Article by Vanmala Subramaniam, Vice News
One of the primary determinants of whether the federal government’s plan to legalize recreational weed will end up being a success story is how much a gram of legal weed will cost the Canadian consumer.
If the price of legal weed is higher than the current market price of black market weed, there’ll be very little incentive for people to go the legal route. On the flip side, if legal weed is roughly the same price as illegal weed, or lower in price, it is fair to assume that demand for legal weed will quickly outpace illegal weed.
According to an analysis from consulting firm Deloitte, the average price for illegal weed stands at $8.24 per gram across the country. That of course, differs according to province — for instance customers in Ontario pay an average of $8.33 per gram for weed, but in Quebec, the average price of a gram of weed stands at just $7.53.
Now let’s take a look at what legal weed might cost. The federal government has already proposed a scheme that would add an excise tax of $1 per gram of weed, or 10 percent of the final retail price — whichever is higher. 75 percent of that tax revenue will go to the provinces, while 25 percent will remain with the federal government.
On top of the excise tax, you’re going to have to pay the usual 13 to 15 percent in GST (depending on province) for any purchase of legal weed. So effectively, if cannabis producers end up pricing a gram of weed at present market prices, expect to pay up to 25 percent more for a gram of legal weed. Based on the average black market price of $8.24 per gram, that brings us to a legal price of $10.30 per gram.
“I think Canadians will end up paying a higher price — but that’s mainly because you’re getting something safe and regulated compared to what’s out there on the black market,” said Deepak Anand, the Vice-President of Business and Government Relations at Cannabis Compliance.