Jennifer Donnan isn’t sure if she has the correct answer to the question of whether or not the illegal cannabis market will eventually disappear.
Donnan is an assistant professor at the school of pharmacy at Memorial University of Newfoundland and Labrador.
She is also a principal investigator with the university-based Cannabis Health Evaluation and Research Partnership.
Reached by phone in St. John’s, Donnan says she can only guess that the illicit cannabis market will probably continue to exist.
Related Post
To illustrate, she pointed to the unregulated markets for alcohol and tobacco.
“I don’t think you’ll ever see it go away,” Donnan told CannCentral and its sister publication, the Georgia Straight.
“I think the goal is to make a regulated market mature enough that the majority of people are going to that regulated market for their purchases,” she added.
When Canada legalized recreational cannabis in 2018, one of the government’s three stated goals was to protect public health and safety.
This was to be achieved by regulating the production and sale of cannabis in order for consumers to know what they’re paying for.
As Donnan noted, the “biggest risk of purchasing unlicensed cannabis is the uncertainty of what is in the package”.
“Cannabis is a complex substance that has several components, or cannabinoids, that have different impacts on the consumer experience,” she explained.
For example, Donnan noted that it is common for the strength of THC (tetrahydrocannabinol) or CBD (cannabidiol) to be inaccurate in unlicensed products.
“It takes laboratory testing to confirm exactly how much of each are in the cannabis that is being purchased, and there have been cases of inaccurate labels on unlicensed products leading to unwelcomed and unexpected effects,” she said.
A concern as well is that cannabis from the unregulated market may be contaminated with mould, unapproved pesticides, and heavy metals.
Another safety issue is consistency of dosage, which is important for edibles.
“Creating an edible like a brownie that has a consistent amount of THC across all servings is hard to achieve in a home kitchen,” Donnan said.
Donnan noted that many people are very sensitive to the effects of cannabis, so accuracy of dose is vital to avoid adverse effects.
CannCentral and the Straight sought out Donnan after the Journal of Cannabis Research published a paper on February 1, 2022, by Donnan and her colleagues at Memorial University’s school of pharmacy and faculty of medicine.
The paper is titled “Characteristics that influence purchase choice for cannabis products: a systematic review”.
For the study, the authors reviewed current literature on the different factors that affect purchasing decisions.
They noted that although recreational cannabis has been legal in Canada since October 17, 2018, illegal sales are “still largely prevalent”.
The authors noted a 2021 study by researchers at the University of Waterloo that noted that only 48 percent of Canadians who purchase dried cannabis flower buy from the legal market.
The said University of Waterloo paper drew data from a survey done a year after legalization.
The same research also noted that legal purchases ranged from 41 percent to 81 percent of dried flower transactions across provinces.
It likewise stated that 59 percent of people who purchase legal dried flower live less than 10 kilometres from a legal cannabis store.
The study by Donnan and associates noted that price is often cited as an explanation behind the persistence of the illegal cannabis market.
Plainly put, weed is cheaper in the illegal market.
The study included findings by Statistics Canada that from 2018 to 2019, the average price of legal cannabis in Canada increased from $9.69 per gram to $10.30.
Meanwhile, the average price of illegal cannabis dropped from $6.44 per gram to $5.73.
However, the study also found from its review of literature that demand is “generally inelastic with respect to price”.
This means that the whole story about price is not that simple.
“Generally, studies have found cannabis to be inelastic, which means that the quantity of cannabis people buy is not greatly impacted by price,” Donnan explained.
She said people tend to buy the same amount of cannabis, whether it’s $6 per gram or $10 per gram.
“But this was only the case within a reasonable price range. Once prices get really high, the amount purchased does tend to drop,” Donnan stated.
In the study, Donnan and the coauthors also note that there’s much to be known about other attributes that affect consumer choices.
These include quality, packaging, and others.
Donnan said that because there are still many gaps in understanding consumer behaviour, it’s not easy to make specific recommendations regarding prices.
She explained that legal cannabis has to meet certain regulatory standards, and achieving these benchmarks does “not come without a cost”.
Although it’s hard to know for certain what will eventually become of the illicit market, Donnan said, she is sure that having a regulated environment is a “positive thing”.
“We can look and explore what is being rolled out and say, ‘Okay, where can we tweak? Where can we modify to really optimize these policies and regulations?’ ”
Follow Carlito Pablo on Twitter at @carlitopablo
