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Globe says Hexo, rivals hear black market still robust

2019-03-13 07:46 ET - In the News

See In the News (C-HEXO) Hexo Corp

The Globe and Mail reports in its Wednesday edition that a key objective of Canada's pot legalization is to squeeze out black markets. The Globe's guest columnist Michael Armstrong writes that we were reminded last week how little progress has been made toward that goal. Statistics Canada reported that during 2018's fourth quarter, consumer spending on weed averaged $5.9-billion annually, or about $1.48-billion a quarter. Illegal pot's average price of $6.51 a gram was 33 per cent lower than legal products' $9.70, according to Statscan. Adjusting for the price difference reveals only 15 per cent of purchases involved legal products. Widespread product shortages were the main reason for the small percentage. Ottawa could help with pricing. Its excise tax is currently 10 per cent of wholesale value, with a minimum of $1 a gram. Ottawa should delete that minimum. That would make it easier for value-priced products to compete against illegal pot's $6.51 price. That matters, because the important competition is not among provinces. Rather, it is between legal and illegal suppliers. The federal and provincial governments all must ensure their policies support the developing legal industry in that challenge.

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