Cannabis legalization isn’t working in Canada – government ignored the basics of marketing

The federal government’s rationale for legalization of cannabis in October 2018 was two-fold: eliminating the criminal/black market participation in the supply of weed; and reducing the availability of cannabis to youth. Both goals have not been met – not by a long shot – and the restrictions on many elements of the marketing mix are a big part of the reason why.

Any Marketing 101 course in high school would cover off the foundational basics in the first few weeks. Top of that list would be the venerable four P’s of Marketing:

Product – does the tangible product have the features and benefits that meet the needs of the target consumer?

Price – does the price match the perceived value that the consumer has assigned to it?

Place – is the product readily available and is access to it reasonable?

Promotion – are communication strategies in place and do they suitably communicate the other elements of the marketing mix, namely product, price and place?

Looking at the 4 P’s, and in the context of the two separate but related objectives, – limiting black market involvement and youth access to cannabis – here are the letter grades I would give the federal and/or provincial levels of government.

Product – B+

The best grade of the four, legalization has ensured that the weed purchased via the legal channels has been properly tested for mold, mildew and contaminants. Every gram of cannabis sold through the legal sources is transparent about the THC/CBD strength and packaging date. Product quality is pretty consistent from purchase to purchase, although aficionados are complaining on social media. This is the biggest advantage legal weed has over black-market product. But is it enough to get long time users to abandon their dealer, especially if the legal industry is prohibited from talking about the benefits of legal supply?

Price – D

The price of legal weed is significantly higher than its illegal counterpart. As reported by the government’s own Statistics Canada, illegal weed is almost half the price of legal pot. The added costs of taxation and the cost of adherence to regulations and reporting requirements have hurt the legal supply, plus it’s been reported that unregulated black-market dealers have lowered their prices. Why would a long-time cannabis user, who has sourced their supply from the local dealer for years, pay almost double for similar product? Or for that matter, a cash-strapped younger consumer?

Place – Between B & F, depending upon where you live

This important component of the marketing mix rests with the provincial governments. Ontario and Quebec, Canada’s most populous provinces, have earned a solid F. British Columbia follows close behind with a D. Only Alberta, with it’s private-first orientation (born from decades of privatized liquor retail), earns a B. Ironically, with already over 300 dispensaries open in that province, we are likely to see a few of them close. The overall lack of distribution (i.e. convenient access to product) might be the single biggest flaw in the legalization plan.

Promotion – D

There are some important individual and societal advantages to buying legal weed on Main Street, but licensed cannabis producers and retail dispensaries are severely restricted with regards to their ability to get their message out. Here’s a link to the CMA’s guidelines. The restrictions on advertising, social media, packaging, and sponsorship have severely hindered the industry’s ability to compete with the existing competition – the black market. The regulations should be closer to the rules on beverage alcohol, however they are akin to tobacco (at least the tobacco industry has thousands of points of distribution).

If marketing is the process of creating relationships with and satisfying customers, legalization in Canada has received a failing grade. There is little incentive, nor awareness of the rationale, for the cannabis consumer to turn to the legal market. As such, the black market continues to flourish, and cannabis is as easy for youth to access as it was pre-legalization.

Cannabis legalization isn’t working in Canada – government ignored the basics of marketing
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Cannabis legalization isn’t working in Canada – government ignored the basics of marketing
Despite federal government promises to the contrary, the black market continues to supply weed to most Canadians, including our youth.

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