As the clock rolled onto 12:00 am in Newfoundland, eager cannabis users lined up around city blocks as the first legal cannabis was sold within the country of Canada on legalization day, October 17.
Cannabis is now legal for production, sale, consumption and personal growing in Canada, but early critics of Canada’s legalization warn that we should be wary of the “green rush”.
Shares of Canadian companies Canopy Growth (CGC), Cronos (CRON), and Tilray (TLRY) have been soaring all year, but saw a plunge on Wednesday with the turn of legalization, causing critics to warn that the hype doesn’t meet the promise for profits.
Other stocks such as Aurora Cannabis (ACBFF), and Aphria (APHQF) took a plunge in light of recent news that big consumer products like Coca-Cola and Marlboro respectively have been poking their noses into cannabis looking to cash in.
Despite estimates that Canada’s recreational market could be worth $4.3 billion within the first year, critics scoff at the idea that the cannabis boom is akin to the dot-com boom of previous decades. Paul Rosen, CEO of Cronos joked to CNN earlier this week that not every cannabis company will become the Google of cannabis; with some having to settle for Ask Jeeves status.
Customer Feedback on Pricing
“An eighth cost me $56!,” said Emily, who logged on early on Wednesday to the Ontario Cannabis Store’s online shop. “The prices alone may keep me in the grey market”. Another Ontario consumer purchased 2 (yes, only two!) pre-rolled joints for $30. While there is certainly a privilege of purchasing legal cannabis, the high pricing and Harmonized Sales Taxes make a “dime bag” feel more like a hefty investment.
Of course, one of the goals of The Cannabis Act is to stamp out the black market and ensure that “keeps profits away from organized crime”, as Prime Minister Justin Trudeau puts it.
It was recently announced to Access to Cannabis for Medical Purposes (ACMPR) patients that prices for medical cannabis would go up by $1 per gram (or the equivalent of 10% of the purchase price) and would be subject to higher taxation. Licensed Producers like Emblem are working to resolve these issues to make cannabis remain accessible to ACMPR patients.
Winnipeg’s Delta 9 cannabis store reported that within the first minute of online sales, there were 100 orders and that sales for the day totaled $50,000. Products sold out within the first few hours.
“[All cannabis is] all sort of spoken for across the entire country,” said Living Skies Cannabis, a Saskatchewan-based retailer who was ready to open their doors, but had no inventory to offer customers.
The Alberta Liquor and Gaming Commission’s website was so overloaded that it failed to load for some consumers, with 11,000 customers in the queue waiting to purchase cannabis at one time. The platform had to tweet that they’d be back up and running soon.
For the largest consumer province in Canada, Ontario Cannabis Stores’ website ran smoothly, but consumers saw the availability of products dwindle throughout the day.
It was estimated just days before legalization that Canada’s cannabis supply could meet only 30-60% of demand, causing the black and grey markets to continue to thrive as people continue to get cannabis from their pre-legalization sources.
Time to Iron out the Kinks
We’ve gotten through the first day of legal cannabis in Canada. This is the dawning of a new Canada, where certain privileges are granted, while others are taken away. It may be a while before we can properly assess the social and economic impact of legal cannabis in Canada, but at least this is a start.