Canada’s illegal cannabis market leads to national organization suspending operations

Displays are pictured at an provincially operated cannabis store in Quebec City, Friday, June 19, 2026. THE CANADIAN PRESS/Jacques Boissinot

A national cannabis lobby group says it’s suspending its operations, citing the financial challenges to the industry from the illicit market.

In a news release Monday, the Cannabis Council of Canada suggested its members don’t have enough money to pay for its lobbying services.

Financial pressure, complex regulations and the “highly active” illicit market have “constrained the resources available to sustain a national association at its current level of activity,” the council said.

The council’s president, Paul McCarthy, said in an interview last week the organization has been calling on Ottawa to establish a national strategy for eradicating the unregulated cannabis market.

“While this is a provincial and territorial responsibility, I would say accountability rests with the federal government … they legalized it, it wasn’t the provinces and territories,” he said Thursday, adding that Ottawa would be best equipped to deal with the complexities of cannabis enforcement.

The federal departments of health and justice did not immediately respond to a request for comment.

McCarthy said the businesses the council represents, which include cannabis producers and processors, generate billions of dollars in revenue, but the majority of them remain unprofitable.

“One of the biggest reasons is because they’re trying to compete against illicit product. They’re eating up market share and they’re driving down price, and the margins are already razor thin,” he said.

A federal strategy to tackle the unregulated market should involve intelligence gathering to identify illicit operations, disrupt the shipment of product and illegal online sales, and conduct enforcement at brick-and-mortar stores, McCarthy said.

“Illegal product is being sold and shipped through Canada Post, Purolator or other delivery services. You need to find a way to cut that off, because if someone buys illegal product and it never shows up to their door, guess what they’re not doing again? They’re not going to keep buying through that channel,” he said.

Instead of each province and territory creating and enacting its own plan to tackle illicit cannabis, the federal government ought to establish a strategy that can be deployed Canada-wide, McCarthy said.

“Let’s pool resources, pool strategies. We don’t need to build this (enforcement plan) 13 times. Let’s build it once and deploy that everywhere,” he said.

McCarthy said there are many risks associated with the illicit market, including in the potential health and safety hazard of using an unregulated and potentially inaccurately-labelled product. Another serious concern is the risk of underage Canadians being able to purchase the drug, he said.

The government’s objectives when legalizing cannabis in 2018 were to displace the illicit market, keep the drug out of the hands of youth and ensure the product is safe, McCarthy said.

“The illicit market is the … common denominator that is actually the barrier to achieving all of the public policy objectives of legalization,” he said.

In Monday’s statement, the council said it is proud of the role it played advocating for a responsible, competitive and sustainable legal cannabis industry, and its records will be preserved as the organization becomes dormant.

Lyndsay Armstrong, The Canadian Press

This report by The Canadian Press was first published June 22, 2026.