An economics professor startled participants in a seminar at Mount Allison University on Friday when he pulled a $50 bill from his wallet and offered it to anyone who could get him one gram of marijuana within an hour.
A few hands went up when Professor Jason Childs from the University of Regina asked how many students or faculty members could meet that challenge and at least a couple of hands were raised when Childs asked who could buy him that gram within half an hour.
Childs was making the point that cannabis is readily available in Canada even though it will remain an illegal recreational drug at least until July.
“Anybody who wants it can get it now,” he said, adding studies show that 20 per cent of Canadians “are regular consumers of this illegal product.”
Illicit market won’t go away
Childs, who is one of the authors of an academic study on legalizing cannabis in Canada, predicts that the well-entrenched illicit market will pose a tough challenge for the provinces and territories that will begin overseeing sales of marijuana after the drug is legalized this summer.
The New Brunswick government has announced that legal cannabis will be available in up to 20 stand-alone stores run by NB Liquor in 15 communities across the province including Sackville. The stores will operate under the name CannabisNB.
“I don’t think the New Brunswick system is going to displace the illicit market,” Childs said. “One year from now my prediction is the illegal market will be happy and healthy.”
Price of pot a crucial factor
Although New Brunswick has yet to announce how much recreational cannabis will cost, Childs figures the government plans to sell it for $10 a gram after paying half that to acquire 13,000 kilograms each year from three suppliers.
He said the current price on the illicit market is about $6 per gram and while customers will probably be willing to pay more for high quality, safe cannabis, he doubts they would pay 40 per cent more.
“The illicit market is not going to disappear anytime soon,” he said, “and displacing it will be central to long-term success.”
Losing money selling drugs
Childs added that after factoring in labour and overhead costs and sharing tax revenues with the federal government, marijuana sales will be far from the golden goose that many politicians had hoped.
“I think it’s very, very likely the New Brunswick government will lose money selling drugs,” Childs said as seminar participants chuckled.
He added that the government may have to lower prices to compete, taking losses in a long-term effort to destroy the illicit market.
Childs said New Brunswick should have licensed a limited number of private stores to sell cannabis as Alberta is doing.
He argues that private retailers have more incentive than government-run stores to compete with the illicit market by keeping prices down and ensuring quality and variety.
“I’m very comfortable saying New Brunswick got it wrong. It’s going to go badly,” he said. “That’s not the way to run a business.”