The history of competition between the U.S. and Canada has seen larger price increases throughout the northern neighbor given the amount of production that the U.S. does. In the industry on cannabis, it seems that this figure has quickly spun a 180 where cannabis in the country of Canada is now much cheaper than in the U.S.
One study shows that in Canada, the average price of an eighth of an ounce of weed is around $27 where in the U.S. it is as much as $40. This is quite drastic considering the amount of people that depend on cannabis for their medicine every day. This high level of disparity between the two is quite easily explainable, but many are wondering if the U.S. will be able to catch up any time soon.
One study has stated that “Part of the reason cannabis is so much cheaper in Canada than the United States is there is a much longer history of legalization in Canada, and thus a larger supply of legal marijuana growers and sellers.” Cannabis has been legal in Canada for medicinal use since back in 2001, leaving time for the market to mature rapidly and price competition to dwindle down slightly. The study goes on to state that “While cannabis companies in the United States can’t even have bank accounts, in Canada there are publicly traded cannabis companies on the stock market.” This is the other reason that cannabis prices are so much cheaper within Canada. In the U.S., the market on weed is very much still considered to be quite taboo. Cannabis is also still fully illegal from a federal standpoint, with the government listing the drug with others such as methamphetamine and heroin. This scheduling is completely backwards and the hopes are that it will change soon, but until that time, Canada still has the U.S. beat.
Another reason that the U.S. prices are so high is the risk factor. Selling cannabis illegally in the U.S. is much riskier than in Canada, leading dealers to charge higher prices knowing they can get it. With a new market growing around the country, it seems as though this is changing but it does, in fact, take time to see an effect.
Studies have also shown that the prices in Canada for cannabis are dropping quite quickly too. According to data, a gram of marijuana at the beginning of the year in Canada averaged around C$6.78. This number is almost 30% less than in the U.S., which further illustrates the disparity between the two.
The Canadian market is also allowed to export their cannabis around the world. This means that Canadian companies have been growing much more cannabis than they need domestically, leading to a large amount of supply. The exportation of cannabis has also helped to bring in a new slew of investors hoping to get a piece of such a quickly growing market.
The last reason that the Canadian cannabis market is cheaper than in the U.S. comes from the impending legislation this summer. Canada is set to vote for a third and final time on whether or not cannabis should be legal for recreational use throughout the country. This has led to many of the large growers in the nation, upping their supply potential so that they can fuel this growing market. With so much supply and not enough demand at this point, weed has and is continuing to get cheaper throughout the market. The hopes are high that the U.S. can begin to catch up to this price dropping in the near future.
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