O Cannada: Legal Weed’s Effect on the Canadian Economy and Culture

Under Prime Minister Justin Trudeau’s Liberal Party leadership, Canada recently legalized cannabis nationwide, making it the largest country in the world to have a federally sanctioned marijuana marketplace. The Great White North, strong and free? That remains to be seen, say industry experts and activists across the nation.

According to a Statistics Canada report, Canadians spend almost as much on the green as they do on the grape, consuming C$6.2 billion worth of marijuana in 2015—a relatively conservative estimate, the agency admitted, stating that actual consumption could “reasonably” be as low as half that amount, or as much as double. By comparison, Canadians spent C$7 billion on wine in 2015.

The emerging Canadian cannabis industry has seen dizzying growth in the past year. Shares in Canopy Growth Corp. (formerly Tweed Marijuana Inc.), trading on the Toronto Stock Exchange as WEED, have more than tripled. Bloomberg.com reported that the company’s market value of C$7.2 billion now exceeds that of Bombardier Inc.—the world’s leading manufacturer of both planes and trains.

No matter how you slice it, the legal weed industry is guaranteed to be a huge payday for the Canadian government, with an estimated $400 million generated annually in taxes from retail sales, according to Bloomberg. And cannabis businesses across the country are clamoring for their share of the pot pie.

Should Legal Weed Look Fun?

Government regulations and restrictions on legal cannabis sales may limit the retail weed market to some degree. Cannabis-product packaging may be required to display health warnings akin to the graphic images of smoking-related diseases that are printed on packs of Canadian cigarettes. Consumer testimonials may be banned. Ditto for celebrity endorsements. Packaging could be mandated to look as plain and unglamorous as possible if officials have their way: no bright colors, fun fonts or trippy designs.

In a 2016 report titled “A Framework for the Legalization and Regulation of Cannabis in Canada” from the Task Force on Cannabis Legalization and Regulation, public-health officials issued 112 pages of proposed rules for Canada’s cannabis industry, stating, “We recognize that there will be much discussion around the implications of our recommendations. However, like scraping ice from the car windows on a cold winter morning, we believe that we can now see enough to move forward.”

Cannabusiness owners wonder: Will the Canadian government take the fun out of legal marijuana?

Speaking to Bloomberg, Bill Blair, former chief of the Toronto Police Service turned marijuana “point person” for the Ontario government, said that the goal of strict official regulations is to “do a better job of protecting our kids.” But that way of thinking is behind the times. Many nonmedical consumers are middle-aged or older. The cannabis industry’s concern is that, if proposed restrictions limit traditional advertising methods, it may be difficult to market pot products to adult consumers.

Eric Klein, head of marketing for the Cronos Group, an investment firm that owns and operates several licensed cannabis producers across Canada, says branding and marketing are highly important. “You create accountability,” Klein told High Times. “Brands can develop and maintain reputations by delivering high-quality product. If you commoditize the category, then everyone’s racing toward the bottom to reduce price, and that’s when you start seeing the consumer not necessarily benefit. It’s important to allow for product differentiation and brand recognition that enables companies to build reputations, and invest in quality.”

To many cannabis consumers, the new laws may not make much of a difference. They’ll buy and smoke weed no matter how it’s packaged. In fact, true cannasseurs may not even want to buy legal weed. In many cases, provincial governments are choosing to contract with large-scale growers to fulfill their legal cannabis quota, leaving little to no room for smaller operations growing high-quality bud. It may be difficult to find top-shelf nugs in retail pot shops if the supply is primarily from huge industrial grows.

Judging from the track record of US states that have legalized recreational marijuana, like Colorado, Washington and Oregon, the cannabis market in Canada will likely take years to develop. There will be unexpected setbacks. Officials will need to work closely with businesses and communities to fine-tune regulations and finances as obstacles—and opportunities—crop up.

Black, Gray and Green Markets

Cannabis activists Lisa Campbell and Sarah Gillies co-founded the Green Market. (High Times)

Under Canada’s federal pot laws, citizens ages 18 and older will be able to grow four plants of any size at home. However, most cannabis consumers want to buy their bud—it’s much easier to leave growing great weed to the professionals. It remains to be seen whether marijuana aficionados embrace legal pot shops, or continue to buy from the guy who delivers the finest kind to their front door.

