Early winners from legalized cannabis sales in Canada
Although mostly anecdotal, the evidence in the early days of legalized sales of cannabis in Canada seemed to be higher than expected sales, supply shortages and delivery problems. Sales in British Columbia where we live seemed to be a little different than in the rest of Canada. Sales were strong on day one but less than other provinces on a per capita basis and fell off sharply thereafter. B.C. reported 10,000 sales, 9,100 online and 800 at the one legal store in Kamloops but that fell by over 67% the next day and about in half on average for the next five days. Ontario reported 100,000 sales on day one while Quebec reported 140,000 sales in the first week and Nova Scotia reported 12,810 sales on day one alone.
The explanation for the pattern in British Columbia is the number of illegal dispensaries that continued to operate, some with licenses issued by the City of Vancouver. As long as this is the case, buyers will frequent their usual suppliers where prices are probably lower as well. The dispensary operators seem to be taking the most risk as the provincial government has threatened to deny illegal operators with legitimate licenses when law enforcement catches up. B.C. has indicated it will not enforce the closure of illegal stores until the number of legal stores is able to fill the demand. Ontario, on the other hand, has been more aggressive at closing illegal dispensaries.
The problem faced by Canadian provincial governments in general and B.C. in particular is the stuff of Economics 100. The illegal dispensaries are the Walmarts of the cannabis industry right now. The illegal stores offer the widest selection at the lowest prices. Unless and until that changes, one of the primary goals of legalization will remain unmet. The closure of a vast illegal industry with the financial benefits diverted to legal, regulated operators.
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