Only One Week into Cannabis Legalization, Canada Fears Black Market Resilience
The adult recreational use of cannabis was legalized nationwide in Canada last weekend reports from our neighbors to the north were that the legal retail outlets were literally running out of weed on the first day.
The number crunchers report that there were over 10,000 cannabis sales in British Columbia alone on Wednesday of last week.
On that same opening day, the online shopping platform Shopify reported that they were seeing over 100 cannabis orders per minute on sites they hosted. There were 30,000 day one orders just from Quebec where the regulatory authority may have pocketed anywhere from $1-3 MILLION.
In Alberta, they raked in over $730,000 on that first day and Nova Scotia piled up another $660,000.
In Prince Edward Island, they racked up around $153,000 in cannabis sales. As Canada’s smallest province, PEI only has 152,000 people… so roughly a dollar per person was spent on weed last Wednesday.
All of these numbers sound great, and they are. Demand is expected to continue to swell in the near future as the convenience and safety of shopping at a legal outlet clearly has Canadians pumped on pot.
But with all the hype and hoopla surrounding Legalization Day, hundreds, if not thousands, of illegal cannabis dispensaries and storefronts treated it like any other Wednesday and continued to operate in blunt opposition to the nation’s new laws.
Unaffected by inventory shortages and the strict regulation imposed on Canada’s new legal retail outlets, these black market operations enjoy the years of customer loyalty they have built when compared to the faceless, passion-free alternative being provided by the government.
For example, Canada’s new weed laws prohibit any form of individual logos or branding on products.
As part of the compromise with prohibitionists to get the law passed, advocates agreed to keep the packaging of all new legal weed as “clinical” as possible. So now, if you visit one of these retail outlets, you’ll be presented with a jar of buds with a white label featuring a red stop sign and a yellow warning about cannabis being addictive. There will also be information about the strain name, potency levels, and terpene content.
No company name.
No colors, no design, no individuality.
The whole stupid idea caters to the last ditch prohibitionist talking point of “What about the kiiiiiiiids?” as they are still trying to convince thinking people that parenting decisions should be made by the government.
This shortsighted move is already hamstringing the companies who are trying to play by the rules, totally eliminating the opportunity to uniquely brand themselves and separate themselves from their competition.
It will only have a negative effect on consumers as well, as brand recognition and trust go up in smoke, and every individual user with all of their individual reactions to different strains of weed will be forced to wade through a sea of white labels to try to find relief.
Experts predict that once the dust settles on the hype surrounding legalization, reality will set in and the stupidity of this branding rule will be recognized and amended.
In the meantime, the illegal pot shops are still serving up the traditional wares that the Canadian cannabis consumer has come to expect. Taking cues from legal access markets in the U.S., like Colorado and Washington, these savvy dispensaries have established a lucrative marijuana market and simply asking them to stop isn’t going to work.
If any or all of this sounds familiar, it’s because Canada appears to be walking a very similar path as states like Washington and California, where government oversight on the legal side of the market is so strict that the black market side thrives.
It’s really pretty simple - if you create a harshly regulated environment and then leave an unregulated competitor, which one is going to be cheaper?