Steve is a marijuana delivery man operating in the hip Plateau-Mont-Royal neighborhood of Montreal. He feels certain that weed going legal in Quebec won’t affect his job or company in the least. Steve works for an outfit that provides top-shelf nugs, pre-rolls, edibles and concentrates. Clients order via SMS text. An eighth of the best weed around goes for C$30, delivered right to your home, Steve says. Why would any of his clients want to go to a giant government-run pot shop and pay more? Steve told HT, “[The government is] effectively granting a quasi-monopoly to a few corporations—and some of those corporations are run by former police officers who have been directly involved in the persecution of those who love the herb. A lot of people have a negative reaction to that, along the lines of ‘Fuck, I’m not buying my weed from a cop!’”

Steve continued, “Also, mass production like that is the Walmartizing of weed. It’s McDonald’s weed. It’s not artisanally crafted, well-grown varieties. It’s going to end up being the most commercially cost-effective varieties. Because of that, I think we’ll be able to outcompete the big producers, both in terms of quality and in terms of service. From a customer standpoint, they take out their phone, they send a text, and somebody knowledgeable and polite shows up—that’s going to trump going to a store and buying some pre-packaged whatever.”

So trouble may be brewing. Licensed medical-cannabis growers and regulators could be pitted against the black-market weed industry, as everyone figures out how to pivot toward the recreational marijuana market.

While ganjapreneurs scramble to get ready for government oversight, one event is attempting to bridge the gap between illicit weed and legal cannabis. Green Market, a women-led pop-up farmers’ market, occurs regularly in Toronto, and has expanded to other cities across Canada. The market hosts vendors selling all types of pot products—edibles, concentrates, drinks, topicals, flowers and more—to anyone 18 or older. With no medical recommendations needed, before legalization has taken effect, the event runs a risk in openly offering pot products for sale.

Cannabis activist Lisa Campbell, co-founder of Green Market, says that it’s in business to address the supply gap between the current medical- and future recreational-cannabis markets. Campbell told HT, “Green Market started a year and a half ago, and we have another year to go after legalization until edibles and craft producers are included in legalization in 2019. Until then, Green Market has inspired a whole generation of craft-cannabis makers and pop-ups across Canada!”

What’s Legal in Canada?

While cannabis is legal across Canada following a recent Senate vote, much of the on-the-ground implementation of laws will fall to provincial and territorial governments. The federal government has set some basic minimums: The minimum legal age is 18, you can grow a maximum of four plants for personal use and you can legally possess up to 30 grams of pot. Edibles will not be legally available until 2019.

Beyond those requirements, each of the 10 provinces and three territories will largely make its own rules governing cultivation, production, possession and consumption. Local governments will oversee the distribution and sale of marijuana within their own jurisdictions, and they will be able to make laws stricter or more lax as they see fit.

Rec on the Rock

O Cannada: Legal Weed's Effect on the Canadian Economy and Culture

Thomas H. Clarke plans to open up a retail pot shop in his hometown. (High Times)

Newfoundland and Labrador, the most easterly Canadian province, is in hard economic shape. After the collapse of the Atlantic cod fishery in the ’90s, thousands of Newfoundland families struggled to make ends meet. There was a mass exodus from the outport fishing towns dotted around the island, and many young folks moved to mainland Canada to find their fortunes. Today, despite a thriving tourism industry and offshore oil drilling, the province is still hard up. Will cannabis prove to be a cash cow on “the Rock,” as it is in so many other places?

One man fired up about the possibilities that legal pot may afford him is Thomas H. Clarke (note the initials). Clarke grew up in Newfoundland’s capital, St. John’s, and started selling pot in junior high. He was arrested at 18 for trafficking hashish, though he wasn’t actually caught with it—his buddy turned on him. Clarke was convicted on the basis of that statement and served 30 days in jail. “As a 19-year-old kid, that was pretty eye-opening. I didn’t want to go back there, that was for sure,” Clarke told HT. “But I made connections because I didn’t turn on anyone.” From there, he started selling quarter pounds and ounces, mostly to relatives and trusted friends. But he wasn’t in it for the money, he said. “I was in it for the cheaper grass.”

Clarke’s grandparents were both activists—his grandmother received the Order of Canada—and his mother is an educator, so his path to becoming an advocate for legalization in Newfoundland and Labrador made sense. He told HT, “I began speaking up about it because I knew I had to, in order for the province to go in the direction that I felt it should: localizing the industry, letting small businesses open and hiring as many Newfoundlanders as we could.” At 43, he has become the face of the marijuana movement in St. John’s, appearing on TV and radio shows, working tirelessly to destigmatize weed. And much to his satisfaction, the province recently ruled that private retail shops will be able to carry cannabis products.

