Legal Cannabis Stores in Canada Still Competing with Illegal Online Sellers Though Change is in the Air

Since legalization, licensed cannabis stores in Canada have faced competition from the illicit cannabis market, particular illegal online cannabis stores. So called “MOMs” (Mail Order Marijuana) stores can sell their product at much lower prices than licensed cannabis retailers and offer a wider selection of cannabis products that can be delivered right to a buyer’s door by Canada Post.

A legitimate store owner’s hard-won cannabis license is a small victory in a war where the odds have been stacked against them. On the other side of that coin, cost and taxes of entering the legal market are barriers that prevent illegal sellers and growers from “going legit”.

Playing Field Leveling but Legal Cannabis Stores Still Hurting

If results from the latest Health Canada Canadian Cannabis Survey are any indication, things do seem to be improving:

61% of survey respondents reported making a purchase from a legal storefront (up from 53% in 2021).

48% said they always obtained cannabis from a legal or licensed source (up from 43% in 2021).

Only 1% reported usually obtaining cannabis from an illegal storefront (same as 2021).

• Source: “Canadian Cannabis Survey 2022: Summary”, Health Canada.

While the 2022 Cannabis Survey results are encouraging, industry advocates are calling on the Trudeau government make changes that reduce the stigma of cannabis use, reduce taxes on cannabis, and loosen restrictions on product labelling.

Pierre Killeen, Vice President of the Cannabis Council of Canada (C3) told CBC News, “We have a regulatory system that doesn’t make a lot of sense, that frankly prohibits the ability of legal cannabis producers to compete with illicit market products”.

Illegal Online Stores Under More Scrutiny in BC as Legal Purchases Increase

As reported by the Vancouver Sun, in August 2022, the BC government announced a law suit against non-licensed cannabis producers and sellers (mainly online stores). Three of the illegal online sellers received over $6.4 million e-transfers from customers and laundered the proceeds through numbered companies and personal accounts. The BC government is seeking to seize property and bank accounts as “proceeds of crime”.

In August, the BC government published its “2021 Cannabis Use Survey” which, like the Health Canada survey, showed a significant increase in purchases from licensed cannabis stores. British Columbians spent over $50 million per month at licensed cannabis stores in the province (a 28.5% increase from the previous year). The government suggests that the increase “reflects consumers buying less cannabis from illicit sources and instead buying it from one of the 400+ authorized cannabis stores across B.C.”

Thrive Makes Cannabis Licence Applications Easier than You Think!

If you’re considering starting a licensed cannabis store in BC, let Thrive Liquor & Cannabis Advisors do the heavy lifting. Our experienced consultants ensure that your non-medical retail cannabis license application is complete and that your proposed store and layout are in compliance with the BC Liquor & Cannabis Regulation Branch regulations and requirements. By working with our consultants, you save time and increase the chances that your cannabis license application is approved.