Canadians Spent $5.7 Billion on Black Market Weed Last Year, According to Government Study
The Canadian government is crowdsourcing information on cannabis use in order to predict the impact of full legalization, which will be a reality in the Great White North this summer.
Published on January 30, 2018

Lead image via 'Stars and Stripes'

Recreational cannabis sales will not be legal in Canada until this summer, and despite the country's current prohibition laws, Canadians still spend more money on locally-grown black market weed than they do on Canadian beer or tobacco. This revelation is one of many market statistics unveiled this week in the Cannabis Economic Account, a set of provisional estimates on the production, consumption, and sales of cannabis between 1961 and 2017 created by the government's official statistics agency.

Statistics Canada collected data on production and consumption of cannabis via anonymous online surveys that asked for information on cannabis prices, quality, and use. "All levels of government will need information related to the production, distribution, and consumption of non-medical cannabis prior to and following legalization to support the development of policies and regulations," a spokesperson for the agency said, according to Bloomberg. "The hub will also include a voluntary crowdsourcing platform to collect information on the purchase price and use of cannabis."

The statistics agency found that nearly 5 million Canadians aged 15 to 64 bought weed last year, spending an estimated total of $5.7 billion. Around 90% of these individuals admitted that they were buying weed for recreational, not medical, usage. Household spending on cannabis increased by an average of over 6% every year from 1961 to 2017, while domestic production increased by around 7% per year.

The study also found that the Baby Boomer generation has been buying more weed in recent years, representing 23% of all cannabis consumption last year, compared to 4% in 1975. The age demographic data is in line with recent cannabis consumer reports from the U.S., such as Eaze's annual Insights Report, which also found that Baby Boomers are spending more on pot products than ever before.

The Canadian report also found that the illegal cannabis industry even surpassed the country's beer and tobacco industries. In 2014, the size of the cannabis production market was estimated at $3.4 billion, compared to $2.9 billion and $1 billion for the the country's brewery and tobacco industries, respectively.

The alcohol industry has seen the writing on the wall, however, and several firms have begun to invest in legal cannabis. Last year, major U.S. alcohol distributor Constellation purchased a 10% share of Canopy Growth, Canada's largest publicly traded medical cannabis company. Many American cannabis companies, wary of Jeff Sessions' newly-rekindled War on Drugs, have also recently made multi-million-dollar investments in Canada's impending legal market, despite the government's plan for advertising restrictions and mandatory safety labels.

Statistics Canada also tracked the price of cannabis over time. In 1961, pot cost around $5 a gram. The price peaked at $12 a gram in 1989, and is now roughly about $7.50 a gram. The agency believes that the falling prices are due to an increased supply of product. And Canadians weren't the only ones enjoying cannabis grown in the Great White North. The report estimates that $1.2 billion of Canadian-grown weed, about 20% of 2017's total cannabis production, was smuggled out of the country.

Once full legalization is rolled out this July, the Canadian government hopes to see the vast amount of money spent on black market weed end up in the legal retail industry instead. The fact that cannabis will be taxed and regulated will likely increase the overall price of weed, though, which could give black market dealers a chance of surviving.

In California, combined state and local retail taxes on cannabis are as high as 45% in some areas, which could inspire buyers to seek cheaper weed illegally. Around 11 million tons of black market cannabis are still being grown in the California, creating an environmental hazard due to rodenticide and pesticide usage.

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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