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Canada's legal adult-use cannabis industry is finally overtaking the illicit market, according to a new study published in the Drug and Alcohol Dependence journal.
Researchers from the University of Waterloo School of Public Health Sciences collected data from the International Cannabis Policy Study, an annual online survey that asks adults to anonymously report their weed buying habits. The study authors set out to estimate the percentage of adults who bought their weed legally, estimate the price of dried flower, and to explore whether the cost of bud had an impact on customers' decisions to buy legal or illegal weed.
Out of 4,923 Canadians who reported buying weed in 2020, 67.5% said they shopped at a legal pot dispensary at least once during the past 12 months. This marks a significant increase from 2019, when only 55.7% of adults said they bought weed legally that year. The percentage of respondents who said that their most recent pot purchase came from a legal source also increased, from 46% in 2019 to 58% in 2020.
The study suggests that Canada's legal weed industry is finally making good on its promise to stamp out the black market. During the country's first year of legal pot sales, which began in October of 2018, as many as 80% of Canadians were still choosing unregulated market bud over newly-legal products. This lack of demand was driven by high prices, limited retail outlets, supply shortages, and extreme limitations on advertising. Government officials also banned all forms of edibles, tinctures, and other popular weed products until the end of 2019.
Over the next two years, legal weed shops fought hard to gain market share. Provinces continued to expand the number of legal dispensaries and delivery services, and many retailers started offering low-cost flower options and pot seeds as an attempt to lure more customers. And as the present study suggests, these tactics have proved to be a success. Another study from last year reported an even higher increase in legal sales, with 70% of consumers reporting that they bought their weed legally.
A recent report by Ontario's government-run adult-use retailer indicates that these surveys are accurate. Last summer, more than 54% of all cannabis sold in Ontario was purchased via legal channels, according to surveys conducted by Statistics Canada. That percentage has climbed steadily from just over 5% during the first quarter of legal sales in 2018 to 47% in the first quarter of 2021.
The present study also found that the overall price of dried bud has been decreasing steadily since legal sales began. And even though illict market bud is still cheaper than legal flower, the difference in price continues to shrink. The researchers concluded that the decreasing price of weed is largely responsible for the growing acceptance of legal sales, and suggest that “price and retail policies must continue to encourage the transition to the legal market in Canada.”
The price and availability of legal weed products remain to be the most critical factors influencing customers' decisions to buy weed legally or not. In California, for example, roughly 80% of municipalities in the state have banned adult-use businesses, forcing stoners to drive for miles if they want to buy legal weed.
And thanks to extreme state taxes and regulatory fees, legal Cali weed is now some of the most expensive in the nation. The combination of high prices and limited availability is helping the state's black market vastly outsell its legal industry, and despite the ongoing concerns, the state is still raising taxes on legal weed.