HEXO’s Bold Move Requires Aim At Cannabis Black Industry


The #1 challenge for Canada’s cannabis market to date has been effortless to determine: not almost adequate cannabis retailers opened by Canadian provinces. That challenge is beginning to abate as most provinces are now reaching a essential mass of cannabis retail retailers.

Retail sales are now regularly increasing month-to-month at a double-digit price. But this leads to the second challenge facing the Canadian cannabis market (and all legal cannabis industries): the cannabis black marketplace that nevertheless dominates general consumption and sales.

Canada’s government has explicitly cited “ending the black market” as a single of its prime priorities (and motives) for legalization. However it has performed nothing at all to aid the legal cannabis market accomplish this target.

A single cannabis business – HEXO Corp (US:HEXO / CAN:HEXO) – has seized the initiative right here.


The greatest hurdle for the (taxed and regulated) legal cannabis market in displacing the cannabis black marketplace is cost. HEXO’s announcement signals true progress in leveling the playing field.

Statistics Canada not too long ago reported that the typical cost for (legal) cannabis in Canada dipped – for the initial time – to CAD$10.23. But with black marketplace cannabis at ~$six per gram, this has nevertheless supplied cannabis buyers with a considerable incentive to get from the black marketplace. Till “Original Stash”.

The Canadian government produced this black marketplace with almost a century of misguided cannabis Prohibition. But when it comes to unwinding the black marketplace, this similar government is clueless.


  • It more than-regulates the legal cannabis market
  • It more than-taxes the legal cannabis market
  • It hides the legal cannabis market from view with absurd marketing restrictions

Black marketplace cannabis operations do not face all this extraneous overhead. If the Canadian government was really serious about placing an finish to the cannabis black marketplace, it would seek to streamline the legal market – to market efficiency.

The government would either supply market-friendly regulations that promoted scale and efficiency. Or, it would supply a low-tax framework for the legal market (at least more than the brief term) to straight make the legal cannabis market much more competitive.

Canada’s government has performed neither. Now the private sector is top the way.

“Our aim with Original Stash is to disrupt the illicit marketplace, educate buyers about the worth of a regulated and tested item, and drive them to obtain their cannabis legally,” added [HEXO’s CEO, Sebastien] St-Louis. “We’re now competing straight with the illicit market and supplying buyers with an cost-effective, controlled, high quality item. Moreover, we are giving buyers the alternative of significantly less packaging in a 1 oz format, which we know is a priority for so many.”

Bold. Progressive.

HEXO’s Original Stash accomplishes its stated objective. It offers legal cannabis to buyers at a cost that undercuts black marketplace rates.

HEXO is to be applauded for its initiative in displacing black marketplace cannabis commerce. But HEXO has a luxury that most other Canadian LP’s do not appreciate. With its dominant position in the Quebec cannabis marketplace (Canada’s second biggest provincial marketplace), HEXO has enough scale in its operations to be capable to bring a low-price item to marketplace.

Other Canadian LP’s have significantly less economies of scale in their operations – and significantly less capacity to significantly lessen wholesale/retail rates. The private sector can’t succeed in phasing out the black marketplace with out some tangible government help.

It begins with creating the legal cannabis market much more visible to Canadian buyers.

Cannabis is not an particularly lethal customer item like tobacco (which kills more than 480,000 Americans per year). Or a moderately lethal customer item like alcohol (which kills more than 88,000 Americans per year).

Cannabis is secure. Non-toxic and non-addictive. However listen to the rhetoric from Canada’s ill-informed cannabis Czar, Bill Blair.

“It’s not the government’s intention to market the use of this drug but rather to make it legally readily available in a nicely-regulated manner to lessen the social and overall health harms frequently connected with cannabis use.” [emphasis mine]

Initially of all, the government really should be “promoting” cannabis, as a considerably, considerably safer option to either alcohol or tobacco use. It could net Canada’s provinces billions of dollars in healthcare savings alone.

Second, there are no “social and overall health harms frequently connected with cannabis use.” There is just decades of anti- cannabis propaganda, created by our governments (and Major Pharma) and distributed by the mainstream media.

Fake News. All discredited by true science.

In the true globe, legalizing cannabis tends to make cities (and their populations) healthier.

The government desires to loosen up its cannabis marketing restrictions, specifically in adult settings, and let the legal cannabis market to attain buyers the totally free-marketplace way: through marketing.

This is the a single benefit that government can bestow upon the legal cannabis market that can’t be matched by the black marketplace. It would be a sign that “ending the black market” for cannabis was a true government commitment, not just lip-service.

Along with significantly less-restrictive marketing, the government also desires to ease taxes (for each cannabis firms and buyers) and streamline regulations to lessen overhead and expedite cannabis licensing.

The cannabis black marketplace is a government-produced challenge. Solving the challenge needs proactive government policies – not a cannabis-phobic legal framework that undercuts the legal market. Greater cannabis regulation is crucial.

In the meantime, HEXO is top the way in Canada in the quest to phase out the cannabis black marketplace.


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