Here's Why the Cannabis Black Market Will Continue To Outcompete Legal Businesses in 2019
Even though cannabis is federally legal for adult-use in Canada, many consumers still favor buying from the black market. Eliminating illicit activity has been a central pillar of legalization but lack of access has enabled the underground market to thrive.
In Canada, besides the online Ontario Cannabis Store (OCS), there are only a handful of legal brick and mortar stores presently open in all of Toronto. For a city with over 2.5 million residents (6+ million in the Greater Toronto Area (GTA)), five stores are hardly adequate.
The black market has been extremely successful in tapping into all the shortfalls of the legal industry. According to Scotiabank, illegal cannabis is dominating the market, and is estimated to comprise 71% of all federal sales in 2019.
Price and Prejudice
Torontonians have many reasons to still buy from the black market. First, unlike the legal industry, which is facing intense supply shortages, underground cannabis is bountiful and is much cheaper as a result. Second, products like edibles and concentrates, which are not yet legal, are widely available. Third, many users feel that licensed producers (LPs) industrial growing practices produce lower quality strains, unlike non-licensed craft growers who are praised for their quality. Lastly, buying illegally is more convenient because the number of online and physical black market shops, which face little to no enforcement, still greatly exceed legal outlets.
While it’s not always easy to know whether your go-to source is still around, until the legal market can be more accessible, physical stores and online dispensaries are determined to stay open to serve Torontonians high quality, low cost cannabis demands.
Illegal Brick & Mortar Dispensaries
Toronto’s illegal dispensaries have been able to withstand constant police raids and seizures, with some re-opening their doors merely a day after all their supply was seized. Permanently closing a shop is difficult because authorities are only allowed to arrest store staff if they refuse to identify themselves, and the owners make sure to not be on site. Despite the hefty fines, Toronto’s store owners have enough capital to continue to operate.
Toronto’s most popular chain of black market outlets is CAFÉ. With a trendy coffee bar in the front, this dispensary initially looks and feels like any normal café, but visitors are directed to the goodies in the back. And all the need is a valid ID. As of early April 2019, CAFÉ has locations in Kensington Market, CityPlace, and on Bloor West.
Illegal Online Delivery Services
Online mail-orders are becoming Toronto’s favourite source for buying cannabis because they’re convenient and plentiful. The number of online dispensaries is increasing because they’re not subject to any regulations that legal stores have to, chiefly free cannabis promotions to incentives larger purchases.
Due to the plethora of these online marketplaces, many consumers are unaware that they’re buying from illicit sources. Websites are designed to look like they are medically licensed, with detailed product lines and reviews, FAQ pages, and 24-hour customer service.
Too Good to Puff Puff Pass
For many, the wide selection and better prices of black market cannabis are too good to pass up. Canada’s regulatory market is moving at a glacial pace, giving illegal outlets plenty of time to take advantage of the industry’s gaps. There’s progress but it won’t be another few years until the legal industry will be able to overtake the black market.
Ontario’s provincial government recently announced their increased commitment to cracking down on illegal dispensaries but they’ve been saying this since legalization and haven’t made a dents. As long as Toronto’s demand continues and no new stores open, illicit retailers will easily accommodate consumers’ needs.