Something fascinating is happening in Canada right now. A popular, once-demonized illegal product is going to be legalized by our federal government and made available to consumers in retail stores across the country.
Legal, recreational cannabis is coming in July 2018. And with it, a new opportunity for a new industry.
Cannabis is big business
Cannabis sales have the potential to be huge business. According to The Cannabist, a cannabis news and lifestyle website based out of Denver, sales in the state of Colorado passed the $1 billion mark in 2017 after just 8 months. Not only is the number eye-popping, the rate of growth is significant – in 2016, it took 10 months to hit the $1 billion mark. These numbers don’t appear to be an aberration. Cannabis sales for 2017 in Washington State reached $1.1 billion at the end of September.
Canaccord Genuity estimates sales could reach C$6 billion annually in Canada by 2021 and many politicians are looking at cannabis as a new, lucrative revenue stream.
Big policy decisions remain at the provincial level
Provincial governments now have big policy decisions to make related to cannabis. Despite the fact that the federal government made the decision to legalize cannabis, it’s being left to each province to sort out the details, including the important matter of who will sell cannabis.
What’s emerging is a potential patchwork of policies where cannabis sales will be as uniquely regulated across the provinces as alcohol. For example:
- In Ontario, the Kathleen Wynne government announced sales will be through LCBO-controlled outlets, but cannabis and alcohol cannot be purchased in one store.
- Last week the Alberta government announced a hybrid system where the private retailers will sell cannabis in physical stores, while the government will control online sales.
- In British Columbia, the government completed a consultation process on November 1, seeking the publics’ views on how B.C. should regulate non-medical cannabis.
- In Quebec, the government announced on November 16 that cannabis will be sold through the Société québécoise du cannabis (SQC), a subsidiary of the crown corporation Société des alcools (SAQ).
- And in New Brunswick, the government recently announced that recreational cannabis will be sold through 20 stand-alone stores operated by NB Liquor.
Legal cannabis is a significant business opportunity in every province, but it’s expected to be particularly lucrative in British Columbia. In 2016, there were reportedly more than 100 illegal cannabis dispensaries in Vancouver alone. Earlier this year, police estimated 35,000 participants attended the annual “4/20” protest.
While July 2018 is only nine months away, most provincial regulatory regimes remain fluid with policy makers still deciding what their province’s distribution and sales regimes will look like.
As a result, provincial governments are in a position where they’re picking winners and losers for a multi-billion industry, an unprecedented situation. In determining who will sell recreational cannabis, politicians will be creating a new government-protected monopoly, awarding a lucrative benefit to either the public sector unions who staff government-operated stores or the businesspeople responsible for privately-operated stores.
The advocacy window is closing
Our public policy and government relations experience suggests that once the sales and distribution regimes are set, they will be difficult to change. This is the case with all highly-regulated industries and products, particularly those that may impact public safety.
For those businesses interested in being a part of the cannabis supply chain, now is the time to put forward a compelling, thoughtful submission to government, and to continue to advocate directly with decision makers – both bureaucrats and elected officials – where possible.
But the window is closing. Those who don’t proactively engage government will soon miss the opportunity to have their voice heard.