Ontario, BC, and Quebec have strong black markets for cannabis, all three provinces vastly underperformed in terms of setting up legal to detail stores and making sales.
Ontario’s 25 brick-and-mortar shops didn’t start opening til April. B.C only had one store on October 17, 2018 and now has 85 shops, but only 14 in Vancouver, once home to more than 185 black market dispensaries. Quebec has 22 stores. Comparatively, Alberta has 301 stores.
Here’s how those provinces did from October 2018 to July 2019, according to statistics Canada:
BC (population 5 million) $25million
Alberta (population 4.3 million) $144.9 million
Ontario (population 14.3 million) $151.q million
Quebec (population 8.39 million) $ 141 million
Toronto-based cannabis attorney Caryma Sa’d said “I think that among the biggest losers are consumers in Ontario and that’s a result of the provincial government, and their approach to the retail rollout.”
Many would-be retailers, including those who had hoped 0to transition from the grey market, had shored up financing, renting out spaces, and created business plans, only not to be chosen by the lottery. The provinces timelines between lottery selection and opening dates meant most of the chosen winners weren’t ready to open on time.
Sa’d also mentioned, “it was some in a very arbitrary and unfair way. People who had knowledge, expertise, experience with the plant were really sidelined.”Sa’d noted that some lottery winners who were disqualified ended up suing the province.
Long time cannabis entrepreneur Ani Roach, who opened up one of Toronto’s first cannabis lounges nearly 20 years ago, was hoping to get a retail license but didn’t get chosen by the lottery.
Roach said “the provincial government’s flip flop on its licensing system on a whim brought many businesses to ruin, ours included. We set up everything necessary for licensing, from floor plans to staffing, only to be shut out completely last minute.”
Cam Bartley, chief corporate officer for licensed producer Aurora said to watch for provinces to rapidly add new stores over the next year.
“I think the provinces have been by the willingness to buy legal weed. I think they’ve also seen there is a cost to not having enough of a retail footprint,” he said.
Edibles could be boring and messy
Canada’s edibles regulations kick in today, but they won’t be on the market until at least December.key rules include a limit on 10 milligrams of THC per package for solid and drinkable edibles: a 10 mg of the limit per unit of unbeatable extracts and 1000 mg per package: plain, child-resistant packaging: a ban on mixing with alcohol or nicotine: and a ban on products that are appealing to kids.
The edibles and topical market is expected to be massive, with Deloitte predicting it will be worth more than $2.5billion a year.
Deepak Anand, chief executive officer of CBD distributor Materia Ventures, said he’s concerned about Health Canada’s ability to handle all the applications its going to be receiving.
“From what I am aware of, I don’t think they’ve dedicated any new resources towards that,” he said.
Health Canada was slow to issue licenses and expansion approvals during the first round of legalization, which partly contributed to cannabis supply shortages across the country.
Anand said there’s been a shift away from focusing on licensed producers to focusing on brands, a trend he thinks will continue with edibles. Major beverage companies, including Molsen Coors, Heineken, and Constellation brands are investing billions in cannabis drinks.
Delivery services are dominating the black market
In August, Gerald Butts, former principle secretary to prime minister Justin Trudeau, tweeted that “legal cannabis has wiped out half the black market in a year, just as it was designed to do.” But Butts was being misleading.
According to 48 percent of all cannabis consumers said they purchased some weed legally in the first half of 2019, while 42 percent said they purchased at least some of their weed from illegal sources.
The crowd-sources stats Can data found that the average price of Legal Weed fell in the second quarter of 2019 from $10.65 to $10.23 per gram and black market weed went From $5.94 to $5.59 per gram.
Black.market wholesaler Frank said the dispensary scene has shrunk post-legalization, delivery services are cropping up everywhere.
Frank said a lot of smaller mom and pop dealers are getting pushed out of the black market as a wholesaler. He said wholesale prices on the black market have gone up as much as $300 to $400 a pound, in.part due to demand from black market dealers in the U.S.