A variety of factors have enabled America’s cannabis black market to thrive despite more than two-thirds of the states legalizing medical cannabis, recreational marijuana, or both. But the problem is not limited to the U.S. A recently released study out of Canada shows that our neighbors to the north are having their own problems with the black market.
In short, the study demonstrates that Canada’s medical cannabis black market is going strong. Despite legality across the country, large numbers of patients are still buying medical cannabis products outside of the regulated healthcare system. Some are turning to illicit sellers because it is cheaper and more convenient.
Canada’s Single-Payer System
People are not surprised that the black market thrives in the U.S. Our healthcare system is a private system whereby the majority of people pay for their own healthcare through insurance or personal funds. Canada is different in that they have a single-payer, government-run healthcare system.
One would expect that a single-payer system would make medical cannabis available free of charge and at virtually every corner pharmacy and hospital. But that is apparently not the case. People still pay for their own cannabis, or at least a portion of it. As for availability, it is not as easy to get medical cannabis in Canada as one might think.
As a result, research data shows that most people who use medical cannabis in Canada do not buy it from within the system. They are more than happy to go outside the system. For many, this means turning to the black market. However, others are purchasing from the legal recreational market even though they are using the drug medically.
Cost Is the Big Issue
Whether you look at Canada, the U.S., or any other country where cannabis has been made legal, cost is always the big issue in terms of the black market. At the end of the day, people are motivated by money. They will buy cannabis from whomever offers the lowest price. It is human nature.
So why are prices so high on legal cannabis products? There are two culprits: regulations and taxes. In terms of regulations, let us look at Utah. The Beehive State is very restrictive in everything from product quality to plant origin and retail sales. For example, the state has only licensed 15 medical cannabis pharmacies to serve tens of thousands of patients. Park City’s Deseret Wellness is one of them.
According to Deseret Wellness officials, the state’s many restrictions limit supply and artificially drive up prices. Medical cannabis is very expensive in Utah. People who cannot afford to buy it legally will turn to the black market.
The Tax Problem
Where taxation is concerned, California is the poster child. It has been well documented over many years that California’s excessive taxation puts legal dispensaries and growers at a clear disadvantage. Some are now even suggesting that taxation could kill the legal industry in California if given enough time.
Black market operators in California do not pay taxes. That means they can sell more cheaply. But it doesn’t end there. They also don’t follow all the onerous regulations that only add to the costs faced by legal operators. Again, that means they can sell for less.
The medical cannabis black market is alive and well in this country. It is apparently doing quite well in Canada, too. Strange, as it wasn’t supposed to be that way. At least that’s what medical cannabis proponents tried to get us to believe. Those of us who understand economics have known better all along. Unfortunately, so have black market operators.