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Canada's Regulated Industry Has Grown. What About the Black Market?

A recent study showed 70 percent of participants made their cannabis purchases through regulated Canadian outlets rather than unregulated sources.

This story originally appeared on Cannabis & Tech Today

Canada is currently home to the largest legal adult-use cannabis industry on earth. The only other country that has legalized adult-use so far is Uruguay. Unfortunately, there are still unregulated markets.

Whereas Canada has a population of roughly 37.5 million people, Uruguay’s population is less than 1/10th of Canada’s (roughly 3.5 million people). In addition to a much larger population, Canada’s adult-use industry is open to anyone of legal age compared to Uruguay where only residents can make legal purchases. Canada’s legalization rollout was far from smooth, however, that was expected given the fact that Canada was essentially doing something that no other country had done before.

RELATED: 5 Lessons the U.S. Can Learn From Canadian Cannabis Legalization

Increasing Sales and Production

In virtually every legal cannabis market, sales start out slow and pick up over time, with a significant chunk of overall sales still going through unregulated channels. That was the case in Canada, where regulated entities had a hard time gaining market share over unregulated entities. It appears that the tide is turning.

According to a recent study, 70 percent of study participants reported having made their cannabis purchases through regulated Canadian outlets rather than unregulated sources. It was also recently reported that sales in February 2021 were up 74 percent compared to the year prior in Canada. Health Canada also added more cannabis producers recently, with 657 licensed producers now.

RELATED: Canada's Legalization Missteps, And What Entrepreneurs In The U.S. Can Learn From Them

Will the Unregulated Market Ever Go Away?

Cannabis opponents act as if just because some consumers continue to make unregulated purchases, it’s ‘proof’ that cannabis legalization is not working. The fact of the matter is cannabis legalization is working in Canada (and anywhere else it is allowed at a national or local level).

The unregulated market for cannabis will presumably never go away 100 percent. After all, there are still unregulated purchases of tobacco and alcohol going on in Canada. Just because people still purchase unregulated tobacco and moonshine doesn’t mean the policies for those substances are failing, and the same is true for cannabis.

The unregulated cannabis market will always exist in some form, but that is never ‘justification’ for prohibition. Legalization works and more countries need to get on the right side of history.