Canada is the first G7 country planning to take the step to legalize marijuana nationally. Now, residents will be able to access marijuana from licensed government stores legally both online as well as retail. However, there are concerns that the marijuana black market will continue to thrive despite the legalization of the drug making it hard for the licensed stores to compete.
Last year alone, it is estimated that Canadians spent approximately $5.7 billion on marijuana, most of it acquired illegally. The government seeks to take a piece of this pie by legalizing the drug. Already, some provinces in Canada have legalized marijuana sale, but the specific rules vary for each province. For instance, you can have weed delivered to you legally through shopping online from sites such as Peak 420.
However, the main question is, are black market dealers worried about the looming countrywide legalization of weed? Well, the answer is no for the following reasons:
The price of legal marijuana is expected to be higher than that of black market dealers with ministers debating on setting the price at $10/g while the street price ranges at around $7/g. The price of legal weed tends to be higher due to the additional costs of packaging, testing and security regulations. Additionally, legal marijuana will be taxed driving the expenses further up. Most weed users will prefer to go for cheaper weed than costly weed for recreation. Moreover, most aren’t interested in quality over cost, which explains why black market dealers are set to retain most of their customer base as their weed will be cheaper compared to legal pot.
The government is planning on first starting small before expanding the number of stores authorized to sell marijuana. For instance, Ontario province which is the most populated in Canada expects to have around 40 government operated stores for a start, whereas Quebec, which has about 8 million people, will have approximately 15 stores. This number is nowhere near enough to supply the residents of these provinces conveniently. It, therefore, gives a leeway for black market dealers to fill the gap as they can conveniently supply weed to customers at their doorstep.
The quality of government weed is expected to be weaker than that of street weed. This is because government weed will be mass produced and generic; it will be the same everywhere and will have the same flavor. On the other hand, street weed will not only be stronger with a higher level of THC but will also come in various flavors. This factor will make weed customers opt for street weed causing the marijuana black market to continue thriving.
4. Increased Market Gap
The government is targeting to shut down dispensaries which are selling weed illegally across the nation. While this move is intended to create room for the government stores and other online licensed retailers, it will also create a supply gap in the market. Since the government is taking a cautious approach and opening only a limited number of stores, black market weed dealers who deliver locally stand to benefit the most. Most are already counting their luck since the demand for weed will go up due to a shortage in supply which they’re more than ready to fill.
In conclusion, the looming legalization of marijuana comes with serious considerations on how to beat the black market weed dealers at their own game. While most weed enthusiasts welcome the move, companies and businesses seeking to profit from the trade are faced with the hurdle of competing with a thriving weed black market.