B.C.’s massive pot industry is in for some tough times because of changes in U.S. marijuana policy and a shrinking market south of the border.
The changes have raised questions about whether the B.C.’s economy will take a hit.
Washington state’s liquor board is expected to issue the first wave of retail marijuana store licences on July 7, with some of the 334 outlets set to open the next day. Pot growers for recreational marijuana already operate legally in Washington state. Colorado began allowing the sale of recreational pot on Jan. 1.
Marijuana sales haven’t started in Washington, but the effects of the loosened drug laws are already being felt in B.C., said Simon Fraser University criminologist Neil Boyd.
“There’s not that export market any more, and taking that market out of the picture, your profitability is going to reduce,” said Boyd, adding there are indications the wholesale price of marijuana in B.C. has fallen to up to half of what it used to be.
Marijuana activist Dana Larsen estimates that pot prices in B.C. have dropped about 20 to 25 per cent retail and up to 30 per cent wholesale in recent years, with about half the decrease since 2011. Part of the drop was due to new laws in Washington and Colorado, but the fact that 22 U.S. states have legalized medical marijuana also plays a big role, he said.
Other factors include better technology, stricter U.S. border controls, and the exchange rate. Many experts predict the price of pot will only continue to go down.
“It’s a risky business to be in [for] the long term for profitability, especially when a marijuana high is cheaper than an alcohol high,” said Boyd. “I wouldn’t want to invest in the industry.”
It is difficult to get data on an underground industry, but there’s general agreement that the majority of B.C. bud is exported to the U.S. or Eastern Canada. According to a 2004 study, B.C.’s marijuana industry was worth $4 billion to $7 billion annually. The RCMP believes about 50 to 80 per cent of marijuana grown locally — about $2 billion to $5 billion worth — is smuggled to the U.S., a figure that rivals the province’s agricultural or lumber exports.
Daniel Werb, a public health policy researcher with the University of B.C. who specializes in drug policy, believes the expansion of California’s medical marijuana program in recent years has played a larger role in the decrease in U.S. demand.
“Even if growers in [Washington and Colorado] were to replace all the B.C. bud being trafficked in those places, it would not make the same kind of dent [as California],” Werb said.
The question for law enforcement and health policy researchers right now is how the local cannabis industry will change or compensate for the smaller U.S. market.
“There are obvious pressures on the export of B.C. bud because of policy changes elsewhere,” said Werb, who is in the early stages of a study that will look at the impact of U.S. drug policy changes on B.C.’s lucrative industry.
“Are people who are in control of the market here going to shift to other industries? Are they going to shift to other drugs? What’s going to happen? That’s something we need to know.”
While figures on the underground marijuana economy are guesstimates at best, the illegal trade earns real dough that goes toward local goods and services.
“If you compare the size of the [marijuana] revenues to B.C.’s GDP, it’s way up there,” Werb said. “The entire market has estimates that suggest it is comparable to the forestry sector or mining sector in B.C. In fact, estimates suggest it’s larger. We’re talking about billions in revenue.”
Marijuana activist Jodie Emery, whose husband Marc Emery is serving the last two weeks of a five-year jail term for selling marijuana seeds to the U.S. in the 1990s, believes B.C. will undoubtedly feel ripple effects, from “car dealerships to Rolex shops and house sales.”
The money may be illicit, she said, but it goes into the legitimate economy.
“People who grow pot and sell it, whether they’re mom-and-pop types or big-time gangsters, they spend their money in restaurants and stores and [on] clothing and cars.
“There’s a lot of money out there,” Emery said, pointing out it’s money that’s off-limits to law-abiding Canadians and benefits mostly “unsavoury characters.”
With Oregon and Alaska voting on the legalization of recreational marijuana in November, Emery thinks B.C.’s marijuana money woes will only get worse.
“We’re going to be squeezed through … overgrown on both sides. One day we will be importing pot from Washington state. I hope not.”
Not everyone is convinced the B.C. economy is going to feel an impact.
Simon Fraser University economist Stephen Easton, who wrote a 2004 report on marijuana growing in B.C., said there will be no “apocalyptic” repercussions for B.C. due to growers or dealers losing their purchasing power.
“They’d have to go get other jobs,” he said.
Very few people are full-time marijuana growers, unless they’re members of organized crime, Easton said. “Most people will also have other jobs and they’ll just have to change the balance of how much work they do.”
