I deliver to your house': pot dealers on why legalization won't kill the black market
It’s a case of My Guy versus The Man: who will you buy your pot from? As legalization looms, governments across Canada are angling for a generous slice of what was a $5.7bn marijuana business in 2017. The rules vary across the country – some provinces will permit licensed private retailers; others will sell pot exclusively through government stores – but success will ultimately depend on just one thing: beating the black market.
So is that black market worried? Two Toronto-based dealers agreed to speak with us. Gord, 44, has been selling marijuana full-time since he was 16, and his business had the trappings of a retail empire, with business cards advertising Smiley Face Delivery. Ray, 45, who began selling 17 years ago, is more modest in his ambitions. “I have a day job,” he said. “I do this for the extras, so I can take my wife out to an expensive dinner. I don’t really look at it as a serious business. It’s as much a cultural thing.”
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How will legalization affect your business?
Gord: Ever since the government started talking about legalization and all these [illegal storefront] dispensaries opened up, the profit margins have decreased. All the years I’ve been selling, the price never changed very much – like around C$250 to $300 per ounce for the really good stuff. Now I’m supposed to lower my prices down to $200 or less. And you have this younger generation coming up that’s used to the idea of stores and getting pot anywhere. In the old days you had a drug dealer and you held on to him. He’s like your doctor or mechanic: once you got a good one you held on to him. The loyalty thing is dead now. So a lot of the bigger dealers are saying: “You know what? My time’s done, it’s time to retire.” The last year I’ve taken a pretty big hit on the finances so I’ve been looking at an exit strategy. Which is kind of just exiting slowly, trimming the fat, only helping out the people who’ve been the most loyal.
Ray: Five years ago, it was different. Some people were definitely making more money, simply because there were fewer people in the industry, but now their income has dropped. I operate at a smaller scale, I do this because I enjoy it and I make some extra money. So for me it’s great that the government is coming in – I’m happy as shit. The reason why is now they’re going to shut down the dispensaries and they’re my biggest competition. Plus, the THC content of the pot the government will be selling is going to be 20% or less. The guys I know selling commercially can’t wait till the government comes in.
What’s the key factor in determining whether the black market will continue? Is it price? Quality? Ease of access? Ministers have discussed $10/g, but the average street price nationally is only $7/g.
Ray: Price is 90% of it. The majority of people aren’t connoisseurs and don’t have a lot of money to spend on pot. They want a good deal and don’t care, or know, much about quality. If the government prices pot too high you’re not giving those people an option, so they will stick with the black market. I’m still going to deal with the regular people I deal with: people who go to work everyday and just want to smoke a little pot, but don’t want to pay the astronomical prices the government is going to charge.
Gord: You got to include all the tax [on government pot] as well. It’ll be like smokes and alcohol: whenever they need more money, “sin taxes” will be the first thing they’ll increase.
Uruguayans queue in line outside of a pharmacy to buy legal marijuana in Montevideo Photograph: Andres Stapff/Reuters
What about convenience? Alberta is talking about having 250 storefronts, but Quebec only 15 – to service 8.2 million people.
Ray: We’ve had this period in Toronto where it seemed like illegal dispensaries were opening on almost every block. Now Ontario will have, what, something like 40 [government-operated] stores to start? There’s no way they’ll be as convenient for consumers. Once they shut down the illegal dispensaries it will just level the playing field for dealers like me. And I deliver to your home.
What do expect from the quality of government weed?
Gord: It’s going to be mass produced, like Labatt’s beer or Budweiser, all off-the- shelf, generic, it’ll taste the same every time. It won’t have much strength so it’s like you’re really just buying a flavour. Maybe you can produce an excellent kush that’s 29% THC, but no, they government will tell you, you have to do it this way.
Ray: The stuff the government is going to sell; it’ll be weaker, like the difference between light beer and regular beer, or even liquor.
After all these years of very lax enforcement, does it feel as if pot dealers are about to be recriminalized? Do dealers now have new reason to fear the police?
Ray: I’ve never really had to worry and I’m not worried now. I have friends in law enforcement, and generally they look [at marijuana prohibition] like it’s ridiculous, the dumbest thing ever. They can tell if someone is organized crime or it’s just some local guy growing a basement full of pot and selling to his friends. If it’s organized crime, then OK, that changes everything, but for the local guy? They’d rather leave that guy alone. They have other street drugs to worry about: fentanyl, cocaine … and guns.
Gord: In my experience, the fear only comes when you start to sell the hard, poisonous drugs. I can only think of one time since I started selling at 16 when I was ever really scared, and that was I was driving through [a police drunk-driving checkpoint] with 15lbs of weed in my car. That scared me. But that was the only time.
If the bigger dealers get squeezed out by the market, where will they go?
Gord: I can’t be the only person in this country who’s noticed a direct correlation between the talk of legalization and the increase in fentanyl and heroin and gun violence. You’re already seeing more killings, more problems [associated with harder drugs]. Some of us have our morals and ethics we follow: we won’t go into the stuff that will kill people. Other dealers I know have branched out into other markets.
Ray: For sure you will have some small percentage of dealers – especially those strictly in it for the money – move into harder drugs, but that’s like any industry when you’re getting squeezed out. You become willing to take bigger risks. Everyone in the marijuana business is pretty decent for the most part. Maybe you’ll get the odd guy who wants to be a badass, who thinks marijuana’s too soft and they’re not making enough money. A percentage of those guys will move into selling crack, cocaine, pills, whatever.
‘The stuff the government is going to sell will be weaker - like the difference between light beer and liquor.’ Photograph: Mark Blinch/Reuters
Is there as much money to be made in legal pot as everyone now seems to think?
Ray: I don’t really see it. Whether the dispensaries are there, or whether the government comes in, there’s still about the same number of people smoking. Maybe as kids turn 19 and they’re allowed to buy at a government store, you might get a 10% spike in the people who will try it – but not everybody’s going to try it and like it. You’re not going to get this astronomical increase.
Will a diminished black market affect the broader economy?
Gord: Unfortunately, you take away a black market and you hurt the economy, in ways you’ll never understand, because it’s so much easier to spend money that’s not taxed than explain where your money has come from. Our black market money is what stimulated all the fun things in life. The cars and boats nobody could afford to buy otherwise. The dealer never worried about going out for a $400 lunch with his two halfwit buddies because he knew there’d be another $400 later that day.
Employees of Amazon Organics, a pot dispensary in Eugene, Oregon, help customers purchase recreational marijuana. Photograph: Ryan Kang/AP
With the elimination of dispensaries, do you see an opportunity to grow your business?
Ray: I would love to grow my business, but I’m too lazy. Is it really worth the extra dollar to run around and kill yourself that much more? I have one friend who is ambitious about it, he’s working all day and night, driving around. He loves to buy his materialistic things, going on vacation. For dealers like me and most of my friends – if we make a buck today then great. It’s just supplementing our income. I have a day job, I do this for the extras, so I can take my wife out to an expensive dinner. I don’t look at it as business: it’s a cultural thing. If I can make a dollar off it I will – if not, I’m still going to smoke. I mean, a person who smokes pot is pretty chill to begin with.