Canada’s “Shortage” of Marijuana

I never imagined that Canadian finance ministers would one day worry about a shortage of marijuana. Welcome to 2017.

Bloomberg: The biggest challenge for Justin Trudeau’s forthcoming legal recreational marijuana market is a shortage of pot, the finance minister of Canada’s most-populous province says.

…Finance ministers were told demand is “quite high” for marijuana already in Canada, he said. “So we want to make certain that, when we do proceed, there is sufficient supply to accommodate the activity because what we’re trying to do is curb the illicit use and organized crime that now exists around it.”

The finance ministers’ worry, however, is misplaced. Canada’s system is not as open to entry as Colorado’s, so even with new licenses being approved rapidly, demand will increase faster than supply once legalization happens and prices will increase. That much is true. But much of the new demand will come from people who were deterred from buying illegally. As far as these buyers are concerned, the total price–including the price of possibly being caught–will have fallen, even as the money price rises. Many people who were buying illegally will also prefer to buy legally, even at the higher price. In other words, even if the price of legal pot is higher than the current illegal price, the demand for illegal pot will fall putting pressure on the criminal element.

As usual, the finance ministers forgot to think at the margin.

Hat tip: Daniel Lippman.

Comments

I hope our DHS responds in kind to stop the growing degeneracy from the north from spreading here.

Too late. Justin Bieber is everywhere.

"... never imagined that Canadian finance ministers would one day worry about a shortage of marijuana."

well, nobody here ponders the spectrum of possible worries for Canadian bureaucrats.

not a news flash that Canada/US commissars do not understand markets or black markets.
the finance ministers did not 'forget' to think at the margin -- such thinking was entirely absent from his mind... he thinks only in terms of government carrots & sticks in attempts to change human behavior.

You`re talking what is typically the second most powerful position in government after the prime minister, not some random guy sitting at a desk (bureaucrat) crunching numbers and occasionally issuing statements.

Considering that highly addictive medications (methadone, Suboxone, Opana, OxyContin, fentanyl, etc) have been pushed on unsuspecting patients for more than 20+ years as safe, I for one would be glad to see marijuana displace the pharmaceutical industry for pain. Having worked in a pharmacy during college, I can attest that the "degeneracy" as you call it is already here. The desperation for a fix whether it be Pittsburgh, PA, Chattanooga, TN, or rural Kentucky is all the same. You would be surprised how many functioning addicts work right next to you.

If Kentucky could ever get out of its own way, it could supply Canada with the product they desire.

Addiction studies place the percentage of people in the "Appalachian" statistical region addicted to opiodes at less than a quarter of a percentage point. Opiodes are medicines of antique origin, Cannibis is not.

Cannabis one of the oldest cultivated crops in the world - 'Cannabis sativa is an annual herbaceous plant in the Cannabis genus. It is a member of a small, but diverse family of flowering plants of the Cannabaceae family. It has been cultivated throughout recorded history, used as a source of industrial fibre, seed oil, food, recreation, religious and spiritual moods and medicine. Each part of the plant is harvested differently, depending on the purpose of its use. The species was first classified by Carl Linnaeus in 1753.' https://en.wikipedia.org/wiki/Cannabis_sativa

"Considering that highly addictive medications (methadone, Suboxone, Opana, OxyContin, fentanyl, etc) have been pushed on unsuspecting patients for more than 20+ years as safe"

You are kidding, right? I know a few states AG's are suing drug companies but that is all about the money. Have you ever needed strong pain killers? They don't "push" them on you and mine have 3 and 4 warning stickers on them. But you also do not become addicted to them if you use them as prescribed. When an addict gets one of the medications you named they will either grind them up to bypass the slow release factor and/or take multiple pills, sometimes 6 at a time. Hardly the fault of the doctor or the pharmaceutical companies.

Dude - stop harshing the narrative!

We here at MR (along with such diverse operations as the NYT, WaPo, and the Huffington Post) are all in complete agreement that pharma companies have done nothing but harm to the People of Earth, and need to be bankrupted ASAP.

If an economic sector as a whole produces net positive value for society, this does not imply that we should refrain from discussing its downsides, including specific companies or parts of companies, or entire lines of business in that sector, which may be damaging.

For example, being American, I think you'd find it very easy to agree that cars have produced significant positive value. But would that mean we should ignore the diesel scandals for which somehow VW was singled out?

