B.C. Predicts Possible Drop in Legal Marijuana Prices
B.C. feels a downward trend in cannabis cost is on the horizon, according to Global News.
The price of legal cannabis is a huge turn-off for consumers. Although things like quality, consistency and safety are all benefits of buying from the open market, some products are almost prohibitively expensive.
But the cost of production and regulatory compliance all add overhead that companies need to cover. Applying both sales tax and an excise tax also does not help consumers or the legal industry.
Like any commodity, however, prices do not remain fixed. Marijuana is just as susceptible to the effects of supply and demand – sometimes to extremes. Oregon, for instance, saw its prices drop by about 50% in early 2019 – from ten dollars per gram to five dollars per gram – after a huge supply surplus that made the business virtually unprofitable.
Canada’s supply situation is unlikely to spike to such a level, but it is gradually recovering. In B.C.’s case, they are not simply relying on outside factors like supply. The province intends to take action that will hopefully further decrease their cannabis prices.
Price Drop in All Areas
According to recent crowdsourcing data by Statistics Canada, there is a small downward trend in nationwide cannabis pricing:
“According to Statistics Canada, it’s the first time their crowdsourced data on pricing has shown a drop in the price of legal marijuana since legalization. The average price for legal weed fell slightly to $10.23/g between July and September and the average price for illegal cannabis also slumped slightly to $5.59.”
However, Statistics Canada points out that crowdsourcing is not the most accurate way to gather information, mainly due to its small sample size. But the fact that this is the first time this method showed a decrease in cannabis pricing at least proves a change in trend, even if the numbers may not be completely accurate.
Regardless, this is encouraging to B.C. Minister of Public Safety Mark Farnworth, who is confident that further price drops are on the horizon.
U.S. Trends as a Predictive Model
Farnworth heavily bases his theory on trends seen in U.S. states who legalized marijuana, also reminding the public that progress is not instant:
“We know from US jurisdictions that have legalized that there can be significant price fluctuations in the early years and we expect prices to come down as supply ramps up. We also know from US jurisdictions that it will take time to capture the illegal market —so we shouldn’t expect this to happen overnight.”
Farnworth’s statement should serve as a reminder that simply because prohibition’s problems did not instantly vanish does not mean they will not dramatically improve with time.
One thing that seems sorely lacking across Canada is law enforcement’s slow and underwhelming response to illegal marijuana dispensaries. But Farnworth says this is about to change:
“You can expect to see increasing enforcement action against illegal retailers by the Community Safety Unit, which will help to reduce the availability of illegal cannabis. At the same time we are continually reviewing the licensing application process and looking at ways to streamline the system to ensure broad access to legal cannabis in communities across the province.”
Letting the grey market operate with impunity for so long after legalization certainly set back the efforts for police and health officials. At this point, it seems that these entities are finally rallying to fight back.
WeedAdvisor’s Expectations for an Improved Legal Market
If B.C. is any indication, the legal cannabis landscape may finally be improving. However, other provinces need to follow B.C.’s lead and take serious action to reduce overhead for producers and strike hard against illegal retailers.
Still, change will be gradual – likely over several years – and the black market will probably endure for a long time. But with enough effort, Canada can finally create the legal marijuana framework it intended to see.