Whats on the horizon for cannabis consumers?
This has been an interesting week in the world of cannabis in Canada. Studies showing that the black market or ‘craft’ cannabis, that can’t seem to make its way to the legal industry, is not slowing down on production, or making its way to the streets. People are still turning to the illicit market that offers lower prices for regular users. Are medical patients getting some relief at a price they can afford?
The biggest risk, outside of being charged for buying illegally, seems to be in the regulations. If growers are not following the rules to participate in providing cannabis in the legal fashion, are they following the growing regulations for health and safety? What I am getting at is pesticides. The system in Canada was put in place to offer safe access to Canadians for cannabis that is grown with standards. The black market operates in ways of its own.
We have seen a number of fatalities arise from illicit vape products in the USA. Vitamin E acetate being used as the substrate has been under investigation and companies promoting it to vape manufacturers. The bottom line is that with no health and safety regulations in place, or being followed, people are at risk of a potential health crisis by consuming illicit products.
Trying to compete with the black market, the licensed producers have had excise taxes levied on their agricultural and extracted products from the cannabis plant, they even slapped it on medical products. There are strict branding rules and heavy packaging requirements, which caused much angst about how anti-environmentally friendly the new rules were in social media circles. All of these things lead to higher costs for the consumer.
If taxes weren’t enough, we have seen the ON government rake in a huge sum from their ‘lottery’ in allowing a few business licenses. Setting up the recreational side of the cannabis has been plundered for profit. Access is difficult if you are not an internet shopper, with a very low number of shops sparsely scattered across the larger provinces. Licensed producers have hit a road block, complaints of not enough product has changed to not enough stores, while Alberta has over 300 shops, Ontario has less than 25, with three and a half times the population.
Quebec has a government that is controlling the sale of the product, not only online but the physical stores. The grass roots cannabis community seeking medical relief, is now trying to navigate their way through the governments greedy approach, to get access to products they need with added taxes now. Government has not only gone after taxes, but also dipped their hands deep in to the business of cannabis, operating websites and stores basically pillaging entrepreneurs that want to participate.
All this has made it hard on the pocketbook, a single gram that retails on average from $8 -$12 have seen price drops and yet, the cannabis is still served up in an abundance of packaging bearing an excise sticker. The government gouge has made it hard for companies to turn a profit. I have seen statements made, that Canada is showing the world how to legalize cannabis. Really…? cause down the way in California and Nevada. They have bright coloured designer packages and are opening lounges and cafes for the cannabis consumer.
Because of the issues Canadian producers are having to deal with, we are seeing an abrupt change. This week, Hexo from Quebec announced they are launching a discount brand called Original Stash. An offering at black market prices, buy in bulk and save on the gram cost at $4.49. A retail price of $125.70 including sales tax on an ounce or 28 grams. I remember ounces back in the day, that people stuffed in their pockets in plastic baggies, four fingers if it had a lot of shake. Now, it is being presented in black pouches, trimmed and manicured.
Another company that has come out with a reprieve from high costs is Zenabis Global, with a coast to coast operational footprint and an agricultural background. They launched a new brand called Re-Up, a great idea for the recycle, upcycle mentality. A proactive approach on packaging waste. The discount brand is said to be selling 3.5 gm, 7 gm and 15 gm packages. Pre-rolls are available in a 2 pack format of a gram each, with quantity pricing discounts in New Brunswick. At the moment 7 pre-roll packs are $77., so that’s a half ounce rolled up in 14 one gram joints, all done and dusted and waiting to be sparked up.
Will this drop in pricing be enough to bring the black market consumers in from the street? With the government being so heavy handed on the business side of things and free enterprise almost a thing of the past for cannabis, in some provinces. We are seeing lower prices on flower while we wait for the edibles, beverages and concentrates to hit the market. This week a few announcements came out on new products, as producers wait for their applications to be processed to add the new products to the shelves in December.
Hopefully, we will see Canadian companies start to turn a profit that were slammed against a wall for profitability, when recreational was originally legalized with the heavy levees, branding and packaging rules imposed. The competition is getting fierce on flower pricing and producers with higher grow costs need a boost to get them into the green. We will see in the coming months, if the new products will give the industry participants some relief.
Canada is going to have to step it up if they are serious about putting an end to the black market, or was legalization really just about milking the cash cow?
A visit to California’s newest cafe or Planet 13 in Vegas may open eyes. Relax, wake up and smell the coffee, indulge in the cannabis world that exists outside of Canada to really see what’s going on.