Opinion: Quebec should make legal cannabis more available, not less

Michael Armstrong, Special to Montreal Gazette - thegrowthop.com Posted 5 years ago
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The Coalition Avenir Québec government is making a mistake with its proposed law to raise the legal age for cannabis to 21 as well as to ban public smoking. 

The government seems well-intentioned. But its law seems likely to have unintended effects. Critics argue the age increase would drive young adults to illegal suppliers. And the smoking restrictions could prevent residents of non-smoking buildings from legally lighting-up.

Instead, it would make much more sense for Quebec to increase all adult Quebecers’ access to cannabis, by opening more stores.

Let’s see what the numbers say.

First, there are about 270,000 Quebecers ages 18 to 20, according to Statistics Canada data.

Statistics Canada’s surveys also indicate 33 per cent of Canadians in that age group use cannabis. Quebec’s figure might be nearer 29 per cent, given its lower overall usage rate.

Together, those numbers suggest roughly 80,000 existing users would be banned from Société québécoise du cannabis (SQDC) outlets. Does the government believe they’d all suddenly abstain?

Second, the proposal restricts public smoking. The government has suggested residents of non-smoking buildings could switch from smoking dry cannabis (buds and leaves) to ingesting cannabis oils.

But recreational users strongly prefer dry products. Those account for 90 per cent of SQDC sales. Does the government believe consumers would abandon products they favour nine-to-one?

Instead of trying to legislate unrealistic changes in consumer behaviour, CAQ should leverage that behaviour in order to achieve a different objective: squeezing out cannabis black markets. For that, it must accelerate the SQDC’s expansion plan.

Consider Quebec’s cannabis sales in December. Statistics Canada reported last week those totalled $12.0 million. Only Alberta sold more, hitting $13.6 million. By contrast, Nova Scotia sold just $6.4 million.

But the results look different when pro-rated by estimated market size. Quebec sold only $12.76 per cannabis user, versus Alberta’s $24.50 and Nova Scotia’s $37.69.

So, Nova Scotia sold three times as much per potential customer as Quebec did. That’s a much bigger bite out of black markets.

Pricing partly explains the apparent differences. The SQDC’s $7.27 average price per gram last quarter was about 30 per cent below those of other provinces. (That’s wise: it helps legal cannabis compete with black markets.) But that also means each dollar of sales in Quebec represents more physical cannabis than it would elsewhere.

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But scarcity of stores looks like a bigger factor. The SQDC has just 12 outlets for some 939,600 cannabis consumers. That’s only 1.3 shops per 100,000 shoppers — hardly convenient.

By contrast, Nova Scotia’s 12 outlets serve just 170,400 users, meaning seven stores per 100,000 users. And Alberta has 11.7. Those higher densities offer better accessibility.

Such retail access matters. In Statistics Canada’s cannabis survey, convenient shopping times and places were two of consumers’ top five priorities. And provincial cannabis agencies sell far more in-store than online. Some 80 per cent of Quebec’s sales and 94 per of Nova Scotia’s were in-store.

Compare other provinces’ sales-and-stores numbers. The four Atlantic provinces, plus Alberta and Manitoba, all had sales exceeding $24 per consumer. And all had more than seven stores per 100,000 consumers.

By contrast, Saskatchewan, Ontario, and British Columbia lagged in both per-user sales and store density.

Quebec fell in between, ranking seventh in per-user sales. Apparently, its attractive retail prices partly compensated for its low store density.

To be clear, product shortages are the primary constraint on Quebec’s legal cannabis sales. But that’s true elsewhere, too. New Brunswick, for example,  blamed widespread shortages for its disappointing sales. Yet it sold $27.80 per user in December.

So, as product supplies improve, the SQDC should quickly add more outlets. And its current 40-shop target is too low. The rough comparisons above suggest it should prepare for at least 70 simply to catch up with current leaders.

Better retail access means more market share taken from illegal suppliers. That’s a key goal of legalization, and surely one that fits CAQ values.

Michael J. Armstrong is an associate professor in the Goodman School of Business at Brock University in St. Catharines, Ont.