Why Canada’s Pot Legalization Won’t Stop Grey-Market Sales

Article by Nichola Saminather, Reuters

A marijuana plant is seen at Tweed Marijuana Inc in Smith's Falls. Why Canada's pot legalization won't stop black-market sales Many buyers of illegal pot will have little incentive to switch to legal weed, expected to be more expensive and less available because of strict regulations on sales. FILE PHOTO: A marijuana plant is seen at Tweed Marijuana Inc in Smith's Falls, Ontario, March 19, 2014. REUTERS/Blair Gable

Jake Rowinski, a 20-year-old University of Toronto student, buys marijuana every week from one of the many self-described “medical” dispensaries in downtown Toronto.

The illegal store sells openly to customers ranging from budget-minded recreational users like Rowinski to silver-haired grandmothers treating legitimate ailments.

“Nobody really cares at this point,” Rowinski said outside the shop, near the city’s financial district.

As Canada’s Liberal government prepares to legalize recreational marijuana use this summer, the biggest remaining obstacle to regulated sales will be competition from a thriving black market, according to cannabis investors, researchers, policy analysts and government data.

Many buyers of illegal pot will have little incentive to switch to legal weed, which is expected to be more expensive and less available because of strict regulations on sales, according to hedge fund GTV Capital, which invests almost exclusively in Canadian cannabis stocks, and the Marijuana Policy Group, a U.S. research firm.

As the first major economy to fully legalize cannabis, Canada’s regulatory rollout will be closely watched by other nations considering the same path — and by global investors, who have already poured billions into Canadian marijuana firms.

Read the full article here.

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