Can Canada’s Weed Legalization Be Considered A Success?

Evaluating the market 6 months later.

Canada and USA flags iStock /Oleksii Liskonih

When Canadian Prime Minister Justin Trudeau announced that cannabis would be legal in Canada, the global marijuana movement got one of its biggest push yet.

Canada is the second country, after Uruguay, and the first G8 nation in the world to legalize the plant. Canada stands as the first real test of how national marijuana legalization will play out in the modern world.

Now, half a year after sales were legalized in January, Canada stands to make around $5 billion by 2021 from the industry.

So why is the rollout being considered a letdown?

Lack Of Public Consensus on Cannabis

Ottawa, Canada - April 13, 2019: Customers wait in line to enter the Fire & Flower Cannabis store on York St in the Byward Market. The store opened April 1 the first day for legal retail store sale of cannabis in Ontario. Retail store sales of cannabis was legalized in Canada Oct 17, 2018 but not until April in Ontario.

iStock / PaulMcKinnon

The first signs of trouble for the marijuana industry in Canada came when the realities of marijuana legalization began to manifest itself in their government.

Marijuana, while being legalized, has a considerable stigma attached to it and is still considered dangerous still by a good chunk of the population.

Before the rollout, the Financial Post published that still about half of Canadians were split on how to feel about marijuana. Sure, more people support the drug than people who don’t, but with over 40 percent of Canadian’s people against it, problems are bound to appear.

Even Prime Minister Trudeau, who made legalizing marijuana in his original 2015 campaign a big promise, has stayed away from marijuana with his looming re-election.

When the details of the rollout began to surface, some troubling notes began to pop up.

Competing With The Black Market

At first, Canada was only going to sell cannabis flower and oil to people, while effectively banning edibles and vape pens for the time being. Edibles are expected to be sold by this December after some outcry, but the high cost of the weed itself is a driving force that is keeping people in the black market.

The average cost of a gram of marijuana in Canada is around 9 Canadian dollars, which is around 7 American dollars. On the black market, Canadian marijuana is going for around 5 to 7 dollars, which is pretty cheap considering there will be taxes associated with legal weed.

This difference in price has kept a lot of people on the black market, with illegal weed accounting for more than $5 billion dollars in gains compared to $2 billion on the legal market.

The legal market is overall having difficulty getting off the ground. 

Limited Supply Is Killing Dispensaries

Marijuana leaf in a cart. US dollars and credit card.

iStock / bestdesigns

With huge demand, dispensaries and medical outlets were given the short end of the stick with the strict government regulations that were put on them. When the day came for shops to open, the limited supply did not last long.

“When I’m sold out, they’re still gonna find a product somewhere,” Trevor Tobin, who operates the High North marijuana store in Labrador told The Guardian. “It’s hard to keep employees behind the counter when they’re not selling any product – and we lose money every day that we don’t have product on the shelf.”

The weed shortage in Canada is a big problem for the industry and has been the dark shade over what should be a fairly good success. 

Late 2018, it was announced that most of the retailers in Canada who were looking to open in January were not going to receive enough materials for the launch. This problem was realized when retailers began selling out fast and have mostly failed to deliver on the demand in the later months.

A Lack Of Preparation

Before people could even buy marijuana, the problem was being blamed on the government, which many large retailers said did not accurately prepare for the launch and underdelivered when it came time.

Marketwatch reported in November 2018 that “Canopy Chief Executive Bruce Linton said the company’s lackluster sales in September were due to the fact that provinces bought only enough cannabis to test their supply infrastructure and did not ramp up sales as expected” and Aurora CEO Terry Booth said that Ontario and British Columbia, two of the bigger provinces, failed at their rollouts.

While there are many possible reasons why there isn’t enough marijuana, it’s fair to say that Canada, or any place with legal weed, isn’t always going to get it right the first go. While Colorado might be making way more than a whole country, Colorado has had five years to get their regulations and practices in order.

Still, Canada is making some ground when it comes to the legal market, with an over ten percent decrease in those going to the black market. Sure, that’s not a huge amount, but you’ve only been able to buy cannabis for not even an entire year, and the growing pains of the cannabis industry will hopefully smooth themselves out.

Success Is Relative

Cannabis is still proving to be a billion dollar industry, it just isn’t as successful as some thought.

The hype with recreational marijuana is definitely real, but it’s hard to compare. American states operate independently and have had various amounts of time to set up their own systems for marijuana sales. 

In Canada, where the recreational industry has not even celebrated its first birthday, the industry is going through a period of trial and error.

Imagine if marijuana were legalized federally in America tomorrow. Sure, California and Colorado would be fine and profit, but Montana or Utah aren’t going to be as successful the first go, as not only do the cultures differ, but the geography and local governments could cause roadblocks down the line.

With Canada being far colder and less populated than America, we can only look to our northern border mates with hesitant optimism. Canada itself has no other examples to compare its own results to, making for some growing pains.

Yes, Canada is providing a blueprint for what major legalization of marijuana could mean for a country, but it’s just too soon to say what that really means at all.

Can Canada’s Weed Legalization Be Considered A Success? was last modified: by