Canadians paying about $10 a gram for legal pot (or $6.37 for illegal pot): StatCan

Canadians buying cannabis from legal sources pay about $10 a gram, while those who have stuck with the grey market pay $6.37 a gram, figures released Wednesday by Statistics Canada show.

A slight majority of buyers responding to StatCan’s survey, or 54 per cent, said they bought from illegal sources.

The numbers are based on a running national survey of cannabis buyers, both legal and illegal.

More frequent users seemed to have found ways to save money or else had volume discounts from grey-market sources: daily users paid $7.55 a gram, while people who used a few times a year paid $9.55 (looking at legal and illegal sources together).

Why stick with grey-market pot? Almost half of Canadians who are still buying from illegal sources said it was because it was cheaper. Others said it was because illegal pot was easier to source or that they got better quality or variety on the illegal market.

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Price-conscious consumers in the grey market said they paid only $5.71 a gram.

About half of the legal recreational customers surveyed said they’d bought cannabis from online retailers. That may reflect the fact that an online channel has been the only way to buy cannabis in Ontario until quite recently. (In provinces like Nova Scotia and New Brunswick, which have well-developed store networks, about 95 per cent of legal sales are in person.)

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Combining legal and illegal sources, buyers in Quebec and British Columbia paid the least, and those in the territories and Newfoundland and Labrador paid the most.

To a large extent, the difference between legal and illegal prices can be accounted for through taxes. Legal dried flower is subject to $1 a gram in federal and provincial excise taxes, plus GST/HST.

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The difference in price illustrates a tension in marijuana legalization: whether it’s more about capturing otherwise lost tax revenue (in which case legal pot would be sold for the highest price the market will bear) or about eliminating the black market (in which case it would be sold more cheaply).

It also shows what seems to be the only remaining business model for the grey market as choice and variety gets better in the legal market, physical store networks expand and governments in provinces such as Ontario become less tolerant of grey-market dispensaries: competing on price.