More Canadians are flocking to the illicit cannabis market for lower prices

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As legal cannabis continues to try to secure its footing in Canada, prices of illicit cannabis continue to drop while prices of legal cannabis continue to increase. Statistics Canada released a report earlier this week stating that, in some cases, legal cannabis costs 80 percent more than cannabis on the illicit market.

Statistics Canada said in their quarterly report that a gram of cannabis from the illegal market is on average $5.93 in the second quarter, fallen from $6.23 in the previous quarter. Legal cannabis has only become pricier, increasing to $10.65 from $10.21 in the previous quarter. This makes most legal cannabis in the country close to 80 percent more than cannabis on the illicit market.

“The share of respondents who reported purchasing illegally due to ‘legal cannabis being too expensive’ rose from 27 per cent in the first quarter of 2019 to 34 per cent in the second quarter,” Statistics Canada said in a release.

Most of the submissions Statistics Canada received were given voluntarily between April 1 and June 30. The government agency also found that Canadians purchasing cannabis from the black market increased to 59 percent, an increase from 55 percent in the previous quarter.

Brad Poulos, a lecturer in the Ted Rogers School of Management at Ryerson University in Toronto told the CBC that he believes there will always be somewhat of a gap in prices between the legal and black market.

“There’s an excise tax built in. Then, depending on the province, there’s GST and HST on top of that,” said Poulos. “There’s compliance costs that legal cannabis producers have that the illicit market doesn’t have to worry about. Add it all up and there’s quite a cost disadvantage.”

The legal cannabis market in Canada has not had a seamless rollout by far, and though law enforcement has been working hard to combat the black market, prices of the legal market seem to only further fuel the demand for illicit cannabis.

Some of the respondents to Statistics Canada said that they choose to purchase cannabis on the illicit market because they prefer the products and quality, but many said it simply comes down to the fact that legal cannabis is just too expensive.

If officials want to keep illicit cannabis out of the hands of the Canadians, they will need to do something to make sure people can purchase products at reasonable prices, especially once edibles are rolled out later this year.

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