Canada Legalises Cannabis: One Year On

by Ant Lehane



Today Canada celebrates its first anniversary of a legal, regulated cannabis market (a Cannaversary… if you will). Exactly this time last year we caught up with some of the key stakeholders involved in this monumental shift of policy to find out how ‘the Canadian Experiment’ would pan out.

Since that celebratory moment 12 months ago, much has changed. As logic dictates ‘what must come up, must come down’, so too did the Canadian cannabis hype bubble.  From day one of ‘legal weed’ there has been a palpable humming noise of negativity coming from some corners of the North American nation centring on issues such as supply, quality, consumer choice, price and the still striving pesky illicit market.

Of course, it would be ridiculous to assume that any model adopted by Canada would be a perfect fit for all those interested in consuming legal cannabis… After all, no matter how big your tent is, it is impossible to fit the brand-happy ultra libs and the hard-left anti-business brigade inside (as well as everyone in between).

So too is it unrealistic to assume the model adopted by Canada would be an instant hit. With very little to compare itself to and political reputations very much on a tightrope, there was always going to be an element of educated trial and error. Canada, rightly choosing to favour a public health approach over milking the economic cash cow, chose to roll out the implementation in stages, so we are not even analysing the finished product. Although to the detriment of those desperate for legal edibles and vapes, the pragmatism behind the Canadian model has ensured that, so far, there has been no major controversies. As one cannabis store owner said, “Everyone’s watching us”. He continued “If anything goes wrong here, we’re screwing it up for the whole world.”

The mere fact that the Canadian Experiment has kicked up minimal controversy is the greatest credit to its success. As aforementioned, the stakes for the first G7 nation legalising were incredibly high (no pun intended), with many anti-voices sharpening their knives in the shadows. The vaping ‘crisis’ in the US is a great example of how quickly these moral panics can get out of hand, and Canada must be lauded for allowing no such situation to develop under the watchful glare of the world.

To find out more about what Canadians REALLY think of their model and whether it can confidently be held up as a beacon of success for cannabis advocates, we caught up with Nick Pateras, MD of Materia Ventures’ European operation and previously of Lift&Co, to find out his thoughts.

Hi Nick, what have been the successes of the Canadian Model thus far?

The concerns about the public health and safety impacts of adult-use cannabis legalisation have not materialised: there have not been widespread incidents around driving fatalities or youth accessing legal product, which is a positive that has largely gone under-appreciated. In fact, the opening of stores across the countries and large grow facilities into small communities especially have fuelled job creation – the industry now employs roughly 10,000 people across the nation.

In essence, success has been marked in that Canada’s first year that has been largely non-contentious. There have been the obvious hiccups around supply shortages in the first few months and the supporting infrastructure, but as the months have gone by the system is starting to hum along nicely.

And…. What have been the failures?

The roll-out of retail stores has been slower than expected. In the country’s largest province of Ontario for example, retail stores weren’t open until six months after the date of legalisation. The number of stores are insufficient too: whereas most estimates demonstrate that the province could support hundreds of stores, Ontario has only 24 at time of writing with another few dozen due to open in the coming weeks. This has stunted market growth and the displacement of the legal market, and is also a theme in other major provinces like Quebec.

Additionally, from a capital markets perspective it has been a challenging few months for cannabis players, whose stock prices have seen dramatic declines as investors have started to demand notable revenue growth and improvements on bottom line performance. The problem here has been a systemic mismanagement of expectations on the part of companies, the media and the investor community, all of whom over-estimated how fast the market would grow. This has caused some to label the first year of legalisation a ‘failure’ but really the issue was an artificially inflated sense of growth from the outset.

So, what do you hope to see in the future?

Everyone is keenly awaiting the launch of the second wave of products, which include topicals, edibles (including beverages) and extracts (such as vape pens and other concentrates). These will start to appear on shelves across the country early next year and will play a large role in attracting new consumers to the category and accelerating the displacement of the illicit market. From a consumer standpoint, it will be interesting to watch the adoption of beverages specifically and hopefully these types of products offer a new face to the market for those who still believe cannabis can only be consumed in joint form. Hopefully these products’ convenience and safety profiles – especially vapes – is easily accepted.

I also hope we continue to see support of the medical cannabis system, which has been overshadowed by the grander commercial opportunity of adult-use. I’d like to see patients’ product needs prioritised and some movement from the government on the issue of taxation, where today medical cannabis is still subject to both a sales tax and an excise tax. For many of us, this is unacceptable and we will continue to champion the rights of patients for access and affordability.

Thanks Nick!

So then, the verdict is still out on the longevity and efficacy of the Canadian Model, but it is impossible to deny that the first year of legal cannabis in Canada has shown the world that it can be done… and with minimal negative press. The teething problems still to be ironed out, such as a lack of dispensaries, are more minor tooth ache than root canal surgery which will be dealt with in time.

To finish on a high, Canada must rightly be lauded as a big success so far, yes there is definitely room for improvement, but don’t forget: when so much could have gone wrong, Canada has got it right.

Ant Lehane is Communications Officer of Volteface. Tweets: @antlehane

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