Canada must help legal cannabis sector complete with the illicit market, experts say | 24CA News

The federal authorities’s ongoing evaluation of the Cannabis Act emphasizes defending public well being — however consultants and trade insiders say it additionally has to discover a method to enhance the authorized marijuana trade and assist it compete with the illicit market.

The act, which legalized leisure marijuana in Canada in 2018, got here with a requirement that the federal authorities evaluation it three years after it turned legislation.

After a delay, the federal government began the evaluation in September 2022. It’s being led by a panel of 5 consultants with a mixture of backgrounds in well being, legislation and public coverage. The panel is anticipated to report its last conclusions and recommendation to the federal authorities by spring 2024.

“The work of the expert panel will address the ongoing and emerging needs of Canadians while protecting their health and safety. Through this useful, inclusive and evidence-driven review, we will strengthen the Act so that it meets the needs of all Canadians while continuing to displace the illicit market,” federal Health Minister Jean-Yves Duclos stated in a news launch.

But the Cannabis Council of Canada (C3), which represents hashish companies nationally, says some marijuana guidelines and rules meant to guard public well being are hurting the authorized market’s capacity to push out the unlawful market.

In its submission to the federal authorities as a part of the evaluation, C3 known as for broad adjustments to the Cannabis Act. They embody reducing the excise tax on hashish merchandise, decreasing the variety of restrictions on bundle labelling and promoting, and ending taxation of medical hashish.

“We have a regulatory system that doesn’t make a lot of sense, that frankly prohibits the ability of legal cannabis producers to compete with illicit market products,” Pierre Killeen, C3’s vice-president of legislative and regulatory affairs, informed 24CA News.

In the federal authorities’s most up-to-date survey on hashish, 48 per cent of respondents stated they at all times get their hashish from a authorized, licensed supply.

“If we want to achieve the objectives of legalization, we need a financially sustainable cannabis industry,” Killeen stated. “We are government’s partners in this endeavour, although we have never really been treated by any level of government as a partner in this endeavour.”

Cannabis shops recorded gross sales of slightly below $3.8 billion throughout Canada between January and October of 2022, in line with Statistics Canada’s newest knowledge. Stores bought roughly the identical quantity in all of 2021.

Killeen stated many hashish companies might be pressured to shut if the federal authorities would not make adjustments to marijuana legal guidelines — and he isn’t optimistic it can.

“Your best indicator of the future is the past. So if you look at the Government of Canada and the provincial governments’ approach to the economic challenges facing the cannabis industry, there’s no track record of success,” he stated.

“So I think … at this stage in the journey, we are pessimistic about the prospects of the Cannabis Act review resulting in any measures that address the pressing and immediate financial crisis facing cannabis licence holders.”

Michael Armstrong, a professor of operations analysis at Brock University who research the hashish trade, agrees that the federal authorities is unlikely to make a few of the greater adjustments C3 needs.

“On some of those asks, I think [C3 is] going to get a hard no, because they’re going to contradict the public health, public safety objectives of the federal government,” he stated.

“Keep in mind, the federal government’s balancing act is they want the legal market to be attractive enough to bring all the existing users over from the illicit market, but they don’t want it to be so attractive that it brings in lots of new users.”

Health Canada lately introduced a rise to the quantity of cannabis-infused drinks one can legally possess.

Armstrong stated that is the kind of smaller adjustment the Cannabis Act evaluation is prone to produce.

He added that C3’s request for much less restrictive packaging and labelling guidelines is truthful.

“I think it’d be perfectly reasonable to let the industry put a little blurb, like a paragraph, saying, ‘Hey, this is what this product is intended for,'” he stated.

The commonplace excise tax on dry hashish flower is $0.25 per gram. Cannabis customers additionally pay gross sales taxes on the product and, relying on the province, might should pay a mark-up from monopoly retailers such because the Ontario Cannabis Store. The Ontario authorities lately reported it made $520 million from marijuana gross sales final 12 months.

Brad Poulos, a lecturer at Toronto Metropolitan University’s Ted Rogers School of Management, stated the federal government has set the excise tax too excessive to permit the authorized hashish trade to compete with tax-free unlawful product — and it ought to take into account reducing it.

“When it’s time to get rid of that illicit market, when you get rid of prohibition, you know what you don’t do? You don’t tax [cannabis] like crazy,” Poulos stated.

Poulos added he’d additionally wish to see the federal government remove taxes on medical hashish.

“There’s only one medicine in Canada that gets taxed at all, and that’s cannabis,” he stated.

“So what this says to me is that the government does not actually consider cannabis to be medicine.”

It’s one in all many adjustments Don Davies, the NDP well being critic and member of Parliament for Vancouver Kingsway, needs to see come out of the Cannabis Act evaluation.

“A lot of the legitimate legal cannabis sector is hampered by excessive rules and regulations that are, I think, inhibiting it from reaching its full potential and actually helping to facilitate a lot of the black market that’s still there,” Davies stated.

“In my hometown of Vancouver, the storefront windows of cannabis stores have to be shaded in. You can’t look in. That’s not the case for a liquor store … More importantly, the labelling on products is not really telling the consumers what they want and need to know.”

The Conservative Party didn’t reply to CBC’s request for touch upon the Cannabis Act evaluation.

Kun Karunaker, CEO and co-founder of the Toronto-based hashish manufacturing firm Strains Limited, agrees that regulation of the trade is extreme. Karunaker’s business holds 4 cannabis-related licenses and lately utilized for a fifth.

But Karunaker provides Health Canada credit score for reaching out to him and his firm for suggestions on hashish legal guidelines — one thing he stated the provincial authorities in Ontario hasn’t executed as usually.

“I’m not going to bash Health Canada where right now they’re actually listening more to people like us, and they’re having these conversations of where they can get better and where they can improve,” he stated.

Karunaker stated he’d like federal authorities officers to go to his facility to allow them to see what working a hashish business is like.

“They need to be on-site with somebody like us who can actually show them, and go through these things with them,” he stated.

Karunaker stated some latest tweaks to hashish rules make him optimistic about the way forward for the trade — an optimism that Davies shares.

“I’m hopeful that we can make progress and we certainly need to do so because this industry is very important to Canada’s future,” Davies stated.

“I’m very bullish on the cannabis sector. It’s sustainable, it’s clean, it’s high-tech. Canada can be a world leader.”

Cannabis tourism a missed alternative: knowledgeable

Susan Dupej, a researcher on the Lang School of Business and Economics on the University of Guelph, stated Canada missed a possibility to grow to be a world chief in hashish tourism following legalization.

She stated rolling again restrictions on promotion and promoting may result in extra travellers heading to Canada searching for a authorized toke.

“The Cannabis Act outlines where consumption cannot take place, right? It’s restrictive,” Dupej stated.

“But there are no rules, no guidelines around the potential for developing the spaces where consumption could take place.”

Though hashish is illegitimate on the federal degree within the United States, Dupej pointed to a Forbes Magazine report that valued the American hashish tourism trade at $17 billion.

Dupej stated it is troublesome to know the way a lot the hashish tourism trade in Canada is price, however she estimates it is considerably decrease than $17 billion.

Poulos stated it is not the one space the place the United States has an edge in the case of hashish.

“The Americans are the ones that are building up the worldwide known brands, and so that’s an opportunity lost,” he stated.