Michael Armstrong, Associate Professor of Operations Research in Brock’s Goodman School of Business, wrote a piece recently published in the Conversation analyzing how well recreational cannabis will likely compete against established black market suppliers, given the various policies enacted by the federal and provincial governments.

Armstrong writes:

A key goal of legalizing recreational cannabis is squeezing out illegal suppliers. But how competitive will legal cannabis retailing be against established black markets? 

That’s a key question for federal and provincial politicians. Governments don’t like pot consumers funding organized crime. 

That question may also interest investors. They’ve pushed up cannabis stock prices and created demand for four cannabis exchange-traded funds. Alcohol and tobacco companies have bought stakes in cannabis growers. Suppliers of hydroponic equipment and online retailing software could benefit too. 

To answer the question, consider the “four Ps” that marketers work with in every industry. Those are the product characteristics, price charged, place where sold and promotion activity. From this viewpoint, legal vendors have some potential advantages. But they face major challenges under current government plans.

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