12 months after Canada legalized cannabis, sales of legal marijuana are expected to total $1 billion for the first year, according to figures reported by the Associated Press. That is considerably less than Canada’s illicit market, where weed sales are estimated as being between $5 and $7 billion.
One obvious explanation for that disparity? The difference in cost.
“One customer told me, ‘I love you and I want to support you, but I can’t buy all my cannabis here. It’s too expensive,’” said Jeremy Jacob, the co-owner of a Vancouver marijuana store, as quoted by the Associated Press. “The black-market producers are being well rewarded by legalization.”
It was a year ago to the day when Canada joined Uruguay as the only other country to permit recreational marijuana nationwide; the reform also made Canada the first industrial country in the world to embrace legalization.
The policy change was pushed by Canadian Prime Minister Justin Trudeau, who said last year that it has “been too easy for our kids to get marijuana – and for criminals to reap the profits.” When the law officially took effect last October, Canadians celebrated by sparking up joints and forming long lines outside the newly opened pot shops.
But the sales figures suggest that the country’s fledgling legal weed industry still remains a work in progress. The Associated Press noted another factor that has hamstrung legal sales. While there are more than 560 pot shops across the country, more than half are concentrated in Alberta, the fourth largest province located on the western half of Canada. Conversely, Ontario and Quebec, where two-thirds of the country’s population reside, only have 45 shops total.
The Illicit Market Thrives In Regulated Areas
The resilience of the illicit marijuana market isn’t unique to Canada. In California, where recreational pot was made legal in 2016, the unregulated market remains supreme.
A report last month found that California’s unregulated cannabis industry is a whopping three times larger than the regulated market established by the referendum. According to the report, there are about 2,835 unlicensed dispensaries and delivery services throughout the state, compared with only 873 licensed marijuana dealers.
The culprit in that case, according to the United Cannabis Business Association, which represents licensed pot dealers in California, is Weedmaps, an app that allows users to locate dispensaries near them.
The group has been pressuring state officials to crack down on Weedmaps, which is apparently still littered with listings for illegal dispensaries.