The legalization of cannabis caused a drop in prices in Canada. The black market gets the attention of cannabis producers at the South of the border.
The legalization of cannabis caused lower profit margins for cannabis producers.
Profit margins have decreased drastically since the legalization of cannabis. Cannabis producers from Quebec are increasingly turning to the United States to sell their unsold products, says an investigator from the Royal Canadian Mounted Police (RCMP).
“The black market produces excellent quality cannabis,” said Corporal Danny Paradis, coordinator of the Cannabis Strategy.
The investigator said that the quantities of cannabis seized at the border of the United States increased by 2,500% between October 2017 and November 2021.
The consumption of cannabis increased with the pandemic.
The overall increase in consumption during the pandemic in the United States, combined with the drop in prices in Canada, explains the sudden attraction of Canadian producers to this market.
While the price of a pound of cannabis on the Canadian black market is around $1,300, it reaches almost $4,000 in the United States.
“Cannabis is a local product, easy to manufacture, which remains very popular and generates a lot of profit. It’s a bit like the cash cow of the organization, which, among other things, funds clandestine laboratories,” said Corporal Danny Paradis, Royal Canadian Mounted Police Cannabis Strategy Coordinator.
“It’s also a bargaining chip. Criminal groups export cannabis in exchange for hard drugs like cocaine or heroin or even barter for guns. It leaves no traces. And if they lose it, it’s not a direct financial loss; or let’s say the loss is less drastic,” he added.
Corporal Paradis says he is “skeptical” of the data from the Société québécoise du cannabis (SQDC), which states in its most recent annual report that it captured 53% of the illicit market.
The state-owned company bases this claim on the assumption that Quebeckers consumed around 175 tonnes of cannabis while approximately 91.5 tonnes of cannabis were sold in 2021.
According to the RCMP, in the most recent quarter, SQDC customers paid an average of $6.32 for 1 gram of cannabis, while the price is around $6 to $7 per gram on the black market for higher quality cannabis.
Vaping products and edibles are rising among young people, replacing cannabis flowers as top products. The police also confiscated more concentrated forms, such as wax or shatter.
These illegal products are sold on the internet and delivered in standard post packages in most cases. “It requires a lot of resources and investigation time,” Paradis emphasizes.