Canada Is Launching a Free Market for Pot

Canada's medical marijuana industry is about to grow from a small-scale industry into a huge $1.3 billion corporate behemoth.

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Canada's medical marijuana industry is about to grow from a small-scale industry into a huge $1.3 billion economic behemoth, the Canadian Press reported over the weekend. And that free-market capitalist spirit will likely lead to cheaper weed.

On Tuesday, Health Canada, the national health organization, will officially start issuing new licenses to grow medical marijuana to major indoor commercial marijuana farms. These new grow-ops "will produce, package and distribute a range of standardized weed, all of it sold for whatever price the market will bear," according to the Canadian Press. This also means several big changes, for both industry and the whole Canadian economy.

The new regulations could mean a new market for abandoned warehouse real estate. One new weed operation purchased an old Hershey chocolate factory recently. The new indoor farms will be subject to Royal Canadian Mounted Police approval and must undergo regular health inspections, like any food or beverage plant. The new rules will also allow imported strains of product, similar to the beer market. Currently, medical marijuana is grown in 4,200 small distribution houses that RCMP officials contend are mostly criminal fronts. (Not all, but most of them.)

For current medical marijuana users, the new regulations and greater production will initially result in a slight price hike, as Health Canada explained in documents posted online on Monday. Weed will jump from $5 per gram to about $7.60 by next year. That's still cheaper than the $10 per gram street price, but the future looks even more affordable for Canadian medical weed users. Federal officials believe the free, open market will drive the price way, way down. "We expect that over time, prices will be driven down by the free market," Sophie Galarneau, a senior official with Health Canada, told the Canadian Press. "The lower price range will likely be around $3 a gram. ... It's hard to predict."

The one thing smokers bemoan about a potential legal weed utopia is the price hike. Like alcohol and cigarettes, weed would likely be subject to federal, state and local taxes. (Instead of state taxes, in Canada has "provincial" taxes.) That completely legal future is still far away in Canada, unlike Colorado and Washington in the States, where legality goes beyond medicinal purposes. However, Canadian officials concede the new regulations would foster a smooth transition if weed is ever legalized in the future. (Wink, wink.) For now, things are cheap only if you know how to purchase the bud legally.

As it stands, there are about 37,400 medical marijuana users recognized by the federal government in Canada. By 2024, officials expect the number of medical marijuana users to skyrocket up to as many as 450,000 people. They expect revenues to hit $1.3 billion in the same year.

This article is from the archive of our partner The Wire.