BRITISH COLUMBIA (BC) has a reputation among cognoscenti for producing potent cannabis. Vancouver’s easygoing attitude to pot has earned it the nickname Vansterdam. On the back of these attributes, the Canadian province has built a thriving marijuana-export business, estimated at C$2 billion ($1.9 billion) annually by Stephen Easton, an economist at the Fraser Institute. But the industry has been dealt a blow by moves towards marijuana legalisation south of the border.
Legislation approving medicinal marijuana use has been helping to drive down prices in the United States over the past decade. The recent legalisation of recreational marijuana use in the states of Colorado and Washington has added to the downward pressure. Local production has ramped up: there are an estimated 1,000 licensed growing facilities in Colorado alone. Retail outlets in Washington are due to start opening in early July. One pound of cannabis used to sell for $2,000 on the wholesale market in the United States, say insiders, but the price has halved in some areas.
As production increases in the United States, pushing prices down, the economics no longer justify the risk of smuggling weed from Canada. “Exports have taken a massive hit,” says Jodie Emery, a pot advocate in BC. Her husband, Marc, is currently finishing a five-year sentence in Yazoo City, Mississippi for operating a mail-order marijuana-seed business. Marijuana grown cheaply outdoors in Mexico is the only import that is holding up, says Mr Emery from prison.
If smuggling into the United States is becoming less attractive, BC growers will not find it easy to diversify into other markets. Suppliers in the Netherlands, Spain, and Morocco are able to satisfy European demand. Asia and Africa also have their own sources of supply. That leaves the domestic market. The outlook for demand is good: Canadian politicians are mulling plans to weaken the penalties associated with small-scale recreational cannabis use. But competition is also increasing. Vancouver already has over 35 medical marijuana dispensaries, for example. Cannabis consumers have never had it so good; it’s a tougher world for producers.