With high taxes, a saturated market and few options, some of Canada’s legal cannabis producers are struggling.

  • Vlyn@lemmy.zip
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    1 year ago

    Maybe I don’t get the nuances, but isn’t this just the free market?

    It gets legalized, tons of shops open up. Turns out after the initial rush it’s not very profitable to have half a dozen shops in the same town? Everyone competes, lowers their prices, some shops have to close (the ones with the worst locations). Duh?

    • MaxHardwood@lemmy.ca
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      1 year ago

      Exactly. You shouldn’t get a bail-out because your risky investment failed.

    • Sir_Osis_of_Liver@kbin.social
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      1 year ago

      Yup. Just like any new market/product. A pile of people rush in, a pile fail, and the rest consolidate into a few well established players and dominate the market.

      In a previous career, I was involved in salmon aquaculture in the Bay of Fundy. When I first got in, along with dozens of other companies, we were getting $8.50/lb at the farm. Five years later, we were struggling to get $2.50/lb, which wasn’t enough to cover production costs. Thirty years later, there’s basically one company dominating in the area. Profitability is still dodgy.

      StatsCan has been doing a fair amount of surveying on cannabis in general. They found that 69% (nice) of users buy from legal storefronts or legal websites. Another 25% was home-grown, or from friends/family. The remaining 6% was from dealers or illegal shops/websites.

      https://www.canada.ca/content/dam/hc-sc/images/services/drugs-medication/cannabis/research-data/canadian-cannabis-survey-2022-summary/fig12-eng.jpg

      https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/research-data/canadian-cannabis-survey-2022-summary.html

    • sik0fewl@kbin.socialOP
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      1 year ago

      Except black market is still cheaper and has more options, so by that logic all the legitimate shops will end up closing.

      • EhForumUser@lemmy.ca
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        1 year ago

        black market

        That’s all you needed to say. A black market fundamentally cannot exist in a free market. A black market is only able to emerge beside a regulated market as ignoring regulations is what sets a black market apart from other markets.

    • EhForumUser@lemmy.ca
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      1 year ago

      No. A big reason why you see 10 pot shots on every street corner is because the shops needed to be licensed, and the licensure was a closed process. In other words, the government left it a secret as to whether or not your neighbour was going to also open a shop.

      If you could have seen that your neighbour was opening a shop, as you could in a free market, chances are you would back away and find somewhere else before you sunk much into it. But the lack of a free market left people to guess – and many guessed wrong, only finding out after they were long into the process of running the business. At that point, you may as well try.

      There is nothing free market about cannabis in Canada. It is regulated to the max.