Canada Legalises Cannabis: Two Months On

by Web Test



The legalisation of cannabis in Canada is a burning hot topic. As the first G7 country to legalise the drug nationally, Canada provides a significantly better example for the UK to look towards than the various US states where cannabis still remains federally illegal. But almost two months on, what can we discern from the Canadian experience?

Wading through the haze of information and criticism that has emerged since the end to the prohibition of cannabis on October 17th, Volteface looks at the preliminary effects of the policy, placing the experience of industry, the police, consumers, government and young people under the microscope.

Taking industry as the first focus, Trudeau’s reform has faced criticism for the failure to meet consumer demand. Cannabis shortages are prevalent across Canada, with retailers reporting that just 20%-30% of stock ordered are being received.

This is because there are simply not enough licensed producers in Canada. Currently Health Canada lists 132 producers licensed to cultivate, but reports that an additional 300 people have been hired to assess incoming application, suggesting that the organisation did not have the capacity to approve a sufficient number of licenses prior to legalisation. This suggests that Health Canada were inadequately prepared for the predicted surge in demand post legalisation. According to polls conducted by Statistics Canada before legalisation, 28% of active cannabis users nationwide said they anticipated increasing their cannabis usage once it became legal. However issues on the supply side may also relate to the newness of the industry, which is simply not developed enough to meet Canadian demand.

With any new industry, be that drug related or not, teething problems such as this are to be expected. Toronto based economic think tank, The CD Howe Institute, released a report in early October estimating that the current legal supply will meet about 30% – 60% of total demand in the first few months of legalisation. But it is thought to be a relatively easy issue to rectify and in the coming year it is widely expected that supply will catch up with demand and initial shortages are likely to a be a temporary frustration rather than a persistent catch-22.

With legal enterprises struggling to meet demand nationwide, it has been reported that a significant proportion of consumers have continued to purchase cannabis on the black market.The legal market is competing against an illicit business model that has functioned effectively during the years of illegality, with a recent IPSOS poll revealing that 35% those who purchase cannabis regularly have remained loyal to illicit dealers.

However, Canada is already starting to see the closure of illicit outlets. In Toronto alone, the number has already fallen from 92 to 21 and high consumer satisfaction with the legal market suggests that licensed retailers could fill this gap.

Polling data shows that 83% of those who have purchased from a licensed retailer since legalisation were satisfied with the overall experience of purchasing cannabis, while 85% agree that they were satisfied with the quality of cannabis that they purchased. Issues remain surrounding the price of cannabis on the legal market, with 54% regarding it too high, but this issue is likely to decline according to industry experts. Tom Adams, managing director of cannabis industry intelligence at BDS Analytics, has suggested that prices for legal products will plummet significantly. This prediction is based on the performance of the legal market against the black market in places such as Colorado, where the price of cannabis has declined by over 50% two years after legalisation. There may be a temporary protraction of the black market, on account of its ability to out compete the legal market on price, but this is unlikely to continue in the long run and Trudeau’s claim that black market profit will be reduced by C$6 billion, may yet be realised.

Economic projections suggest that legalisation will financially benefit the liberal Government. With cannabis sales taxed at 5%, 13% or 15% depending on the province or territory where the product is purchased, it is heavily anticipated that both federal and provincial governments will benefit financially; receiving 25% and 75% of tax revenue respectively. At this stage data to this effect is limited, but according to a Deloitte study titled ‘A Society in Transition, an Industry Ready to Bloom’, legal cannabis sales will generate $4.34 billion in revenue in 2019. Additionally, data collected by online cannabis based magazine Lift & Co, reveals that in the first 24 hours of legalisation, Quebec generated an estimated $1,381,250, Alberta raked in approximately $730,000, and Nova Scotia reported sales to the value of $660,000. For a more comprehensive assessment, time will only tell, but legalisation is likely to transpire as a profitable revenue.

Aside from the economic benefits, legalisation has opened the door for more research opportunities into medicinal cannabis and a number of study opportunities have already emerged. The Canadian Institute of Health Research has announced funding for fourteen new studies, while a multimillion dollar professorship has been established at the University of British Columbia to explore the potential utility of cannabis in the opioid Crisis.

When looking to the general public, it appears that a significant proportion of Canadians have shrugged in the face of legalisation. A further IPSOS poll suggests there is neither an overwhelming sense of joy or discontent among the population, with 35% neither pleased nor disappointed. This sense of indifference may suggest that perhaps, legalisation isn’t as divisive as politicians have assumed back in the UK.

That said, the policy has not been entirely unchallenged. Almost three-quarters of Canadians believe the minimum age to purchase and consume cannabis should be raised and independent research conducted by the Angus Reid Institute reveals that only 27% agree with federal government legislation that 18 is an appropriate age limitation. The legal framework has given provinces the right to raise the legal age, for instance, Quebec has taken the hard line raising the legal age to 21, while British Columbia and Manitoba have set the age as 19. Despite a lack of data to this effect, the legal patchwork may cause issues for the policing of cannabis across provincial borders. Though time will tell, it is unlikely that this issue will necessitate federal focus, as it mimics Canada’s long standing devolved arrangement of age limits on alcohol consumption.

Regarding the experience of the police and young people, the impact of legalisation remains ambiguous due to a lack of evidence at this early stage. As regards the consequences for youth possession, the legal regulations are extensively fragmented due to Canadian devolution. For instance, youths caught for possession in Ontario are liable for a C$200 fine, but there remains no federal penalty. A similar story emerges when attempting to assess the impact on the police force. The federal government committed to putting an enormous $274 million into policing two new pieces of legislation: The Cannabis Act and The Driving Act. The success of policing the new legislation is still open to question, but it is notable that there has not been a spike in cannabis impaired driving, despite initial concerns.

Legalisation is a complex issue that should be nurtured gradually, with a careful consideration of the detail. Reflective of Canada’s heavily devolved system, cannabis reform has thrown up a patchwork of laws and a miscellany of trends. The Canadian experience presents an interesting case study that the United Kingdom can look towards and with the black market likely to decline and the government set to accumulate significant revenue, the national trajectory appears positive.

It is too early to reward Trudeau with a wholesale political victory, but Canada has certainly set the stage.

Lola Brittain is an independent contributor to Volteface & University of Leeds student.

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