Yahoo Finance Black market lured nearly 80 per cent of Q4 pot spending: StatCan
The impact of cannabis legalization was reflected in Statistics Canada’s real GDP report for the first time on Friday. The figures show the black market is still commanding a massive share of sales.
Canadian households spent $5.9 billion in the fourth quarter, at an annual rate. The federal agency found $4.7 billion of that figure was outside the legal system.
“With this release, cannabis is fully integrated in the national economic accounts, including estimates of legal and illegal economic activities related to cannabis production, distribution and consumption for non-medical and medical use,” StatCan said in a statement. “Before this release, only economic activities related to legal use for medical purposes were recorded.”
Canada commenced legal recreational sales on Oct. 17 of last year.
“I’m actually pleasantly surprised to see that over 20 per cent of all cannabis sales went through regulated channels in Q4, given most early targets were aiming for a 30 to 35 per displacement by the end of year one,” Nick Pateras, vice president of strategy at cannabis data firm Lift & Co. (LIFT.V), told Yahoo Finance Canada on Friday.
“That was prior to any foresight into the delayed roll-out of retail stores in key provinces.”
He said it may be helpful to remember that illegal sales in Colorado still account for a quarter of that market, five years after recreational sales were legalized.
StatCan added that cannabis accounted for 0.5 per cent of total household spending for the quarter. Non-medical cannabis amounted to 11.2 per cent of spending on alcohol, tobacco and cannabis.
Cannabis amounted to $2.2 billion or 0.4 per cent of Canada’s fourth-quarter GDP, at market prices. Illegal cannabis accounted for an estimated $1.4 billion (65 per cent), versus $770 million (35 per cent) on the legal side.
According to data collected on the agency’s crowdsourced StatsCannabis website, price-per-gram for legal flower averaged $9.70 versus $6.51 for the illegal equivalent. The agency cautioned that these statistics are self-reported, and do not represent a random sample.
“This underscores the need for more stores to be licensed and the introduction of new product classes to effectively compete with the black market,” Pateras said. “Until we actually match the black market’s form factors and accessibility, we’ll never be making a true apples-to-apples comparison.”
Download the Yahoo Finance app, available for Apple and Android.
