The legalization of cannabis production gave way for different companies to open up a joint for cannabis production. Although users want to purchase products legally, the black market prices are more affordable.
According to Matt Daisley, the prices in a store that he went are much higher than the products he bought before legalization.
Users like Daisley observed an enormous $3.19 difference between legal and black markets when it comes to selling cannabis products. Daisley, a 60-year old has used cannabis for almost 25 year. He visited the Niagara Herbalist in St. Catharines, Ontario, Canada to buy some cannabis.
Legal cannabis means increased prices to the point where it’s not affordable. The increase in product price can be described as the ‘sticker shock’ phenomenon. Legalization of products and having a sticker that proves its government approval will always increase a product’s cash value. This may be because of the increased regulation costs, taxes and associated retail costs.
It is not only Daisley that complained about the products. During the first week of legalization, there have been complaints nation-wide about the excessive cost and packaging associated with legal cannabis.
Price Should Be Right
According to cannabis stores, the amount that these stores offer should counter the activities in the black market. The Ontario Cannabis Store agreed with this statement. However, critics and customers disagree with the argument. Daisley explained that he will save a lot of money and will buy more grams of cannabis when he goes to black markets. In order to battle the increasing black market purchases, legal prices should be lower. The same testament is what Joe Couto, spokesperson for the Ontario Association of Chiefs of Police, wanted to reiterate.
The police realized that laws regarding cannabis are undergoing development, that’s why black markets are still operating. Couto also added that legalization of the product would not solve the illegal purchase immediately.
They expected that the price that legal markets is the same or lower than black market prices. Cheaper legal products will pressure black market sellers and will cause them to decrease their prices and hopefully make the sale not worth the work. Eventually, the sellers will not gain profit and will opt to shut down rather than take a loss.
The low price of cannabis is what law enforcement officials like Couto would like to observe with cannabis legalization. However, he added that they trust government workers regarding this pricing. They believed that there’s a good reason for its high price.
Daisley also believed that the price should be right for them to buy from legal markets continuously. When he visited the Niagara Herbalist, the place was accommodating and excellent until he knew the price.
According to him, users wanted to purchase products legally to also contribute to the destabilization of cannabis crimes. But with the higher price, they opt to continue illegal purchases.
Both parties, police, and users, thoroughly believed that the legal prices should match illegal price tags to stop illegal activity.
Legal is Better
According to Olivia Brown, a cannabis consultant, users don’t see the difference between legal and illegal. She described the two classifications as “fine wine to moonshine.”
Brown wanted users to realize that legal cannabis products’ prices are higher because of their quality. The process of production up to the transporting this cannabis made it cost higher cash value. Moreover, producing legal cannabis also need employers and equipment for it to meet proper standards.
However, this price guarantees high-quality cannabis. The government has regulation for production to assure that the best quality of products will be produced.
As compared to black market cannabis, legal products are top-tier. Brown also suggested that illegal pot products are cheaper because of their production.
According to her, “unprofessional people may handle the productions and may affect its quality.” She also added that the plant might be grown in an unwanted environment and use harmful pesticides. The presence of bugs and insect pests damages quality.
People should realize that lab-tested, high-quality products are more appealing than products without a specific background, Brown added.
Regarding this enormous price difference, an OCS spokesperson explained that these prices are “competitively priced.” According to the spokesperson to CBC News, the established prices considered the pricing of illegal black market products.
In an OCS website, there are the same products that Daisley wanted to buy but with a small price difference. But the site implied that it isn’t available yet.
However, the statement also said that the prices of cannabis are dependent on market prices, available resources, and demand from customers. These conditions further increase the amount and reflect each “individual business models” of producers.
With these conditions, the prices of the legal industry may not counter the alarming rates of black market purchases. According to Fred Eisenberger, Mayor of Hamilton, the only resolution is to offer a diversity of products.
Eisenberger’s statement was a response to the criticisms regarding the failure of battling illegal markets.
Critics like Michael Armstrong, the teacher at Goodman School of Business, supported Eisenberger’s statement. Armstrong believed that sooner or later, the government needs to produce ‘no name’ lines to cater to all customers.
These ‘no name’ cannabis products are relatively cheaper than branded legal ones that the markets are selling.
Armstrong added that “black market enjoys a big price advantage.” As compared to $9.70 of dried, legal cannabis, the illegal sellers will offer it at $6.51.
The legalization of cannabis also opens stores per city to prevent customers from buying from black markets. While the first week may be productive, Armstrong believed that these stores might have an enormous loss if the price does not decrease.
Regulars like Daisley would want to try legal, high-quality weeds and will have the possibility to buy at least once. However, spending a dollar or even a cent more than they usually spend will lead them to be back to black markets.
According to Armstrong, there are a few things that the government needs to prepare in order to decrease legal cannabis’ costs.
First of all, they should work on lowering production cost, which ranges from planting up to post-processing. The overall processing of cannabis needs to be automated to reduce wages to a lot of employers. One best solution is to increase production to a large-scale rather than small ones.
The excise tax system of the government also affects the price of cannabis products. While it varies in different provinces, the default price is $1 per gram of the product. Even if producers can sell at a lower price, the tax will still increase it.
Lastly, the production of no-name pre-rolled joints or cannabis should be available immediately to match up black market’s prices.
Daisley reiterated that he’s risking his life and reputation by providing his insights regarding this price difference. He added that there are no clear rules and consequences about purchasing in black markets. Hoping that the government and retailer will listen and act accordingly, he’s willing to speak and share his experience.
While the laws are developing, Armstrong firmly believed that the prices should be lower to provide black market purchase control.