Cannabis Act Under Review As Industry Faces Hurdles

Nearly four years after the legalization of cannabis in Canada, the federal government will finally announce its plans on Thursday for a long-awaited overhaul of the country’s cannabis law.

The legislative review was due nearly 12 months ago, and calls for reform are echoing from coast to coast.

According to Health Canada, “the legislative review must study the impact of the law on public health. In particular, it must examine the impact on the health and consumption habits of young people with regard to cannabis.

With so many unlicensed weed suppliers operating storefronts across the country as well as online, some industry leaders are telling the government that the health and wellbeing of consumers is at risk.

When weed was legalized across Canada in October 2018, it sparked a “green rush”, but fears are now growing that parts of the Canadian cannabis industry could go up in smoke.

CTV National News spoke with the former CEO of cannabis giant Canopy Growth, the president of the Cannabis Council of Canada and a brand partnerships expert who currently works for a company that connects consumers to black market products.

While nearly everyone working in the marijuana game agrees that sweeping change is needed, finding consensus on how to move forward remains elusive.

Industry complaints range from exorbitant taxes, government overreach and advertising restrictions to the proliferation of the black market.

Leafythings, an online cannabis directory, recently received the award for “Best Innovative Technology” at a national industry gala, although their big win turned heads primarily because the products they offer online come from both licensed companies and unregulated retailers – something lawmakers always point out. as illegal.

Nima Derak, director of brand partnerships for the company, characterizes those working in the black market as “independent operators looking to enter the market — most of these people want to enter the (legal) market but Because of government financial barriers, they’re really struggling.

In major urban areas across the country, owners of regulated pot shops are sounding the alarm, saying provincial governments are handing out too many retail licenses, causing city streets to become saturated with stores. Look no further than Toronto, which now has more weed stores than Tim Hortons locations.

“A lot of these family businesses are going to go bankrupt, they’re going to lose their life savings,” Derak adds, though many legal and regulated cannabis store owners point to the black market as a big part of the problem. .

George Smitherman, president of the Cannabis Council of Canada, believes that “the playing field is far from even. There are illegal retail storefronts, there are also many illegal delivery services which are also largely ignored (by the authorities).

A report commissioned by the Cannabis Council of Canada notes that in Ontario, each gram of weed is collectively taxed at over 27% by the provincial and federal governments. An additional markup of nearly 19 percent is then applied by the Ontario government – that’s all before a product hits the market for sale. “No other industry could handle a tax grab like this,” Smitherman said.

Meanwhile, the black market operates without paying a cent in taxes for their products. Smitherman believes authorities and prosecutors must find a way to shut down illegal operations. “There is a strong regulatory body, but there are not enough laws in place to stop the obvious illegal operators and no one is doing anything about it,” he said.

Large-scale regulated cannabis cultivators and producers also find themselves with a smaller slice of the pie, with massive layoffs and plummeting shares at big players in the Canadian industry like Aurora Cannabis and Canopy Growth.

In 2019 Canopy Growth shares hit nearly $70, today they are down to around $4 per share. The company declined our interview request, but its former CEO, Bruce Linton, spoke to CTV National News, noting that “the actual number of Canopy sales, in dollars of cannabis sold, has declined as the market is growing. So they actually sell less total revenue.

Linton wants to see the easing of government restrictions on marketing and advertising so that growers and regulated producers can compete with the black market that has no limitations on their packaging or the potency of their edibles.

“If you want a legal, regulated, and safe system to succeed, it must be able to sell products that you can identify, associate, and build,” Linton notes.

Derak and his colleagues at Leafythings believe there is a way for everyone to succeed. It calls for the establishment of a “system similar to Canadian Food Standards, where producers and brands can retain samples of their product and send samples to independent labs for testing and distribution directly to regulated businesses.” He also claims that many black market businesses would be willing to pay taxes if “exaggerated” government regulations were dropped.

Smitherman, who previously served as Ontario’s health minister, believes Derak and others are “trying to make the illegal market work better for themselves,” not the industry and consumers as a whole.

“Our focus is on consumers of legal age, giving them the right to choose where they buy and what they buy,” Derak fired back, pointing out that the Canadian cannabis industry “as a whole is a market of 6 billions of dollars and we’re missing out on half the market. It’s time to bring that money in and start contributing to Canadian society.

When cannabis was first legalized in Canada, the federal government transferred regulatory responsibilities to each provincial government, creating a patchwork system, with different laws and regulations depending on where you are in the country. .

For an industry that spits in front of the eyes of the world, all eyes will now be on the Canadian government’s review of the Cannabis Act. In an email to CTV National News, Health Canada states that “the government is committed to putting in place a credible, evidence-based process for legislative review that will assess progress toward achieving the goals of the Cannabis Act”.

As the government prepares to announce its plans for how it will overhaul the Cannabis Act, Aurora Cannabis this week announced a loss of just over $600 million in the fourth quarter.