Pot sales aren't performing as well as the federal government had predicted ahead of legalization.
Shortages, lack of retail stores, and a late start date have all contributed to low profits.
"Because of the absence of stores, legal cannabis in Ontario last quarter only grabbed 12 per cent of the total market," Michael Armstrong, Associate Professor in the Goodman school of Business at Brock University, told 1310 NEWS' The Rick Gibbons Show.
The other 88 per cent was dominated by the black market, which Armstrong believes the feds could have avoided if they didn't plan to introduce a whole new system.
"Because of that decision to go with a more controlled pharmaceutical model, that means the industry has to start with nothing," he said. "They are growing rapidly, but it will take time."
Once more stores and products are introduced, Armstrong says it will start to eliminate the black market.
"When you get past the 50 to 60 per cent mark then things are going to slow down because it becomes more of a question of competition," Armstrong said.
In total, the federal government has taken in $96-million in legal cannabis sales.