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Canada Will Still Need Black Market Marijuana for Awhile

Canada Will Still Need Black Market Pot for Awhile
Photo Gracie Malley for Cannabis Now

Economics

Canada Will Still Need Black Market Marijuana for Awhile

Experts say there isn’t currently enough legal marijuana in Canada to meet consumer demand. But before the pot runs out, it’s likely that prices will rise.

Canada is set to launch its recreational marijuana market in a matter of weeks. It goes without saying, even though we’re going to say it anyway, that the people of the northern nation are champing at the bit to get their hands on legal bud the second the first dispensary opens its doors.

But the exhilaration of having the freedom to buy pot without the risk of a law enforcement shakedown may be short-lived — at least for a while. The word on the street is there is not presently enough marijuana on the shelves to placate the mob looking to storm the ganja gates.

Ever since the Canadian government announced over the summer that marijuana would no longer be held to a prohibition standard, cannabis operations have been gearing up for the retail frenzy expected to erupt during the first year of legal sales. But now, just two weeks until the new law is scheduled to take effect, industry analysts are saying there isn’t enough marijuana to meet consumer demand. Because of this, cannabis users may want to hang on to their dealers’ numbers a little bit longer. The underground will continue to play a vital role in pot sales until the legal industry builds up enough cannabis surplus to keep up with the market response.

“There is not currently enough legal supply of marijuana to actually supply all the recreational demand in Canada,” economist Rosalie Wyonch of the C.D. Howe Institute, a public policy think-tank, told CBC News. “We didn’t have enough producers far enough ahead from legalization that they’ll actually be able to deliver enough product to market by the time legalization happens.”

But even the most enthusiastic crowd of cannabis consumers will not deplete the cannabis supply right away.

Wyonch predicts the cannabis deficit will rear its ugly head as the legal industry works its way through the inaugural year.

What is likely to happen before the hordes of all highness are emptied from the shelves is a price hike. Low supply and high demand almost always translate to higher prices. Once consumers start paying more for weed at the dispensary, rest assured it won’t be long before the nation heads back into the depths of the black market.

It is difficult to predict just how much marijuana Canada needs to appease the consumer. All of the independent agencies, as well as the government working to estimate the demand, have put it somewhere between 881,000 to 2,041,480 pounds, according to the CBC. And no one seems to have any idea just how much the industry has on hand.

It is for this reason that Health Canada spent the summer ramping up production efforts to keep the market from collapsing before it has a chance to get off the ground. Over the past few months, the agency has brought on more than 70 additional production facilities and approved some 160 expansions to existing operations. There are now 117 licensed producers nationwide, reports the CBC. Still, no matter what type of mad science one employs, cannabis plants only grow so fast.

While the goal of total legalization was to toss a wrench in the gears of the illegal pot trade, government officials are not naive enough to think this will happen overnight. Basing their predictions on the progress of legal marijuana in some parts of the United States, Health Canada says the displacement of the illegal market “will follow a similar pattern of incremental growth over the first few years.”

But it needs to be made clear: There will be no shortage of marijuana in Canada. Organized crime has been fulfilling the estimated $6 billion pot market for some time. The expected drought is only going to hit the legal trade.

“As a country, we don’t have a shortage of marijuana; we have a shortage of legal marijuana,” Wyonch said.

Perhaps this is a good time for Canadians to start thinking about growing their own?

TELL US, is there a shortage of cannabis where you live?

1 Comment

1 Comment

  1. Maxcatski

    October 12, 2018 at 10:17 pm

    There will be a huge sucking sound on day one as all the legal cannabis disappears off the shelves.

    Prices will rise in the short term, then drop precipitously as all that unlimited production kicks in.

    As a licensed medical grower, I have been building my own inventory. It will take five months for all the new legal recreational growers to catch up. I’m already living the dream up here in Canada!

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