Analysts Say Edibles Will Take Business Away from the Illegal Market, but is it True?

According to CNBC, many analysts say that the upcoming round of edible products will boost cannabis sales and take away business from grey market dispensaries. With many users understandably turned off by the idea of smoking, it is safe to say that these products will be well-received in some circles.

But are experts truly correct in their prediction? Let us not forget what happened with the first stage of legalization. Investors flocked to licensed producers in droves, driving up stock prices well above the companies’ respective valuations. In the end, sales were – and continue to be – short of expectations.

Analysts and industry insiders alike, however, seem more comfortable with the future of edibles. However, this is likely because they missed one critical factor.

Cannabis Industry “Optimistic”

Licensed producers have a lot of faith in their products and the legal market as a whole. Understandably, a major goal is to eliminate their primary competitor, the illegal industry. However, experts warn that the fight is far from over:

“Licensed cannabis producers are optimistic that the introduction of legal edibles will help displace the black market, but analysts say it will take time to displace illegal sales.”

Aurora Chief Corporate Officer Cam Battley says consumers are interested in edibles because they provide an alternate consumption method to smoking. Battley says:

“This will give the legal industry the real opportunity to make significant strides in replacing black market sales with attractive and safe adult consumer products,” Battley said. There is a willingness to pay for products that are deemed to be properly regulated.”

Andrew Udell, another analyst, says a successful legal edible market requires a certain equilibrium between competitive pricing and public safety. He explains that we need to:

“Try and find the right price at the right size for how much goods or products should cost, versus societal goals of, say, public health and reducing social costs of consumption.”

Unfortunately, these “societal goals” could prove to be the Achilles heel of the edible industry.

One Size Does Not Fit All

While safety is a bonus for many consumers, the limitations on Canada’s edible products will force many recreational users to stay with the grey market.

At a THC limit of 10mg per unit, this level is adequate for new and casual users. But veteran consumers are another story.

Many heavy users consume products containing hundreds of milligrams of THC. For them, 10mg will not provide any intoxicating effects. These individuals will have no choice but to buy from illegal sources, whether they want to or not.

Analysts may be correct that legal edibles will affect illegal sales to a degree, their appeal is heavily limited by the outrageously minuscule potency. This is something that seems to have eluded them and will likely set them up for disappointment.

But we cannot entirely blame the government for this decision. In the months leading up to legalization, the media started a frenzy as they reported story after story on children and adults ingesting excessive amounts of THC.

Even though the edibles in question were all purchased illegally – a fact that most of the stories conveniently failed to address – it made people and lawmakers uneasy. Consequently, the government overcompensated and will likely see the unfortunate results.