Canada: legal cannabis 80% more expensive than black market cannabis

8 months after legalizing cannabis in Canada, price differentials continue to widen between legal cannabis and the black market. The costs imposed on legal producers (production and packaging licenses, personnel, premises, etc.) are reflected in the selling price for consumers. Consumers therefore continue to buy cannabis from their most trusted source, the dealers.

Today in Canada, a gram costs an average of 10,65$, compared with 5,93$ on the black market. David Clément, a consumer activist, explains: «Taxes and fees create high prices, and then a lack of competition prevents those prices from slowly coming down. It takes half a billion [over five years] to enforce the rules and regulations of the cannabis law. Therefore, to generate revenue, they set up royalties and licenses for authorized producers.».

A gram purchased legally in the shops therefore costs on average 80% more expensive than a gram obtained illegally, which explains why the black market still captures 71% demand in 2019, although this figure is set to fall to 37% by 2020.

Thus, among the reasons given for not buying their cannabis commercially despite legalization, consumers indicate that prices are prohibitive. Jennifer McLeod Macey, Vice-President, Ipsos already indicated last year, The Canadian Association of Cannabis Professionals (CACP), in its report on the use and procuration of cannabis, stated that «we really shouldn't expect any changes after October 17». She also points out that 'one in five Canadians used cannabis when it was illegal. So they weren't very concerned about legality.

Fiscal balances linked to the cannabis trade are therefore far from being as good as expected. Although some provinces, such as Alberta have announced significant gains, up on their forecasts, this is not the case across the country. Visit British Columbia and Ontario had to revise their estimates downwards by several tens of millions of dollars.