Original cannabis journalism for Canadians

Think legal weed's too expensive? Give it a few years

Shoppers examine legal cannabis prices at the Meta Cannabis Supply Co. store in Opaskwayak, Manitoba. (Andre Brandt/Winnipeg Free Press)

Shoppers examine legal cannabis prices at the Meta Cannabis Supply Co. store in Opaskwayak, Manitoba. (Andre Brandt/Winnipeg Free Press)

In the immediate wake of legalization, the narrative that "legal cannabis is more expensive than black market cannabis" took hold. Even Newsweek wrote about it, so it must be true.

A closer look at marijuana prices posted online shows the difference in average prices between legal and illegal weed varies widely, especially by region. Some legal cannabis can even be cheaper than some black market stuff, given wide ranges in prices and quality across both markets.

Data provided to The Leaf News by cannabis data firm CannStandard shows a gram of black market marijuana cost an average of $10.77 across 55 illegal online Canadian dispensaries, as measured before legalization on October 10.

In comparison, CannStandard data shows the post-legalization average price for a legal gram ranges from $7.96 across all listings on Quebec's SQDC website to $11.81 at the government weed store in New Brunswick — or even as high as $14.01 in Yukon. (Those measurements were taken November 9, about three weeks after legalization.)

"I think, on average, legal prices are better," says CannStandard director and analyst Brad Martin.

"I think they're even better in the medical markets. With that being said, I can find areas of way lower prices in the illegal markets. You can buy $2 and $3 grams from some online dispensaries."

(The wider range of prices at illegal online dispensaries, points out Martin, means the average price across all products could be higher than the prices most frequently paid for popular products.)

Regardless of whether you feel legal cannabis is cheap or expensive right now, odds are it'll only get cheaper. A new report from U.S. firms Arcview Market Research and BDS Analytics suggests that's exactly what will happen to Canadian cannabis prices over the next few years.

The report says that following an initial post-legalization demand surge, wholesale cannabis prices in Colorado and Oregon have been "on a continuous downslope" as more producers grow more weed for less money.

In the mature Colorado market, the average wholesale price of cannabis was $4.30 US per gram between 2014 and the first half of 2016. By the end of this past July, that price had plummeted to a "historic low" — just $1.94 US per gram.

That same pattern should repeat itself in Canada, the report's lead author told Canadian business news channel BNN Bloomberg in a recent interview.

"The price is going to come down steeply, to put it mildly," said Tom Adams, BDS Analytics' managing director of industry intelligence. (Adams did concede that the Canadian climate makes it harder to cultivate outdoor cannabis, the cheapest way to grow.)

Still, Canadian producers of indoor and greenhouse cannabis are already racing to produce the greatest amount of cannabis at the lowest possible cost. Plus, new Canadian cannabis production is coming online faster than ever as Health Canada quickens the pace at which it issues new production licenses.

When all that capacity comes online and Canada's legal cannabis companies are finally able to exceed consumer demand, we can expect prices for cannabis bud to drop in both the legal and illegal markets.

New on The Leaf

  • (Sean Kilpatrick / The Canadian Press files) (CP)

    (Sean Kilpatrick / The Canadian Press files)

    'Back on track': Nearly a month after legalization, the Ontario government's online cannabis store says it has caught up with its backlog of orders.
  • Sovereign drug policy: The Kahnawake Mohawk Territory is looking at its history with tobacco as it moves to create its own cannabis laws.
  • Reading cannabis shortages in the tea leaves: Cannabis giant Aurora expects consumer demand to exceed supply for "some time".

Elsewhere on the Weed Wide Web

  • Cultivating cannabis capacity: Health Canada's cannabis regulation apparatus has dramatically picked up the pace of licensing for marijuana producers. Matt Lamers reports for Marijuana Business Daily.
  • Forbidden seeds: With no legal seeds available for recreational home cultivation, illegal sellers of cannabis seeds are enjoying strong demand, reports Solarina Ho for The Globe and Mail.
  • Political risk from Liberal's legalization efforts: Cannabis legalization could come at a political cost for the Liberal government in ridings with a high proportion of Chinese-Canadian voters, reports Abbas Rana for The Hill Times.

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