The Sweet Taste of Growth in the Canadian Cannabis Industry

by Alastair Moore


This week The Economist ran an article with the headline ‘Justin Trudeau and the cannabis factory: Converting a medical-marijuana industry into a recreational one will not be easy’.

At a former Hershey’s chocolate factory just outside Ottawa a company called Tweed now produces a rather different confection: marijuana for Canada’s tightly regulated medical market.

The article looks at the interesting scenario in Canada – where medical cannabis has been available since 2001 – but had faced a series of stringent crackdowns from the Conservative party under Stephen Harper’s leadership. The party took a hardline approach to narcotics and privatised the medicinal industry.

The focus of the piece is Tweed, the medicinal cannabis company based in an old Hershey’s factory. Their growth in sales is high although their market is currently small. They have 30,000 registered patients who buy their products but this is set to boom.

The existence of companies like Tweed, which obtained a stockmarket listing in 2014 […] suggests that Canada’s transition from remedial to recreational pot will be smooth. It probably won’t be. “It’s going to be a lot harder to implement than you think,” said Lewis Koski, until recently the director of marijuana enforcement in Colorado.

Although the switch to a recreational, legalised market won’t be smooth, The Economist predicts that these medicinal cannabis companies are set to widen their customer base.

This hope of growth springs from the bright light of Canadian liberalism, Justin Trudeau. The newly elected prime minister has promised to legalise cannabis as part of his series of liberal reforms.

There is a structure for medicinal cannabis in place and it is thought or at least hoped by many dispensary owners that they will become part of this regulated system.

Rather than take delivery by post, many consumers—both patients and partiers—obtain their marijuana through storefront “dispensaries”, which have sprung up across Canada, encouraged by liberalisation in the United States. Vancouver has the liveliest retail sector, with 176 dispensaries, or “compassion clubs”, which buy the surplus produced by home-based herbalists. These hope to become the basis of a legal distribution network.

The Economist report shows that business is leading the way, leading some city councils to regulate dispensaries despite the ruling of federal law.

In June Vancouver’s city council decided to regulate them, even though they remain illegal in the eyes of federal law. Better that than lose the business to Washington state, which has legalised pot and is 90 minutes away by car, the councillors reckoned. Other local authorities—and parts of the marijuana industry—are not so tolerant. Police in Saskatoon, a city in central Saskatchewan, shut down its only storefront dispensary in October. Smokers caught with “a leftover roach” could be charged, they warned.

The picture painted here is one of many grey areas with lots of confusion and blurring of lines.  There are mixed motivations and definitions circulating around, especially between the legal – illegal, local – federal and medicinal – recreational camps.

One thing is certain – there is big change coming, and people are looking to make the most of it.

But fun is probably the bigger opportunity. Tweed’s boss, Bruce Linton, dreams of cannabis-infused sugary drinks and marijuana-smoked salmon, though it is not clear that such products will be allowed. Although advertising is banned, Tweed is boosting its brand by selling T-shirts and mugs and sponsoring events.

You can read the full article in The Economist here.

Words by Alastair Moore

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