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Canada's illegal marijuana market thrives despite legalization

'There are clearly still issues in the supply chain'

Ben Nelms/Bloomberg via Getty Images

Canada's illegal marijuana market continues to thrive six months after the country legalized the drug.

The nation's top officials blame a shortage in the "supply chain" for keeping the black market strong six months after the nationwide legalization of recreational marijuana, Global Times reported.

"There are clearly still issues in the supply chain," Minister Bill Blair said, according to Global Times. Blair, who serves as a member of Parliament for Canada's Liberal party, is the spokesman for the nation's Cannabis Act.

Prime Minister Justin Trudeau argued ahead of the move in October that legalizing pot across the country would put an end to the black market.

But long lines, high prices, and short supply have kept consumers returning to their illegal pot sources.

How much demand is there?

Brick and mortar stores and online retailers have opened up all over the country to meet the high demand for marijuana.

Fifteen percent of Canadians 15 and older reported using marijuana in the last three months of 2018, according to a national cannabis survey by Statistics Canada. Of those, half said they used the drug for non-medical reasons only. Medical marijuana has been allowed since 2001.

During the same period, illegal pot sales totaled an estimated $900 million (C$1.2 billion) while legal product sales came in at $230 million (C$307 million).

Drug dealers raked in about 79 percent of the country's total marijuana sales during the 4th quarter, according the survey.

In the previous quarter prior to legalization, illegal sales made up about 90 percent of the market.

What's the difference in cost?

Buying cannabis legally costs about 33 percent more per gram than purchasing it illegally, according to a government report released last month.

Consumers paid about C$9.70 per gram on the legal market at the end of last year vs. C$6.51 on the black market, the report showed.

The government agency pointed to the shortage in grow time that suppliers had before the law took effect as a reason for the price increase.

Still, black market prices fell after legalization, according to Global Times.

What do shop owners say?

Some pot shop owners say the shortage forces customers to go elsewhere.

"When I'm sold out, they're still gonna find a product somewhere," Trevor Tobin, who operates the High North marijuana store in Labrador, told the Guardian.

What do experts say?

Some experts believe the black market will continue to operate as long as consumers can get it cheaper from illegal dealers.

"As long as that price differential exists, there will likely be a black market – because people will go to where they can get a deal," Rosalie Wynoch, a policy analyst at the CD Howe Institute, a conservative thinktank, told the Guardian. "The government was aware that it wouldn't fully displace the black market on day one."

What else?

Edibles and cannabis infused drinks are expected to be rolled out on the Canadian market later this year.

One last thing…
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