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Is The Government Cheating The System and Reselling Black Market Cannabis?

Matt Weeks
cannabis, bud, Canopy Growth, Canada, legalization, cheating the system

There is a shortage of legal weed in Canada. And producers may have been caught filling the shortfall with black market cannabis.

Recent evidence suggests that Canadian cannabis sellers and distributors may be buying from the black market. With the demand for legal cannabis soaring in recently legalized Canada, headshops have run into problems with supply chain management. High customer demand, however, is no excuse for breaking the law.

Thanks to 900 pages of internal records obtained by Canada’s National Post, the public has a glimpse of one shady piece of practice by a large cannabis company, and the police who seemed to facilitate the coverup.

What Went Down

Tweed Marijuana Inc., now known as Canopy Growth Corp., lost a massive amount of cannabis in 2014 due to a raid by the Royal Canadian Mounted Police, who confiscated the plant material at a local airport. The laws in 2014 were different than they are today. So while the cannabis shop was legal, the plane’s cargo was not.

cannabis, bud, Canopy Growth, Canada, legalization, cheating the system

Canopy Growth, formerly Tweed, was caught with 700 kg of illicit bud in 2014.

The RCMP thought they’d hit a big score. They nabbed just over 1,500 pounds (700 kilograms) of harvested cannabis bud. This was hidden inside 55 hockey bags and 40 boxes. But instead of celebrating the success, authorities told the Mounties to hold off on announcing their bust.

In the meantime, Tweed issued its own press release, which has since been scrubbed from their website. The supplier’s announcement was sent out just one day before the company was set to go public on Canada’s TSX Venture Exchange stock market. It played down the bust as a minor delay in the supply chain, according to the National Post.

What the release failed to mention is that the whole fiasco had a fishy odor. Instead of working within the confines of the law, the company apparently cheated the system. Not only were the buds stored in hockey bags (hardly the kind of packing that legitimate material needs), but the company’s own ledgers indicated they were receiving seeds and plants — not harvested bud.

The Mouth of Authority

Despite the discrepancies between what the cops knew and what the company had broadcast to its potential investors, the RCMP remained silent on the issue. Tensions within the bureau began to flare.

Why were the police so quiet? Well, for one, Health Canada stepped up to say it had authorized the shipment. But if it did, was the legal shipment of plants authorized, or the illegal shipment of harvested bud?

cannabis, bud, Canopy Growth, Canada, legalization, cheating the system

But while a deep dive into one company’s nefarious business practices is interesting, it’s hardly a pattern. To truly discover whether or not Canadian shops are cheating the system en masse by buying in bulk from the black market, we need evidence beyond a single incident five years ago. And, luckily, there is.

The Bank of Nova Scotia (BNS) recently published research showing that the black market accounts for about 71% of all recreational cannabis sales. That’s a lot. But the bank’s analyst also predicts that percentage will nearly invert in the next year, when the black market will comprise only 37% of total cannabis sales.

Why is that number so high? The BNS explains that governmental regulations on licenses and packaging have led to supply issues. As a result, this has led to slow starts for the fledgling industry. Many of these problems should market-correct within a few months.

But that doesn’t mean the black market is going away completely.

Cheating the System

Right now, Canada has a fully mature black market and a recently birthed legal market that’s still learning how to walk. We’ve already seen that at least one firm was cheating the system in Canada’s recent past and faced no consequences for it. So, it’s likely that at least some percentage of shops or distributors are still cheating the system.

Why does this keep happening? The Tweed incident isn’t the only investigation that the RCMP have seemed to bungle. Recently, the force has been under fire for its investigation of Vice-Admiral Mark Norman, a conservative politician who allegedly leaked details of a military shipbuilding contract to some big business buddies.

cannabis, bud, Canopy Growth, Canada, legalization, cheating the system

When corporations own politicians, and the police are afraid to endanger firms’ profit margins, the result is a two-pronged system of justice. In this, the big money guys have one set of rules, and the rest of us have to follow another.

The thing about medical cannabis is that it just works too well. People want it to help them manage everything from aches and pains to cancer and epilepsy. We’re still looking for research to validate these treatments, of course. But anecdotal evidence is enough for many patients to give cannabis a go when all else fails.

The entire point of legalization, after all, is to take cannabis off the streets. We want to put the plant into the hands of medical and botanical professionals. These authorities can provide the greatest support for patients who desire to improve their physical and mental states through therapeutic cannabis consumption.

Matt Weeks

A writer living and working in Athens, GA, Matt's work has appeared in various newspapers, books, magazines and online publications over the last 15 years. When he's not writing, he hosts bar trivia, plays in local bands, and makes a mean guacamole. He holds an undergraduate degree in journalism and a master's degree in organizational theory. His favorite movie is "Fletch."

1 Comment
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    Of course the black market is going to thrive when you ruin legal markets with heavy regulations, arbitrary restriction and high taxes. People wanted decriminalization, but the govts have pursued this solely as a means of revenue capture.

    June 28, 2019 at 2:43 pm Reply

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