A key goal of legalizing recreational cannabis is squeezing out illegal suppliers. But how competitive will legal cannabis retail be against established black markets?
That’s a key question for federal and provincial politicians. Governments don’t like pot consumers funding organized crime.
That question may also interest investors. They’ve pushed up cannabis stock prices and created demand for four cannabis exchange-traded funds. Alcohol and tobacco companies have bought stakes in cannabis growers. Suppliers of hydroponic equipment and online retailing software could benefit too.
Price is the competitive element politicians mention most. In Colorado, cheap legal cannabis means black markets control only 20 percent of state sales. But in Washington state, where prices are higher, black markets capture 50 percent.
In Canada, governments agree cannabis prices must be competitive. They’ve suggested $10 per gram, including excise and sales taxes.
But Statistics Canada estimates market prices fell below $7.50 last year, and farther since then. Vancouver street prices reportedly are near $5. And street vendors don’t charge tax.
Read the full article at the National Post