Even with the advent of legalized pot, one sticking issue remains: Black market sales of weed are often posting cheaper on average prices than their legalized counterparts with comparable weight and consistency.
As you can imagine, this is posing a problem to legal vendors of marijuana as they are still competing with street prices.
One solution to this problem might be cannabis grown outdoors as one marijuana farmer in Ontario, Canada is reporting that he is able to produce weed for $CAD .25 as opposed to two dollars.
Global News reports that the grower, 48North, is able to sell their cheapest dried bud for a little less than $CAD 7 which, at 3.5 grams, is Canada’s cheapest price for legal marijuana.
That these kinds of price points are achievable goes a long way towards securing the legal market for weed’s future as the CEO of 48North, Allison Gordon explains.
“When you factor in the government’s mandate, which is to eradicate the black market, then of course cost plays a huge role in that. When we have such a robust black market that people have been using forever, what is the motivation to go to the legal market if the prices are significantly more? You pay a dollar in excise tax, then there are taxes on top of that, there is bagging or pre-roll, logistics, distribution — there are a lot of costs. It’s very difficult to compete at $2 a gram.”
Naturally, many legalized growers face higher overhead costs due to the greater energy use of indoor growing as well as other material expenses that help push the price of legal weed over that of the black market price.
Still, as Gordon rightly points out, the goal of eliminating this market cannot be achieved if one price is markedly higher than the other.
To make a play on words, the market, legal or not, wins at the end of the day and consumers will go towards the cheaper prices offered by street weed.
This doesn’t mean that legal manufacturers can’t help distinguish their product from that version through effective marketing and value-add services but that’s not the more immediate solution that lower prices offers.
For one thing, there is still a bit of a stigma about outdoor bud as being perceived of lesser quality.
“For outdoor, in the U.S. a lot tends to be used for extraction, if for no other reason than that it looks different than what people like to get for baggable flower,” Gordon tells Global News.
An area that many growers highlight as a necessary evil of legalized weed are the taxes factored into the price which is something that the government readily acknowledges as both an incentive to eliminate the black market as well as an impediment for legalized growers. Mediating the black market and legalized marijuana vendors such that the prices of weed moderates to a common point will not only allow the legal market to flourish without worrying about a competitor that neither pays taxes nor adheres to government regulations but also improve the overall quality of marijuana in general it is argued.