One of Canadian Prime Minister Justin Trudeau’s major campaign platforms was to legalize marijuana. Earlier this year in June, Trudeau’s Liberal Party shepherded Bill C-45 (also known as the Cannabis Act) through Parliament. As of today, Canada now officially permits recreational cannabis sales, which makes it the first G7 country — and the second country worldwide after Uruguay — to legalize the drug for recreational use among all adults.
Canada had already legalized a national market for medical marijuana starting in 2014, which has served as a model for nations across the world who are joining an international movement to dismantle the former global consensus on marijuana prohibition.
And Industry Poised For Success
Now, the country’s cannabis industry appears ready to take over the world with billions of marijuana dollars flowing through Canadian stock exchanges. Combined with the legalization of recreational marijuana in California, there is now an estimated $12 billion sales in North America that Canadian companies are well-positioned to take advantage of.
Brad Rogers is the head of CannTrust Holdings Inc., which has been a licensed medical marijuana producer since 2014, the legalization of recreational marijuana is “monumental for Canada.”
“This is the modern-day end of prohibition… This is going to be the shot heard ’round the world. All eyes are on Canada right now.”
The Cannabis Act legalized possession, home-growing, and sales for all adults, including foreign visitors, in Canada. For now, Canada will only allow the sales of flower, tinctures, capsules, and seeds; edibles and concentrates are expected to be allowed by next year. Provinces are allowed to impose tougher rules.
The program is meant to take over the unregulated or marijuana black market, which is estimated to be worth $5 billion. The sales of cannabis products in Canada is projected to total $4.3 billion in the first year.
The Associated Press reported that their surveys show at least 109 marijuana retail stores, supplied by 120 growers, are expected to open their doors today in the country of 37 million people. However, many more are expected to come. There will be a combination of privately administered and government-run dispensaries.
For example, Canada’s conservative province with the highest population, Ontario, won’t permit the sale of marijuana until spring of next year.
In the notorious pot-puffing British Columbia province, BC Cannabis Store is the only place to get legal weed today on October, 17. Canadian newspaper Keremeos Review reported 173 dispensaries have applied for recreational marijuana licences, but the 62 that have been approved by the province have yet to receive local approval.
Marijuana supply drought on the horizon?
Rosalie Wyonch, who is an economist at non-profit research organization C.D. Howe Institute, said to Canadian cannabis publication Puff Puff Post that, at least initially, Canada will lack the marijuana production capability to keep up with surging marijuana demand.
“There is currently not currently enough legal supply of marijuana to actually supply all the recreational demand in Canada. We didn’t have enough producers far enough ahead from legalization that they’ll actually be able to deliver enough product to market by the time legalization happens.”
While Wyonch didn’t predict that Canada would need to face the supply shortfall on the first day of legalization, nor even in the first month, he did say that it could result in price hikes a few months down the line.
“I don’t see empty shelves manifesting on the first day probably, and not the first month. But as the year progresses, what we’ll see is either prices will have to rise, or we’ll actually see supply shortages.”
How Uruguay legalization is holding up right now
Uruguay was the first country to legalize and regulate its domestic non-medical cannabis market. The South American country has a history of defying the international war on drugs: during a dictatorship that lasted through the 1970s and 1980s, the government in 1974 decriminalized possession of “a minimum quantity [of illicit substances], intended solely for personal use.”
The Brooking Institute and Washington Office on Latin America (WOLA) released a report titled “Uruguay’s Cannabis Law: Pioneering a New Paradigm” that analyzed how the legalization of marijuana is unfolding.
The study said the marijuana legalization in 2013 represents “groundbreaking policy reform” with a promising future. At the same time, the report makes suggestions to overcome distribution shortcomings and over-regulation that has unintentionally led to an expanding “informal” market for foreign tourists.
The report said that “Canadian Prime Minister Justin Trudeau… could encourage Canadian financial institutions to work with Uruguay as a signal of support both for an ally and for a common area of groundbreaking policy reform.”
Effect On Small Businesses
For small marijuana businesses, the legalization of Canada’s national market is somewhat of a double-edged sword. That is because large companies from the agricultural, sugar, alcohol and tobacco industries to become increasingly enticed by the profit-earning potential to invest in Canadian cannabis. Eventually, there is fear that the big players will crowd the smaller businesses out when large-scale operations reach a scale of efficiency that smaller growers cannot reproduce.
Calla Lee, an independent cannabis consultant, has noticed that already licenses producers are partnering with, and acquiring, smaller brand, and that with the passage of national legalization, large scale license producers will start to “weed out smaller brands.” Lee said legalization will help scientific progress by creating an environment where more resources available for medical and technology research can happen.
Vancouver-based cannabis and civil liberties advocate Jodie Emery told The Stash that the day of legalization in Canada is a “great symbolic victory that hopefully inspires other countries to legalize as well.”
However, Emery argued that more work must be done not to exclude “people who cannot afford to go legal.” As a first step, Emery called for Canada to follow states in the United States such as California that have granted amnesty to all non-violent drug charges, including trafficking, rather than only possession charges as Canada plans to do.
Emery was concerned that with the way the law is written, the main beneficiaries will be big business and government.
“With new hurdles in place for craft producers going to the legal market, we’re going to see that only people with money and connections can get through,” said Emery. “Although with the proliferation of craft marijuana in the marketplace it will be hard to make sure all cannabis companies work with large suppliers.”