Now living in Portugal Cove, just eight minutes from the St. John’s airport, Clarke is preparing to open up a retail pot shop on his property this summer as soon as he can get a license from the province. He has big plans for branding, planning an entire line of locally themed Blueberry strains repackaged to reflect Newfoundland culture. “I already have 13 strains picked out,” Clarke confided.

Another St. John’s businessman, Jon Whalen, told High Times that he believes there will be plenty of room for people like him to operate. Whalen, through his company Grass Hut Organics, plans to act as a broker between small operations growing top-shelf cannabis and retail shops. He’s heartened by the fact that the provincial government is talking in inclusive terms about bringing people into the fold from the black and gray markets, “making tax-paying citizens out of those who are already in the marijuana business one way or another.” Whalen anticipates that it will be relatively easy for Newfoundlanders to get licenses for retail shops.

Though the Newfoundland government struck a deal last December with Canopy Growth Corp. to supply 8,000 kilograms of cannabis annually in the first two years of legalization, Whalen said that’s only about a quarter of what Newfoundlanders actually consume. “There’s a lot of weed smoke in Newfoundland,” he says, laughing. “There’s still a lot of room to supply. Otherwise, the black market will continue to fill in whatever blanks exist anyway. It’s not really going to go over to the legal market until the people buying grass want to go to legal shops. I think it’s going to be a while.”

Amnesty for Pot Prisoners

Just as in the United States, Canadian drug laws have unfairly impacted the marginalized, the poor and people of color. Will the government wipe the slate clean for citizens with marijuana convictions?

The Canadian Broadcasting Corporation (CBC) reported in January that the Trudeau government is looking at options to erase criminal records for possessing pot, but there will be no amnesty until after cannabis is legalized and controlled. Trudeau told reporters: “Certainly we know the current legislation is hurting Canadians and criminalizing Canadians who perhaps shouldn’t be. But that is an engagement we will take once we have a legalized and controlled regime in place—not before.”

Critics are pushing for a pardon or record-suspension program for pot possession, saying people should not be criminally charged for cannabis just as legalization is on the horizon. Currently, anyone convicted of simple possession of up to 30 grams can apply for a record suspension through the Parole Board of Canada.

Peace, Roots and Corporate Cannabis

The Cronos Group investment firm owns and operates several licensed producers in Canada, including Peace Naturals in Ontario, where the company is in the process of building what chief operating officer David Hsu told HT will be “the largest purpose-built indoor facility in the world.”

The Cronos Group is poised to take a major share of the legal cannabis market with several companies across Canada operating under its aegis. When the group bought Peace Naturals, which was established in 2013, it also acquired a seed bank containing over 150 unique strains. Eric Klein, head of marketing for the Cronos Group, said, “New LPs [licensed producers] generally have to procure genetics from existing LPs, so with Peace Naturals we have an advantage.”

Cronos COO Hsu added, “We have over 19,000 seeds. Our ultimate goal is to find cultivars that are targeted for therapeutic relief. The main advantage of having such a large facility isn’t just for production. I think a lot of people in Canada are narrow-sighted for the recreational market. The rec market is exciting, but we’re very focused on the medicinal market and creating further intellectual property [in strains], better bioavailability, and then to get our genetics into clinical trials.” Ultimately, Hsu said, the company wants its product labeled with a drug identification number (DIN). An eight-digit DIN, used on prescription and over-the-counter drugs in Canada, indicates that the product has undergone testing and passed a review of its formulation, labeling and instructions for use.

The Cronos Group also has a joint venture with new the cannabis company Indigenous Roots, led by Phil Fontaine, former chief of the National Assembly of First Nations. Indigenous Roots will specialize in providing legal medical marijuana and jobs in the cannabis industry to First Nations communities. Speaking to reporters last year, Fontaine said that the new business venture is about helping Canada’s indigenous peoples gain access to high-quality cannabis products. “We know this is an underserved population,” Fontaine said. “Indian people deserve to have access to quality products.”

The True North, Strong and Free

As the federal and provincial governments implement the new laws, it’s still unclear what the new marijuana landscape will look like. Canadians will experience the impact and benefits of legal cannabis under various types of regulations coast to coast, from Newfoundland all the way to British Columbia. The rest of the world will be watching, and taking notes in anticipation of marijuana prohibition coming to an end in other countries all around the globe. Hopefully, that bright green future isn’t too far off.

The post O Cannada: Legal Weed’s Effect on the Canadian Economy and Culture appeared first on High Times.

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