Michael Armstrong, Associate Professor of Operations Research in Brock’s Goodman School of Business, wrote a piece recently published in The Conversation about the lack of retail cannabis stores and the resulting impact on the black market.
Squeezing out black markets is a key goal of cannabis legalization. Legalization also lets governments tax cannabis production and consumption. Canada has achieved limited progress so far toward those potentially conflicting goals. But some provinces have made good starts.
Statistics Canada says that during 2018’s fourth quarter, consumer cannabis spending totalled $1.478 billion. Unfortunately, only 21 per cent of that went toward legal cannabis: $155 million for medical and $152 million for recreational. Product shortages were mainly responsible for the small percentage.
Legal products’ market share is even lower when calculated by product volume — that is, when considering the fraction of cannabis that was legal rather than the percentage of dollars spent on legal cannabis. That’s because illegal pot’s $6.51 per gram average price was a third lower than legal products’ $9.70.
Adjusting for price indicates only 15 per cent of purchases involved legal products. But some provinces did much better.
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