Illicit Market Winning the Cannabis Sales Battle in Ontario
One hope of the cannabis legalization effort in Canada has been that the illicit market would be substantially decreased in favor of legal sales. But, as detailed in a post on The GrowthOp, that has not been the case, at least in Canada’s largest province, Ontario. One reason for the illicit market thriving is the price disparity between legal and illegal cannabis. In the fourth quarter of 2019, illicit cannabis averaged just $5.73 per gram, while legal marijuana was priced at an average of $10.30 per gram.
Of the estimated $2.9 billion Ontario weed market, legal sales accounted for just $300 million in 2019. And 2020 is not shaping up to be any better. In fact, Canadian cannabis sales had stagnated, even before the virus crisis, with Quebec reporting a month-over-month decline in sales.
Even Alberta, a province often held up as a success in Canada’s legal marijuana roll-out, is budgeting for a $26 million loss in 2020 and not expecting to see a profit from cannabis sales for three years. The article points out that the illicit market in Canada holds a huge advantage over legal sales, due to the prohibitive regulations in place for legal cannabis sales.