Original cannabis journalism for Canadians

When it comes to cannabis prices, bulk discounts matter

How much is that doobie in the window? (John Woods / The Canadian Press files)

How much is that doobie in the window? (John Woods / The Canadian Press files)

The latest Statistics Canada data on cannabis prices confirm what any comparison-shopping marijuana consumer already knows: legal weed currently costs more than illegal weed.

The price gap is significant. A gram of legal, Trudeau-approved sticky icky cost an average of $9.70 between Oct. 17 and Dec. 31, according to data submitted through StatsCan's crowdsourcing price tool. That's nearly 50 per cent more than the average price of a forbidden gram of illicit cannabis, which cost just $6.51 during the same period. (Both prices were collected for recreational cannabis.)

This isn't a perfect measurement of cannabis prices by any means. It's self-reported, and the sample size is relatively small: only 457 price quotes were submitted from legalization day to New Year's Eve, and just 385 were considered "plausible" by government number crunchers. (Other price data reported by The Leaf News suggests illegal prices may be higher than legal prices in certain circumstances.)

Public discourse around the relatively high price of legal cannabis has focused largely on taxes, but another important factor might also account for Statistics Canada's findings: black market weed transactions have traditionally involved bulk discounts.

If you've ever bought marijuana from a dealer, you've probably experienced this. A single gram might cost $10, whereas 3.5 grams might be $30, representing savings of $5. The next size up, seven grams (a quarter), might be $60, and so on.

The Parliamentary Budget Office discovered this for itself when it explored the cost of illicit marijuana in a 2016 report.

"The unit price of an ounce is 40 per cent lower than the unit price of a quantity under five grams," wrote the PBO. (An ounce is about 28 grams.)

This kind of bulk discount doesn't appear to apply at many of the legal Canadian cannabis stores perused by The Leaf News since legalization, where a $10 gram might cost $70 for seven grams.

Still, comparatively minor bulk discounts can sometimes be found in the legal market. (For example, the Ontario Cannabis Store is currently charging $10.40 for a gram of Aurora's MK Ultra, but the price drops to $9.90 per gram for a 3.5 gram package, or $9.40 per gram for larger sizes.)

Indeed, Statistics Canada's new data appears to suggest that bulk discounts could be a key reason for the price differential between legal and illegal marijuana — buyers of illegal weed appear to be buying more cannabis for less cash.

"The average quantity purchased from illegal suppliers was 17.2 grams, more than double the amount of cannabis purchased through legal methods," says Statistics Canada's report.

If the policy wonks and business suits behind Canada's legal cannabis market are serious about beating the black market on price, the issue of bulk discounts deserves a closer look. Otherwise, the long-time cannabis users accustomed to those discounts will have yet another reason to stick with their black market suppliers.


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