With the legalization of marijuana in Canada, one of the main determinants of whether this move will turn into a success or not is the cost of the weed. It is important to consider how much one gram of weed will cost to a consumer in Canada because it doesn’t matter how good the quality is – if it’s too expensive, no one is going to buy.
When the price of weed is kept higher than the current market price in the black market, there will be minimal incentive for the people to purchase from certified retailers. On the other hand, if weed is available at the same rate as illegal weed in the market or is priced at a lower rate, the demand for legal weed is going to outpace the demand for illegal weed. Hence, the pricing of weed is a crucial aspect which should be carefully considered by the government.
As per research, the current average price for illegal weed is about $8.24 per one gram but it differs across provinces and the strains. In Ontario, the consumers will be paying a price of $8.33 per one gram of weed and in Quebec they will be paying slightly lower, which is $7.53 per one gram. This is the illegal rate in the market. Now the legal weed rate is slightly different. The government has an excise tax of $1 for every gram of weed or ten percent of the cost of the final retail price.
Higher of the two will be applicable on the purchase of legal weed. When you purchase weed, 75% of the cost will go to the provinces and the remaining will be with the government. In addition to this excise tax, the buyer will be required to pay an additional GST ranging between 13 to 15 percent. This rate will depend on the province. Hence, the producers of weed will price one gram at the market price and will have to pay about 25 percent more for the same. This means the legal price will be around $10.30 per one gram. However, it has also been noted that consumers are willing to pay more for weed after its legalization.
It is expected that the current consumers will move about two thirds of their purchases to legal route even when they have to pay higher for each gram. Post legalization, the costs have increased but consumers are happywith the decision and do not mind making the payment of a higher amount.
The price also varies according to the demand as well as the availability of the strains in the market and in the province. Again, it also depends on the supply which the licensed producers will be able to deliver. The producers had enough supply to support the medicinal marijuana demands but there is a rise in demand now with the legalization of recreational marijuana.
It is important to compare the prices across different provinces to gain an insight into the average price. In Alberta, the price per gram of weed is between $7 to $8, in Manitoba it is between $6 to $7 but can also go as high as $16. In Labrador and Newfoundland, the cost of one gram of weed is $11. Further, in Ontario, the rate is $7 to $8 and with tax, the cost of pre-rolls is $12.35. The cost of one gram of marijuana in Quebec is $6 to $7 and in Saskatchewan, the average price ranges between $8 to $9. Further, all the online retailers have posted varying prices for the same. The cost of weed in Yukon is around $10 but for a premium standard of weed, it can go as high as $20.
There is an argument that with the legalization of marijuana, the prices will come down due to competition. The prices have peaked after the legalization of marijuana for recreational purposes but it has also fallen after the entry of new players into the market. It is expected that the legal retailers will bring down the prices in the future due to an increase in demand, otherwise consumers will be looking to purchase from the ever-expanding illegal market.