The black market for recreational weed in Ontario is not going anywhere soon.
With just two dozen stores scattered throughout the province, along with the government-run and online-only Ontario Cannabis Store, residents seeking a high rely mainly illicit sources of pot a year after the federal government legalized its consumption.
“I would argue that 80% is illicit in Ontario,” said Chris Damas, editor of The BCMI Cannabis Report, a newsletter that focuses on cannabis stocks.
“If you want to get into the weeds — no pun intended — for Ontario, … I think Ontario probably has a lot of illicit cannabis that’s being consumed, just by the fact that there’s only 24 stores,” added Damas. “And Ontario is probably the second largest illicit grower in the country, after B.C.”
According to Damas, the black market is bigger than what people think.
The legal sale of cannabis in the province is also hurt by regular users enticed by cheaper prices on the black market, being familiar with friends and acquaintances who grow and share their own supply, and the social stigma of purchasing once-banned products in public.
According to Statistics Canada, the average price of cannabis per gram in Canada’s legal market is $10.23, compared to $5.59 on the black market.
The Conservative government’s plan to begin cannabis purchases online before phasing in private sellers in physical spaces in April appears to have not put much of a dent in illegal bud.
Nation-wide, illicit cannabis use is around 68%, Damas added.
By comparison, Alberta is awash in cannabis options. Currently, there are more than 300 retail outlets approved across the province and plans are in place by Alberta Gaming, Liquor and Cannabis to grant licences to bring the total to 500 stores within two years.
And that province is set to exploit their growing demand. Alberta has seen an increase in cannabis use from people 15 and over, going from 16% of the population in the three months before legalization to 20% this summer. For people in Ontario, the use has fluctuated, anywhere between 15-18% during the same time frame.
“In Alberta, there is less motivation to buy illegal (cannabis) if you have 306 stores,” Damas said. “And in Ontario, unless you live on Queen St. (in Toronto), it’s really hard to get (to) a store.”
Since allowing private operators to open their doors, Ontario saw sales nearly triple from March ($7.69 million) to April ($19.69 million). From there, it has steadily climbed, from $22.82 million in sales in May, to $25.86 million in June and $29.61 million in July, according to the latest figures from Statistics Canada.
However, running a weed enterprise has been a rocky road for the province and its more than 14 million residents.
Last month, the province announced a $42-million loss in the last fiscal year, ending March 31, for the Ontario Cannabis Retail Corp., which runs the Ontario Cannabis Store and sells wholesale cannabis to private outlets.
Expenses had ballooned to $106 million with costs including the price of setting up needed infrastructure and cancelling contracts from the previous Liberal government.
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Authored By: The Growth OpArticle category: Recreational Marijuana NewsMarijuana Business NewsRegional Marijuana News: Ontario
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