"For example, being American, I think you’d find it very easy to agree that cars have produced significant positive value. But would that mean we should ignore the diesel scandals for which somehow VW was singled out?"

Somehow? It wasn't random chance. They were caught deliberately modifying their engine software to cheat emissions standards. They were not singled out, they were the ones specifically caught committing a crime.

May be true , but then there is this:

http://www.npr.org/sections/health-shots/2017/06/16/533060031/doctor-who-wrote-1980-letter-on-painkillers-regrets-that-it-fed-the-opioid-crisi

Completely irrelevant and I listened to the useless interview on air.

And no one...no one..out cucks me.

+1 Evans_KY, and today the news is about an Oklahoma doctor who the feds want to put in jail for prescribing too many pain killers that one of her patients overdosed on; absurd (patients do all kinds of crazy stuff). The 'war on drugs' will not go elsewhere, to legal drug users. The prison lobby and the lawyers need to keep busy.

All they have to do is send a truck to Colorado and label as a diplomatic pouch.
Fill and drive north.

Or even closer, they grow in WA, OR, and AK too

'Canada’s system is not as open to entry as Colorado’s, so even with new licenses being approved rapidly, demand will increase faster than supply once legalization happens and prices will increase.'

Or, in a shocking development, instead of a market growing, people will just grow the plants for themselves, bypassing both the legal and illegal markets. This is always part of the reason that marijuana tends to be considered so unfavorably - it is as close to impossible to tax as any other weed, at least among those people who simply know how to keep houseplants or a garden.

We haven't seen that happen with tobacco. California just bumped up the already-stratospheric cigarette tax even further, but nobody is growing tobacco. Fine Nicotiana tabacum can only be grown in a narrow range of climates and soils, but the much hardier Nicotiana rustica can be grown throughout temperate climate zones, and it's much stronger. It's widely grown in Asia, but I've never heard of anybody growing it for smoking purposes in North America.

Because tobacco requires curing and then grinding - it is not as easy to create properly cured and ground tobacco as it is to roast and grind your own coffee beans. (After someone else grows the beans, of course.)

A better example might be an apple tree, which allows one to easily create alcohol - my memory is that it was Pollan that wrote that the symbol of the temperance people was an axe.

To the best of my knowledge, and leaving aside commercial reasons for doing things, you basically need to do little with cannabis except plant it, then harvest it at the approximately right time, then let it dry. You do have to wait a while for the cycle to be completed, so even someone growing their own may be a commercial customer for a while, or at intervals, of course.

Wow, MT is deep. Indeed, Wikipedia tells us that for Nicotiana rustica, "the high concentration of nicotine in its leaves makes it useful for producing pesticides", which lends credence to the stories about native Americans using tobacco smoke as a mosquito insecticide (I always wondered how they could stand the Mosquito Coast, the tropics has so many mosquitoes it drives me crazy).

It's possible to grow tomatoes too, but most people don't.

They're most panicked because likely they will not be able to tax the black market weed.

Maybe bankrupt Illinois, Puerto Rico, et al could service defaulted debt securities with tax receipts from legalized weed.

I wonder if a jurisdiction will try skipping taxation and requiring employment of combat vets, battered women, disabled, 45+ age group to soak up social churn, reduce social wage bill

In principle, sounds like a good idea. But same as with earmarked taxes, it's not likely to lead to optimal outcomes.

If those groups require support, that decision should be made independently of the question of whether to tax marijuana or the rate of tax on marijuana. And, maybe that's not what those people want to do or are best suited for.

"In other words, even if the price of legal pot is higher than the current illegal price, the demand for illegal pot will fall putting pressure on the criminal element."

You are making unstated assumptions in order to arrive at this conclusion. You're assuming that legalization will not decrease the production costs of illegal pot. Perhaps changes to law enforcement patterns will make illegal pot cheaper to grow or distribute. You're assuming that legalization will not increase the desirability of illegal pot. Perhaps reduced enforcement against posession will make customers more willing to buy illegal pot at the same money price.

The net effect on the "criminal element" is not obvious. There are possible effects in both directions. The magnitude of those effects will be the determining factor. Merely "thinking at the margin" is insufficient to identify the new equilibrium.

There's a "q" in p*q

It seems that legal selling + shortage would simply push the illegal buying from Mexican cartels further up the supply chain.

