Canadian cannabis market struggles five years after legalisation
bbc.com
bbc.com
This is a textbook example of a good idea, executed terribly.
I think the grey market channels are pretty much the same as the black market channels used to be: some are selling garbage and some of selling better quality than you can get in the legal shops.
I live near an ex-urb/suburb of about 20,000 people. There's about 5 Tim Hortons franchises, and I think about 7 cannabis retailers at last count. I strolled into one the other day, a saturday afternoon, and it was a ghost town. Not a person in sight. At least the Tim Hortons have a line-up of addicts at the drive-thru.
I suspect anybody who is serious about smoking the stuff either grows their own (you're permitted up to 4 plants, which is a lot really) or "has a guy."
I live rural, and I have neighbours on one side open-air growing a bunch of plants. Eagerly awaiting first frost, because right now it smells like a college dorm room outside.
Are you sure about that?
Streaming is incredibly fragmented + the geolocation based limitations (certain shows are available in X country but not in Y, subtitles and dubbing varies a lot to) are increasingly prominent. Piracy will always triumph because of the ease of access and getting what you want in the format you want.
What does "harder" mean? Just because what.cd doesn't exist anymore there are still countless trackers and servers out there. I can pretty much download anything I want week 1. There are more music out there that we could listen in our entire lives.
Of course someone always comes up with the question like "what about the tanzanian panflute world music band I've heard in Quito in 1982, where can I find their CD"
but spotify is pretty good, doesn't require a lot of storage, and works on everything to include my phone and my linux desktop. my mom, my kid, and most people i know are able to use it, and "it just works". and spotify has few competitors.
tv and movie streaming, however, is fractured and miserable. there was a minute where a single netflix made it better, but for the month cost of 2 streaming services I could get sickbeard and NZDB and watch whatever i want. then there is the "what service is $show on?" game, which you don't have to worry about with streaming.
and then there is 'owning' -- if you keep your pirated content you have it. meanwhile netflix or hulu can lose the rights and you don't get to see that show again.
ime this is only true for the unwashed masses.
piracy has a trove of benefits, but you gotta know your way around the sharp edges.
I wonder how far off the Canada prices are from the California ones I’m familiar with.
The issue is the taxes are so high it's nearly impossible for a cannabis business to generate income while selling at a price point people will buy it at. You have to remember that generally most of Canada is on the poor side.
Now in order for you to grow cannabis to sell to the store you have to meet a set of extremely strict criteria that range from a specific amount of acres to soil quality, to harvest techniques and warehousing. You can't grow plants over X height, need permissions from neighbouring property as flowering can be aromatic, you cannot spray or use any non-organic fertilizer, and you have to go through a series of reviews, which cost a lot of money. After that you can then grow cannabis which could be sold to a store. A store then takes that and puts it into extremely expensive special packaging that is child safe, keeps the cannabis hydrated to 65% and all kinds of stuff like that.
Now stores tend to promote CBC + THC combinations where you are balanced rather than extremes towards one or the other. As well as beverages which is where I assume they make their actual money. I have no idea what kind of up sale is the average, but you don't really make much off a few people buying 3g or 9g of cannabis in any format minus beverages. Since most of it is taxes anyway.
So you end up with a strong "gray market" that grows faster, and cheaper as there is no restrictions and they can spray and use what ever to grow the product faster. And they don't pay taxes.
It has nothing to do with any sort of "dealer client" relationship, I don't know a single person who calls up any "dealer" and gets cannabis. Everyone I know either goes to the store and buys it or gets it online mailed to them.
On my way to work I drive by several stores on native reservations that have giant $60oz signs on the highway. These are not legal stores, they are not allowed to sell like that, I live in a province that it's only allowed for sale in the provincial liquor store. Yet they exist and people walk in all the time. No police will touch it as it's nothing but a hassle. So what does that mean?
If a store can exist and sell and pay taxes, but it's not technically legal, is that not a gray market?
And that's fine I don't know a single person so it's my statement versus your statement.
The rest of what I said is true.
The product is not illegal. But still you call that a blackmarket firearm. You call the market you sell it on, the blackmarket. A black market is one where the transactions are occurring contra to established legal frameworks. Gray market occurs when there's legal ambiguity (ie: research chemicals like LSD mimics that are sold for "soap making" when selling for consumption would be a crime).
I adjusted the parent message to remove black market references. I agree with you.
This is why legalizing it was never going to work.
you have to get a prescription from a doctor, get registered (and leave a massive paper trail) and then pay the same or more as usual.
most consumers don't bother
I know several people who were avid smokers (even before cannabis was effectively decriminalization after Harper left office and people stopped caring) who still have "their guy" because it is "cheaper and better quality" than what they stores can legally sell.
> This is a textbook example of a good idea, executed terribly.
Partly this was due to the constraints imposed by the "reefer madness" crowd and partly due to the unexpected gold rush. Also, who would be surprised that people like Bill "Pot is Dangerous" Blair would botch a cannabis roll out. I kind of wish they would do a reset and rework the legislation now that people are less worried about it, but the current political climate makes that impossible.
