Black market cannabis is about to get a whole lot cheaper

Published Sep 18, 2020 12:00 p.m. ET
iStock / Anton Shelepov

The legal part of the cannabis industry is struggling to keep up to the black market, and things are about to get even more heated as growers who’ve spent the whole summer tending to their cannabis plants prepare for harvest. It’s an exciting time of the year, but also one that is dreaded by both legal and unlicensed cannabis dispensaries because it adds to the already present surplus of pot products that are currently on the market.

Why this won’t only impact the black market

At one time, the only ones who dreaded harvest season were those who sold cannabis, because it meant that some of their customers were about to drop off for several months leading to a reduction in revenue, but unlicensed vendors also get the privilege of adjusting their prices as needed to stay competitive. Legal dispensaries have to operate in the same uncertain territory that is flooded with overpriced government regulated products and that can be incredibly challenging.

As it is, licensed dispensaries had already begun to lower their prices to compete with black market vendors, and the tides were just starting to turn in the direction of legal facilities as the close prices and higher level of service was something that many consumers are willing to pay for which led to a significant shift in the market. Unfortunately, all of that progress may be undone for an unknown period of time, as more people than ever before harvest their own plants.

When should it start?

When exactly this will happen depends on where you are located in the world, but the majority of Canadian cultivators will be harvesting their crops at some point between September and October. Of course, their product will need plenty of time to dry and cure, but that necessary waiting period will only last so long. The crops that are taken off this year between September and October are likely to be ready for consumer use at some point before Christmas, and that is when some experts are predicting major price drops to happen.

Will this mark the beginning of lower prices?

As cannabis consumers slowly make the switch from their local dispensary to their own bountiful harvests, sales will drop off for both the legal and illegal markets, but only one of them will adapt and flourish in these times, and that is the black market. Though illicit product prices are now widely considered by dispensaries, they have very little power to influence the cost of what they sell, as most of it comes from third-party suppliers who set the price.

Eventually, some believe that this shift will force legal cannabis vendors to decrease their prices, but the reality is that this will take quite some time to accomplish. Instead, the more likely outcome is that black market cannabis will decrease in price as it always had this time of year, making licensed and regulated options much less appealing to consumers, especially now that so many have lost financial resources due to the pandemic.

How badly will this impact the legal cannabis industry?

The legal industry has already endured the ups and downs of competing against the black market, but it’s hanging by a thread, with many saying that they’re barely making ends meet with current consumer demand. It might only change consumer habits for a few months in the heart of the winter, but this could be devastating for some dispensaries who are struggling as it is.

There is no way to know for certain how this harvest season will work out for anyone involved in the cannabis industry, but the reality is that with more people willing to grow, this time is bound to have some sort of adverse effects on the legal industry, many of which may continue to be felt for months to come.

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