Ontario's Adult-Use Stores Finally Sell More Weed Than the Black Market
For the first time since Canada legalized cannabis, Ontario's legal adult-use stores sold more pot than the black market
Published on December 23, 2021

Ontario residents bought more weed from legal retailers than they did from illicit dealers this summer, marking the first time in Canadian history that a province's legal weed industry outsold the black market.

According to the Ontario Cannabis Store, the province's government-operated adult-use cannabis retailer, 54.2 percent of all cannabis transactions made between July and September were made via legal channels. The market share of legal sales has been climbing steadily, from 5.4 percent in 2018 to 47.1 percent during the 1st quarter of 2021.

When Canada initially legalized weed in 2018, government officials promised that legal sales would eradicate drug cartels and black market dealers. So far, this promise has failed to materialize. One year after sales began, as many as 80 percent of all Canadians were still buying weed from illicit sources. Licensed producers began slashing prices and dreaming up new ways to compete, though, and the legal market's share has been steadily increasing ever since.

The OCS report is based on national surveys conducted by Statistics Canada, which ask cannabis shoppers to self-report whether they bought their weed legally or not. But because respondents often underreport how much weed they are actually buying from illegal sources, the current data may not be entirely accurate. Reports from individual retailers suggest that these figures are probably true, however.

"When it comes to the unregulated market, [sales] are a difficult number to pinpoint, but assuming the reporting is true, it's not hard to believe," said Jennawae McLean, co-founder of Calyx + Trichomes, a private Ontario cannabis store chain, to the Canadian Press. "The number of stores in Ontario has grown exponentially over the last ... two years. It's really just completely exploded."

Indeed, there are now 1,115 legal weed stores in Ontario, up from 183 last December, and only 53 in 2019. Although the OCS is the province's only legally licensed cannabis wholesaler and the only legal online retailer, Ontario also allows private businesses to open licensed adult-use stores as well. And now that more legal retailers are opening in underserved areas, the average Ontarian currently lives within three miles of a legal weed shop.

This combination of private and public retailers has helped Ontario sell more cannabis than any other province. Ontario's adult-use sales now account for nearly 39 percent of Canada's entire legal weed market. The province's legal stores moved 56 million grams of weed this quarter, with sales reaching almost C$394 million, a 28 percent boost over the first quarter of the fiscal year. 

Ontario also boasts the largest selection of legal weed products available in Canada. Last quarter, licensed producers added 400 new items to their menus, bringing the total number of distinct legal weed products up to 1850. But even with this wide variety of items for sale, dried flower continues to be the most popular legal product, accounting for 52 percent of Ontario's total sales.

Lori Hatcher, head of marketing for Truss Beverage Co., a joint venture formed by Molson Coors Canada and Hexo Corp, believes cannabis-infused beverages are also helping convince buyers to go legal. "This is a category that doesn't really exist in illicit, so it was really important to actually help bring those consumers into the legal market," she told the Canadian Press.

Chris Moore
Chris Moore is a New York-based writer who has written for Mass Appeal while also mixing records and producing electronic music.
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