Authored by Jen Skerritt via Bloomberg

Ontario will try to sell legal pot for a price low enough to squash the black market. The government plans to establish a price for recreational marijuana that isn’t too high in order to eliminate illicit sales, Ontario Finance Minister Charles Sousa told reporters after a cabinet meeting Wednesday. Black-market marijuana sales currently range between C$8 ($6.50) to C$13 a gram across Canada, and Ontario is consulting provinces across the country to determine “a unified price,” he said.

“It’s important for us to establish a price that’s not too high because we want to keep the illicit market under control and we want to eliminate that,” Sousa told reporters, according his spokeswoman Jessica Martin. But at the same time we don’t want to price it too low that encourages greater use.”

Ontario was the first province to announce how it will regulate and distribute sales of marijuana when Canada moves to legalize recreational sales by next July. The Liquor Control Board of Ontario will open as many as 150 government-run pot stores by 2020 and manage the sale and distribution of marijuana along with online sales.

“I think we all recognize it needs to be priced competitively with the current black market price,” said Neil Closner, chief executive officer of MedReleaf Corp. The province has yet to clarify how much they are willing to pay for marijuana from licensed producers, Closner said. While the Markham, Ontario-based producer has a low cost of production at C$1.50 a gram, others are “well north” of C$2 and C$3 a gram.

“I think many of us believe consolidation will happen. It’s a matter of when, not if,” he said by phone. “There will be a day of reckoning that will come for many of them.”

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