Canadian cannabis products have become easy to spot with their plain black or white packaging brandished with large warning labels, a striking red THC stop sign, and excise stamps plastered on them. And because licensed cannabis firms in Canada can only print a small company logo on the packages, critics argue it’s almost impossible to distinguish industry brands like Coke or Pepsi can.
But CBC News has reported some black market suppliers are now ripping off government-approved packaging and selling imitation products as the real thing.
Recently, a manager at a Prairie Records store in Saskatchewan, which is owned by Westleaf Inc. (TSXV:WL), noticed the knock-off labeling when a customer brought in a product they had purchased online. And while it was an impressive forgery that looked legitimate, it was missing some information on it such as the product’s level of potency and the product turned out to be illegal.
“When those labels are confusing and have Health Canada labelling on it, it makes it even harder for customers to differentiate what’s a legal, regulated Health Canada-tested product, and what is something from the grey market or the black market that could get them in trouble.”
The Saskatchewan Liquor and Gaming Authority (SLGA), which is in charge of distribution of cannabis in the province, said they have been informed of the fake labels and are turning to higher authorities for support.
“SLGA is aware of the illegal cannabis with packaging designed to look like official Health Canada approved product,” David Morris, an SLGA spokesperson, said in a release.
“Whenever SLGA becomes aware of information like this, we share it with Health Canada and the police.”
Are there simply too many cannabis companies to choose from?
The sheer number of Canadian pot companies that exist — both legal and illicit — can add to the confusion for a consumer looking to buy from legal sources only. A customer that’s looking to buy pot online will find many options available, and it’s easy to see how someone may believe they’re buying from a legitimate supplier and not the black market. But now with counterfeit legal products starting to circulate, it could even further cloud the marketplace.
If an unassuming consumer is buying from the illegal sources, it also could hurt the consumer’s trust making purchases online because they could end up with a much different product than expected. This gets more serious for medical marijuana patients, because getting the wrong dosage, potency, or strain could have real health consequences.
This is where companies like Aurora Cannabis Inc. (NYSE:ACB)(TSX:ACB) and Canopy Growth Corp. (NYSE:CGC)(TSX:WEED) have big advantages over their industry peers because they are among the few that have been able to develop brand recognition. Consumers know they can trust these companies and they’ll feel more comfortable buying from them as a result.
But with legal pot prices so far being more expensive than in the black market, consumers might be okay with looking at cheaper options, which unfortunately may turn out to be illegal.
The industry’s rapid growth may also add some unintended setbacks. With so many different legal options to purchase from it can create more confusion for customers, especially with the packaging being easy for the underground market to mimic.