When it comes to buying pot in Canada, it is safe to say that it is readily available to the public. It is estimated that Canadians spent on average $5.7 billion on marijuana last year — 90 per cent of it for illegal, non-medical purposes, according to Statistics Canada. So how will legalization affect the black market?
The video above explains in detail how the price of legal marijuana, the supply of it, taxes and the consumer experience are all major factors that will determine whether or not the government can successfully compete with the black market.
When it comes down to it, if the price of legal marijuana is too expensive, then experts predict that buyers will continue to get their pot from their trusted source at a cheaper price.
As well, experts predict that at first, just like Colorado, which legalized recreational pot in 2014, there won’t be enough supply to meet the demand.
Once there’s enough supply, then we can expect to see a downgrade of the black market. But Greg Engel, the CEO of Organigram, one of Canada’s biggest medical marijuana producers, says the black market is never going to go away completely.
“It’s taken now four plus years since that program launched. Some of the estimates I’ve heard or seen is that there are roughly somewhere between 10 and 15 per cent of the black market remaining,” Engel said.
Another important point: the legal market will only be able to successfully compete with the black market if the buying experience is positive, Engel added.
This includes access to retail locations. Are they close and easy to get to? What about online shopping? If the transaction is seamless, then it will encourage more people to buy legally. As well, will there be a wide variety of product?
“The extent to which [the black market] gets reduced is going to depend on the consumer end of things,” Trina Fraser, an Ottawa-based lawyer at Brazeau Seller Law who specializes in cannabis business law, said.
“The more we can match what the black market is offering or even beat it, that is going to be how we take a significant chunk out of it.”