Although cannabis has been illegal in most territories until a decade or so ago, it has been the most-used drug across the globe for years. Demand for the controversial plant has always been high, and since consumers had no legal place to source cannabis, they turned to the black market. As such, the illicit cannabis market has become immense, grossing billions of dollars worldwide as the drug became more popular and demand skyrocketed.
Even as several countries and states have passed cannabis legislation, the black market has been quite tenacious. Although there is a degree of risk with dealing with black market players, these sellers have continued to thrive as they generally sell at cheaper prices compared to licensed stores, among other reasons. In Canada, however, recent data shows that registered cannabis merchants have been slowly encroaching on the illicit market’s territory.
This is despite the fact that Canada’s cannabis sector is relatively new and has just recently incorporated the sale of products such as edibles and vapes. According to the most recent data from Statistics Canada, the gap between the legal sector and the illicit market is widening, with more consumers choosing to purchase cannabis from licensed retailers instead of black market players. While it is estimated that the illicit cannabis market brought in roughly CA$754 million in the final quarter of 2020, the legal adult-use market saw cannabis sales worth CA$918 million.
Legal adult-use cannabis sales surpassed illicit sales for the first time ever in 2020’s second quarter, Statistics Canada found, with sales in the adult-use sector surpassing those in the illicit market by an estimated CA$59 million. This can be attributed to reducing prices, increasing retail options and a wider variety of more consistent inventory from retailers.
For instance, Toronto had only seven regulated cannabis stores at the start of 2020 but at the end of the year, the city had registered 89 more retailers. Consequently, Toronto saw cannabis sales jump from CA$17 million in January 2020 to CA$40 million as the year drew to a close.
Additionally, Canada’s recreational cannabis sector has recently been expanded to include more products such as edibles and cannabis vaporizers. Last year — 2020 — was the first full year of legal sales for vapes and cannabis edibles, with edible sales increasing from CA$12.7 million in the first quarter to CA$42.2 million by the end of the fourth quarter. As Canada’s young cannabis sector matures, even more consumers will likely be drawn from the illicit market.
The chokehold illicit market actors had on the marijuana industry will keep loosening as licensed Canadian companies such as Pac Roots Cannabis Corp. (CSE: PACR) (OTCQB: PACRF) (FSE: 4XM) keep availing high-quality cannabis products at affordable price points.
NOTE TO INVESTORS: The latest news and updates relating to Pac Roots Cannabis Corp. (CSE: PACR) (OTCQB: PACRF) (FSE: 4XM) are available in the company’s newsroom at http://cnw.fm/PACR
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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