High Time for Change: Combatting the Black Market for Cannabis in Canada

Abstract

On October 17, 2018, Canada legalized the recreational possession and use of cannabis federally under the Cannabis Act. The Cannabis Act states goals of protecting young people from cannabis, reducing and deterring illicit activities in relation to cannabis, and providing the public with access to a supply of legal, quality-controlled cannabis. Despite this, the black market for cannabis has remained strong and persistent, with research indicating that the black market accounted for approximately 71-86% of cannabis sales in the first year of legalization. This paper will explore how and why Canada’s criminal black market for cannabis continues to function after legalization, and what measures can be taken to counteract it.

Canada’s illicit black market for cannabis continues to function as the by-product of a reprobate stew of mail-order and traditional cannabis dealers, who operate in a difficult-to-enforce periphery of the Cannabis Act. They continue to flourish by offering cheaper, higher quality, and more available cannabis, functioning as a better-run business outside of the stringent regulatory requirements of the licit market, particularly in packaging and marketing requirements.

This paper will recommend that licit retailers and the government must take several decisive steps to combat this. First, amend the Canada Post Corporation Act. Second, be a better business generally by offering lower cost, higher quality cannabis that is consistently available in stores. Third, introduce affordable cannabis options to directly address price-sensitive consumers. Fourth, engage in consumer education. Fifth, loosen marketing restrictions on legal cannabis retailers. Sixth, pass legislation to better utilize the banking and financial sector to trace and flag bank accounts associated with illegal cannabis sales.