Black market quandary

Published on September 27, 2019 by David Wylie

One of the most pressing questions facing businesses in the legal cannabis space is what to do about the black market.

Nearly a year after legalization, three new illegal dispensaries popped up recently in Toronto — one even advertising up to $200,000 in weed vouchers.

While the black market has taken a hit, it’s only lost about 21% of its output since legalization. About 40% of Canadian cannabis users still buy from the black market.

What now?

WeedMD CEO Keith Merker says beating the black market should be the government’s top priority when it comes to cannabis.

“I think that the most important thing is to deconstruct the illegal market, which requires a multi-facetted approach,” he says.

A carrot and stick approach is a start: offering opportunities and incentives for illegal operators to transition to the legal market — failing that, the stick. On top of that, Merker adds governments need to ensure easy access to legal cannabis through brick-and-mortar stores, keeping prices competitive and allowing marketing.

On the other hand, what do you get when you add a broken lottery system, constant shortages and overpriced products?

Ontario’s mess

Seeing the legal market suffer in Canada’s most populous province, the Ontario Chamber of Commerce has launched a lobbying group this week: the Ontario Cannabis Policy Council (OCPC); it includes cannabis producers, legal experts and the dean of the University of Guelph’s school of agriculture.

The council wants more retail stores opened to push out illegal shops.

But the lobby group’s co-chair, Daniel Safayeni, says there’s no quick fix.

“I think perspective here is important because Canada is going about legalizing a drug that has been illegal for nearly a century and in that time a well-established illegal cannabis market has emerged, meaning some growing pains are to be expected,” he told CBC.

“I think we appreciate that these things don’t happen overnight.”

Call to action

In the thick of a federal election, now is the time to press our local federal candidates about how they — and their respective party —  will improve the legal cannabis landscape.

So far, the Green Party is the only one to make any significant weed announcement, saying they would enact legislation to lower the price and remove sales tax from medicinal cannabis.