But legalization day also marks the start of several interesting competitions. Some resemble those in other industries; others are unique to cannabis.
The most important one from a public policy perspective is the competition between legal cannabis and black markets. Squeezing-out illegal suppliers is a key legalization goal.
The black market’s head start
As I’ve noted before, it’ll be tough to lure customers away from established illegal vendors. For one thing, cannabis-infused foods and drinks aren’t yet legal. Black markets will monopolize those products for another year.
Places to legally shop are also scarce in most provinces. Québec only has 12 stores open and Ontario won’t have any brick-and-mortar stores until spring. By contrast, Alberta has a hundred stores opening this month. As store counts grow, legal cannabis will grab more market share.
Pricing also handicaps legal vendors. They must pay fees and taxes while competing with street prices around $7.20 per gram.
However, legal cannabis might eventually undercut illegal weed. Mass production is already reducing per-gram growing costs below $0.75 and is heading for $0.20. Moving production to countries with lower wages and warmer climates could drop that to $0.05.
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