The Government of Ontario just revealed that it will be investing C$31 million over the next three years to help undermine the province’s illicit cannabis market. There are an estimated 100 unlicensed pot distributors in Toronto alone.
The dollar figure was revealed in the government’s Economic Outlook and Fiscal Review released on Wednesday. This move was made in response to an increasing prevalence of illegal stores throughout the province.
“This investment would enable the Provincial Joint Forces Cannabis Enforcement Teams [PJFCET] to respond to the challenge of illegal online operators,” the provincial government said in its report, “and crack down further on the production, sale and distribution of illegal cannabis in the online and offline space.”
Public operators with a substantial presence in the province like High Tide Inc (CVE: HITI) (NASDAQ: HITI) and Canopy Growth Corp (TSE: WEED) (NASDAQ: CGC) welcomed the move.
“Canopy Growth welcomes today’s announcement by the Ontario government to further prioritize safe, regulated access to cannabis and to strengthen enforcement against illegal cannabis advertising and the unsafe products they promote,” Canopy said in an X post.
In mid-2021, licensed retailers in the province were finally able to sell more goods than illicit producers, but the black marijuana market remains a significant problem for Ontario.
In the months after pot was legalized nationwide in 2018 legal purchases only accounted for about 5.4 per cent of provincial cannabis sales. But as years passed, that number then steadily climbed to over 54 per cent.
As Canada’s largest cannabis retail chain with 72 stores + over 700 employees in Ontario, we at $HITI welcome the Ontario gov FES commitment to help law enforcement crack down on illegal cannabis promotion/advertising. We look forward to seeing more details as they are released. pic.twitter.com/AbHTidtYyR
— Raj Grover 🇨🇦 (@RajGrover_HITI) October 30, 2024
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Ontario police make multiple busts this year
In late August, Ontario Provincial Police shut down two storefronts in London and seized illegal cannabis goods valued at about C$350,000.
They were operating under the name “Spirit River Cannabis” and had ties to another illicit operation on the Chippewas of the Thames First Nation reserve near St. Thomas.
A couple of months earlier, police closed down six illegal pot shops operating under the name “Indige Smoke” in Hamilton, Leamington and elsewhere. They loaded up over C$640,000 worth of unregulated merchandise, three handguns and C$29,000 cash.
But these findings were minuscule compared to what the OPP discovered in April. After the cops became aware of a dank cannabis odour emanating from a warehouse in Niagara Falls, they seized C$8 million worth of illicit plants and arrested six people.
A 2022 study from the Ontario Cannabis Store found that cannabinoid-infused products circulating in the black market have much lower THC levels than advertised and tend to contain harmful pesticides.
rowan@mugglehead.com
