The Ontario government is considering setting the retail price of recreational marijuana at around 10 Canadian dollars per gram ($8.10) come legalization next summer, raising the question of whether the price will be low enough to deter consumers from going to the black market for cheaper product.
Experts are warning provinces to keep their legal marijuana competitively priced if they hope to take a bite out of the black market, and CA$10 per gram appears to be slightly higher than what consumers have been paying for illicit cannabis, which the Parliamentary Budget Office estimated to be CA$8.64 per gram in 2015-2016.
Most licensed cultivators have production costs ranging from CA$1.50-CA$3 per gram, potentially leaving plenty of room for low-cost producers to make a profit and the government to take its share.
One week ago, New Brunswick became the first province to lock up a legal supply when it signed a deal with two producers to buy about CA$100 million worth of cannabis per year.
The Ontario government’s proposed regulatory framework, announced earlier this month, calls for a state-run monopoly to sell adult-use cannabis online and in 40 outlets starting next July.
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