LOL at mystefied Canadians. How does this ... m a r k e t work? Where will we get the supply to meet this demand? Where?!

Though I think Dick the Butcher has it right. The real worry is over supply meeting demand without the government getting its cut.

Then there is the issue of quality. The government has tried growing pot before, and apparently it was so bad that even medical marijuana patients were refusing to use it and buying it on the black market anyway,

The government will not be growing pot. It will be a regulated market.

I think you're misreading the concerns laid out in the article. It's not about the long-term trend of legal vs illegal pot, long-term illegal pot will become a niche activity similar to bootleg cigarettes.

The concern is a political one, initially there won't be enough distributors on the market so there will still be supply complaints. There might even be a short-term illicit pot boom due to the marketing and reduced stigma caused by legalization. Some consumer level distributors will try to augment their supply of expensive legal pot with cheap illicit pot.

Now imagine the next federal election comes up and the legal pot system is a bit of a mess with insufficient suppliers and some distributors mixed up with organized crime. The government might just find itself getting the boot over the scandal, the Conservatives might even shut down the legal pot supply at that point. Alternately, if the Liberals decide to delay (fearing the election) and still lose, it would be even easier for the Conservatives to kill the market.

Usage has tended to decline in places that legalize.

As for going backwards on putting an end to what may have been the single dumbest and most damaging policy of all time .... I don't think that's going to happen. It would have been legal 10 years ago if opposition parties hadn't decided to go to town on a comparatively small (by international standards) corruption scandal that ended up bringing the government down while the legalization bill was on the table.

Supply will increase. Barriers to entry are low: weed can be grown in a tool shed, chicken coop, basement, spare bedroom, and even a closet. In our area, specialty supply stores for weed cultivation are ubiquitous. Our neighborhoods are getting destroyed here in California - fires, traffic, illegal dams, crime, aquifers getting drawn down by pumping, crowds of trimmigrants living in anything including tents, yurts, trailers, vans, cars, toolsheds, you mame it. It's a mess but there is plenty of supply.

32 temperature - also tattooed on her back, the big one, means death to some, tattoos sometimes freak men out. Tattooed numbers always freak me out.
46 - the roads sometimes steam at this temperature, a small pleasure, after the rains have come and gone and the day is starting up.

digits added 33
Divided by amount of digits 4.125
Digits added divided amoutn of digits 2.909090909
digits added up 47

26.6 temperature of the present tense, disregarding velocity or acceleration, when there is snow accumulation by a magnitude the blue spruce is Orpheus crossing the international boundried line.

Maybe ti's Celsius, -273, absolute zero in Kelvin. Plus there's a certain panache, to using the English pastiche, a way of thinking that is nearly obsolete but that we cling onto with our sad hands and frozen hairs on end.

There are plenty of people who will pay extra in order to buy from a legitimate weed shop rather than buying from the black market.

There exists a black market for alcohol too. But even in the rural southern dry counties where it is made, moonshine doesn't command much market share.

While I applaud the government's mission to destroy the black market, I think they are dreaming if they think they will succeed right off the bat. Many current day pot smokers have established long time relationships with their dealers. They pay $X for a known quality. Some will opt to continue this simple relationship and forego the new reality of shopping at hipster cannabis shops that offer the promise (and complexity) of evaluating THC and CBD counts across dozens of strains.

I think you're right, but I don't think I see as much surgical, sequential treatment of problems as opportunistic amalgamations of causes favorable to diverse clients. if those clients r numerous and sympathetic and costly in the status quo, so much the better. I suspect there r potential 'both or none' arranged marriages of useful policies out there

In Washington State, the price of legal weed remains similar to, if not better than, illegal weed. The biggest reduction in costs, though, comes from lowered search costs. Before legalization, one would have to call up a somewhat sketchy dude, arrange a time to meet (often hours later), meet at a somewhat sketchy location, and deal with the possibility that your dealer is out of stock the day you want to smoke. Now, one can be in and out of your local legal marijuana store in two minutes anytime during business hours. Easier than getting a coffee at Starbucks. Legality issues aside, if people had to go through the old method of procuring weed, the quantity demanded would be substantially less, I figure.

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Meh, sounds very short-term. The news from Washington State is that dope is the cheapest it has been in nominal dollar terms since the early 70s.

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