Or "Cannabis is infinitely more harmful [than tobacco]" Harper. The cards have been stacked against legalisation's success since before most of us were alive.
I am incredibly curious but short for time to investigate further. Is the George Smitherman mentioned in this article the very same one listed in all of these interesting stories? Big financial ties to the industry. My conspiracy radar suggests this piece has a motive.
That ratio of watering holes to weed shops seems a bit off.
> "Others say it's simply a matter of too many players and too much production that far exceeds demand."
This is the real problem: there was a ton of money poured into the industry at the beginning and now there is a ton of people, all who have no idea what the sunk cost fallacy is, getting more money and trying to ride it out and be among the last few companies standing.
An old colleague of mine is the CEO of one of the ground breakers in the industry (started with medical cannabis years ago) so watching his company ride this bronco has been interesting.
I don't see the societal benefit of these businesses becoming massive conglomerates, despite the article's insinuation.
Right now there seems to be 3 cannabis stores for every convience store, is it any surprise some need to close. And how is that closing a failure? It was a race to capture a new market.
The rebellious "counterculture" veneer has worn off entirely.
The market can provide any "experience" you want. So there's really no single mainstream dominant focus to be "counter" to. In the 90s I had to hunt for all the "alternative" media I could get my hands on (in record stores, book stores, conventions, clubs, etc. etc), now it can play out on your phone after about 30 seconds of searching.
> By law, cannabis companies cannot advertise their products or build brand recognition in the way companies in other industries can.
And here’s a big reason why. Advertising companies should point to this as a reason why people should give them money.
Legalization/commercialization was simply bringing a large black market into the light.
The gov't (re: JT) pushed this through to some fanfare but has resulted in oversupply and fairly botched execution as some other posters have mentioned already. I'd expect to see contraction in the suppliers / M&A as some of the growers and distributors start to go belly up.
In Ontario the Wynne gov't had what I thought was a better proposed approach in keeping the retailing under the same jurisdiction as wine/beer/liquor in the gov't run LCBO. When used-car-salesman-Doug got into power that idea got axed, and it seems like every strip-mall has a cannabis store now.
Finally, to your dig about "JT" -- the feds only provided the legalization framework. It's the provinces that administered it in their varying ways.
I'm not a Liberal voter, but I see this very often these days, blaming the feds for things (COVID policies, real estate regulation, etc.) outside their jurisdiction. It's a bit annoying.
Most markets trend towards a few winners that dominate.
Overall the legalization and commercialization has been a spectacular success, and ultimately it is markets and capitalism at its healthiest. Loads of firms tried to capitalize to find the market saturated, so there are a few winners and lots of losers. Everyone adjusts. That's exactly how it should be.
I’m not sure what the PM should have done here then. Protecting capitalists from misreading the level of demand, or maintaining cannabis as an illegal product?
> When New York legalized recreational cannabis for adults, it didn't just want to fling the gates wide open for anyone to take part. Instead it specifically aimed to help out and give priority to individuals who were previously harmed by the war on drugs. However, more than two years after the law was signed, there are just a handful of legal, licensed shops. Meanwhile, there are thousands of un-licensed shops that proliferate across New York City. At the same time, red tape and legal challenges have hampered the efforts of those going down the legal, regulated path. On this episode, we speak with two entrepreneurs who are trying to go down the regulated path: Coss Marte and Alfredo Angueira of Conbud. They've spent over a million dollars getting ready to launch their dispensary in Manhattan's Lower East Side, but have been unable to actually open it on schedule due to various last minute glitches and legal challenges. We discuss what they've encountered in their efforts, and what it's been costing them to go down the legal path.
* https://omny.fm/shows/odd-lots/nys-cannabis-rollout-could-de...
One observation: when cannabis was completely illegal, there was 'enforcement' against all the small time sellers, now that is is legal but needs to be licensed, there is absolutely enforcement against the unlicensed shops.
You would think it would in the government's interest to go after the illegal shops as the legal ones would collect more tax revenue. But no.
Quality is good, prices are good, so I think a lot of people are getting confused because they don't appreciate the distribution of users. It's well documented in many other markets that most of the consumption is done by a small minority, ie most people barely drink any alcohol and a small number of alcoholics consume vast quantities. It's the same here - there's a small number of people that smoke crazy amounts, like ounces per month, and so they're extremely vocal and price sensitive. For most people, legalization eliminated the hassle of finding dealers, quality, products, etc.
The other major factor, there were some ungodly valuations. A small warehouse in BC was worth over a billion dollars.
Sometime these crazy valuations would crash.
Markets are doing fine here. Consumers and producers are still exchanging and producing value. Rather, anti-market forces are failing.
This is obviously poison. If you smoke you will tend to buy and use too much and I am telling you it has a massive impact on your mental and physical health.
No matter what cost to the users of this crap as long as there is a buck to be made for the creeps and their buddies in the eternal circle jerk it will remain legal.
It really hit me when I went to Manhattan for the first time since covid and the ratio of pee to cannabis stench had flipped rather strong to cannabis.