada Finance the price for legal cannabis was “inadequately high.”
“This is why there are a number of consumers who will have to be convinced to return to the legal category. They came in to buy once, but then were discouraged enough by the prices that they’ve not returned,” he said.
Customers purchasing marijuana at in-store government-licensed retailers paid as much as $10.73 a gram, making this category the most expensive. “All customers, no matter the frequency of their use, were paying more for dried cannabis after legalization,” StatCan said in a news release.
“Infrequent consumers, or those who use a few times a year, were paying 27.2 percent more per gram of dried cannabis, while more frequent users, or those who consume daily, were paying 14.8 percent more since legalization.”
Pateras says Canadians will always pay a premium price for safe, legal, and tested products, citing statistics from U.S. market studies that show Americans are willing to pay 20 percent more for legal cannabis, as opposed to illegal pot. Another thing Pateras pointed out was that illegal purchases tended to be for larger amounts. The legal market covers smaller amounts like individual grams or rolled joints.
“I just bought a half-gram pre-roll (joint) from the Hunny Pot (a downtown Toronto retail store) yesterday. Dollars-per-gram, it worked out to about $19 for a 0.5-gram joint,” Pateras said. “On the black market, I know friends who will easily buy a full ounce or several ounces, and get a volume discount.”
Black market doing well despite legalization
Nearly half of all customers buying cannabis on the black market said they did so because it was cheaper. Many noted illegal pot was easier to source, or was of better quality or variety than what was available legally.
The federal government has long argued that legalizing cannabis would do away with the black market. That scenario has not come to pass, according to CBC Canada, which cites a new report on cross-border marijuana smuggling.
According to the highly redacted internal report from the Canada Border Services Agency, legalizing cannabis hasn’t done a whole lot to stop the black market sale of illegal marijuana.
The year-end drug analysis report says the agency’s officers are still confiscating large quantities of illegal marijuana at the borders. This is likely partly due to domestic supply shortages,” notes the intelligence assessment, obtained under access to information.
“Post-legalization marijuana volumes are rising relative to pre-legalization and 2017 figures,” says the report. “Varying provincial regulations regarding the location, price, and age of cannabis sales provide for opportunities for [organized crime group] exploitation, differing by province,” notes one section.
“The beginning of 2019 continues to see an increase in cannabis interdictions reporting at the border,” said CBSA spokesperson, Rebecca Purdy in an email to CBC. “Travellers, mail, courier, and commercial shipments continue to be subject to the Customs Act and examined for prohibited goods, including cannabis and cannabis products.”
Along the same line, seizures of methamphetamines rose by 333 percent in 2018 over 2017, as consumption has soared. Seizures of fentanyl dropped by 64 percent last year.
