WILL STRICTER LAWS LEAD TO A SUCCESSFUL CANNABIS PROGRAM?

STORY BY JAMIE SHAW

THE GREAT WHITE North is going green, and we are starting to get a picture of just what cannabis legalization in Canada will look like coast to coast to coast. While there are many issues that are still to be addressed (we won’t be seeing edible products for a while yet), and there are some problematic regulations being proposed, overall this is still a huge step forward.

Manitoba and Quebec provinces are set to a have a fight with the federal government over this issue, but everyone else will be allowed to cultivate up to four cannabis plants. An earlier amendment already saw a high limit restriction removed, but some provinces, like Saskatchewan, may be interested in setting their own, something else that will have to be worked out with the federal government.

Hemp regulations became a lot more sensible as well, with farmers no longer required to destroy everything but the stalks on their hemp crops. They will now be allowed to use the rest of the plant for things like CBD products.

Currently, the only legal companies producing cannabis (as opposed to low-THC-designated industrial hemp) do so under the Access to Cannabis for Medical Purposes Regulations (ACMPR). Production, sale, research, and other activities already have separate license requirements, and these are expected to continue under legalization. Recent announcements regarding new license types that will become available are a mixed blessing for those who have been current illicit producers. New micro-processor, micro-producer, and nursery licenses are expected to reduce some of the barriers to entry of the legal market, however, it doesn’t currently appear that these license classes will have the ability to sell to anyone other than the existing legal producers. Micro-producers would be limited to a canopy area of 200 square meters (approximately 2150 square feet). Micro-processors would be limited to 600kg of dried cannabis, or its equivalent, yearly (expected to be the total yearly output of a micro-producer). Nursery licenses may be well positioned to allow a much-needed influx of genetics to the legal system, but details have yet to be worked out.

Further, these licenses will not be ready in time for legalization this summer, so current legal producers get a double advantage here.

Sales of medical cannabis will continue under the ACMPR (online only), but the federal government has committed to reexamining these regulations after legalization has been rolled out and established. Sales of adult-use cannabis will vary from province to province.

Every province and territory in Canada is planning to have online cannabis sales run through a public or government- owned corporation (known as Crown Corporations). These entities will also run the only legal brick-and-mortar stores in Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. Nova Scotia and Ontario are likely to have a bumpy transition due to the size and sophistication of their current illicit market.

Both Newfoundland and Yukon will also have sales through Crown Corporation retail outlets at first, but the Yukon has said they may be open to allowing private retail in the future, and Newfoundland has already included a private retailer in the province. Canopy Growth Corporation not only has a deal to supply the provincial stores with cannabis and training, but will be also be allowed its own retail location connected with their production facility.

The Crown Corporations running online sales for the prairie provinces of Alberta, Saskatchewan, and Manitoba will not run brick-and-mortar stores. Manitoba has granted four companies permission to open an unspecified number of outlets in the province, but will require these retailers to obtain product from the province. Alberta also has chosen to have its Crown Corporation distribute to private retailers.However, unlike Manitoba, they have set the cap on how many licenses an entity can own at 15 percent. Saskatchewan is planning to have around 60 private retailers, and allowing these retailers to source directly from legal producers, rather than having to go through the province.

BC is a bit of a mixed bag. The province with the most entrenched illicit market, and the one that pushed for the new micro-licenses, is likely to take a financial hit with legalization. As mentioned earlier, the micro-licenses required to transition their illicit players will not be ready in time. Some retailers are already licensed under their cities, but will have to obtain provincial approval to continue operating post-legalization. Those granted permission will have to empty their shelves of all of their current products, including hundreds that will no longer be available, and replace them with a much smaller selection of flower and THC-capped “concentrates.”

It’s still not quite clear where you will be able to use cannabis after legalization. Many provinces have tied cannabis smoke with tobacco smoke in regulations, and creating spaces where cannabis can be consumed is running into roadblocks for this reason. Some cities are looking at licenses for these spaces, but are hampered by provincial laws. Not only can a landlord ban a renter from smoking in their home, they could also ban the growing of plants, even under a medical authorization.

A proposed THC-linked tax rate, the continued prohibition of concentrates over 30 milligrams per milliliter, an excise tax on all cannabis (including medical), and issues around driving impairment penalties are all things that will impact the success of the legalization’s rollout, but a looming shortage is also likely to throw a spanner in the works. Current legal cannabis producers are under serving the medical market, with many having halted taking new patients, and not having enough cannabis to supply those they already have signed up. While the number of licenses has grown and rapid expansion has taken place, the number of medical exports is also rising exponentially. Onlining adult-use cannabis in this environment is likely to make the retail sector resemble food stores in the former USSR: long lines, no product. At least for a while.

Stumbling towards progress, the only thing we really know for sure is that legalization in Canada this year, won’t look like legalization next year, or the year after. Big changes are coming, and even bigger ones are on the horizon.

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