33% of Canada’s Cannabis Market Controlled by Illegal Dealers, Says Federal Memo

About one-third of Canada’s cannabis market is still controlled by illegal dealers despite the federal government legalizing its recreational use in 2018, according to a report.

“One of the main goals of legalization of cannabis was to reduce criminal activity by keeping profits out of the pockets of criminals. The illicit drug trade provides organized crime with one of its most financially lucrative criminal markets,” wrote the Department of Public Safety in an October 2022 briefing note obtained by Blacklock’s Reporter.

The department added in the note that Canada has a “well-regulated legal cannabis industry” that is significantly cutting into profits by illegal marijuana dealers.

However, it added that legal sales of cannabis across Canada account for just 67 percent of marijuana market shares, meaning that about 33 percent is still controlled by the black market.

“There continues to be a well entrenched illegal market in place,” said the department in the note, which was titled “Cannabis Black Market” and dated Oct. 17, 2022.

“Consumers are turning to the illegal market for a variety of reasons,” it added, noting that illegal marijuana dealers typically sold cannabis at a 55 percent discount compared to prices at government-licensed retailers, whose prices are also pushed higher by tax rates.

The Liberal government legalized the recreational use and sale of cannabis in October 2018, which came with a provision that they review the legislation three years after coming into force.

The review was launched over a year behind schedule in September 2022. Health Minister Jean-Yves Duclos and Addictions Minister Carolyn Bennett must present a report to both the House of Commons and the Senate within 18 months of the review’s launch date.

Legal And Illegal Sources

A Health Canada report published in December 2022 said that in its latest cannabis survey, a greater number of respondents claimed they were purchasing their cannabis from legal sources compared to a previous study conducted in 2021.

The report, published Dec. 16, 2022, said “legal storefronts” continue to be the most common source of marijuana purchases since 2019.

“A smaller proportion [of respondents] reported illegal storefronts and illegal online sources in 2022 compared to 2019,” Health Canada wrote.

The survey was conducted between April and June 2022 and collected online answers from about 10,000 respondents aged 16 years old and up from every province and territory.

“61% reported they had made a purchase from a legal storefront (an increase from 53% in 2021),” said the report. “In contrast, 2% reported usually obtaining cannabis from an illegal website … [and] only 1% reported usually obtaining cannabis from an illegal storefront.”

Health Canada also said only 1 percent of respondents said they usually bought cannabis from an illegal dealer, representing a decrease from 2 percent in 2021.

The Canadian Press contributed to this report.