Taxes And Provincial Mark-Ups Are Hindering Ontario’s Cannabis Industry
The main motivation behind legalizing cannabis for adult and/or medical use should always be based on it simply being the right thing to do. No one should ever be penalized for using/possessing a plant that is 114 times safer than alcohol.
With that being said, the reality of the situation is that creating a regulated industry for the purpose of generating public revenue is a driving force behind support for legalization around the globe for better or worse.
Taking the profit away from criminal enterprises and essentially re-routing it to a regulated system in which some profits benefit society is a winning political message, and if actually achieved, a great thing. However, it’s predicated on people actually making purchases from regulated sources rather than unregulated ones, and the transition is far from automatic.
Surveys and polls have consistently found that cost is a major factor for consumers and patients, which is not exactly shocking because that is basically true of any product. But unlike most products, there are a lot of unregulated options when it comes to cannabis, and in most cases, unregulated cannabis is significantly cheaper than regulated cannabis.
Various reports have been published regarding the average price for regulated and unregulated cannabis in Ontario and other parts of Canada, and while the price for regulated cannabis seems to be pretty consistent being that it can be easily tracked, the price for unregulated cannabis often seems to be inflated in my opinion.
I spend an ungodly amount of time online talking to consumers all over the world, and I have yet to find someone in Ontario that pays the prices for unregulated cannabis that are being reported for what that is worth.
It’s a safe assumption that for every extra dollar that gets added to the price of regulated cannabis a certain chunk of the consumer base then gets lost to the unregulated market. With that in mind, the fact that roughly half of the price of regulated cannabis products in Ontario is due to taxes and provincial mark-ups is obviously a problem and will always hinder the legal industry.
This is not to say that there should be no government profit at all. Regulatory oversight is not free, so there needs to be enough money to safely administer sensible industry regulations, and to some extent, put cannabis industry revenues to work helping society in various ways.
However, there needs to be a balance struck to help ensure that regulated cannabis is truly competitive with unregulated cannabis. Regulated cannabis will never be as cheap to produce as unregulated cannabis, but it needs to be close enough that consumers feel comfortable paying a little extra for a product that they know is tested and safe.