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Consumers Still Buying Illicit Cannabis?

While the industry has made huge strides in transferring customers from the illicit market to the legal market, only a little more than half (54%) of cannabis users shop exclusively at licensed retailers, and 20% say they only purchase their cannabis from unlicensed sellers.

With many Canadians now within walking distance of a cannabis retailer, why are one in five customers still choosing to shop on the illicit market?


According to a report from Deloitte, 76% of long-time cannabis users who purchased from unlicensed sources said that they did so because the pricing was better. This is likely referring to the fact that until recently, larger formats weren’t available so legacy customers who were used to receiving bulk discounts weren’t able to get the same deals. Now that larger offerings are becoming more widely available and in more premium strains, retailers may be able to tempt customers back.

Additionally, a portion of these legacy customers are rural, making it less convenient for them to access legal retailers and more likely to, instead, purchase from the same person they did pre-legalization because it saves them a trip to the city.

Deloitte’s report confirms this, with 37% saying their unlicensed source was more convenient or accessible.


Aside from the price, product selection and quality are important to bring customers to the licensed market, with 32% saying that they thought the unlicensed market offered better quality and 21% saying it had more options.

Almost half (45%) of legacy users buying from the illicit market said that good quality product is the biggest factor that could convince them to buy legal, and a further 28% say that products with higher THC content could make them switch as well. The latter group, as well as the 27% who would prefer more product variety, are likely referring to edibles and beverages. Despite the colourful myriad of gummies, chocolates, and cookies, limits on THC content in these products are helping the illicit market thrive. Even if the products from unlicensed manufacturers are inconsistent, customers are willing to roll the dice if it means buying one cookie instead of 5 to get the same effect.

Beverages are, however, beginning to turn some old-school users over to the licensed side. According to the report, 42% of respondents who bought unlicensed cannabis said that they now frequently buy beverages and edibles from licensed retailers.


According to the report, some respondents said that one personal barrier to engaging with the legal market was a lack of trust in government-run retailers, reiterating the data shared by the 2020 Canadian Cannabis Survey that said 12% of respondents had no intention of buying from a provincially regulated retailer.

There are likely as many reasons for this opinion as there are people who have it, however, Deloitte’s research suggests that offering a reliable, legal, non-government-run option could help bridge the gap. According to the survey, 83% of all illicit-market buyers support online sales and delivery for private retailers, meaning that the majority of these non-adopters could be convinced to switch if they had this option. The report goes on to say that 27% of Millennial and Gen Z customers who had purchased from unlicensed sources said they did so because of the delivery options.

Overall, Deloitte’s report drove home the importance for retailers and marketers to really understand their customers and potential customers. Some consumers accept and even revel in the bright new world of legalized cannabis, but others take exception to it. Some old-school users don’t want corporate or government paws on their cannabis, so their definition of value is vastly different to new users. Seeing cannabis through their eyes is the best way to get them, even begrudgingly, into the legal market.

Tags: consumer trends (39), Deloitte (8), illicit cannabis (7), illicit market (21), legacy market (2), unlicensed cannabis (1)