On October 17, 2019, edibles, extracts and topicals became legal in Canada, ushering in the cannabis 2.0 market. Since that day, companies have been eligible to apply for licenses to produce edibles – albeit, under the microscope of a heavily mandated regulatory regime.

As part of the application process, those looking to enter the market must serve a Notice of New Cannabis Product to Health Canada, detailing all requisite information about the proposed product. After 60 days, approved products are set to hit the shelves – or so is the promise. It is yet to be seen whether December 15, 2019 will mark the day where flagship products are ready for distribution, though experts warn of an anticlimactic December as these products continue to make its way up the regulatory ladder.

As a departure from marketing regulations surrounding alcohol, cannabis is subject to the same, if not more stringent restrictions than tobacco; for example, the marketing cannot appeal to children, the packaging must be plain, and the products can only contain 10 mg of THC. The higher threshold of regulations is owed primarily to the fact that edibles are accountable to dual legislation: the Cannabis Act  (S.C. 2018, c. 16) and the Food and Drugs Act (R.S.C., 1985, c. F-27), and its respective regulations.

For many producers, the view to profitability is curbed by the regulatory realities of the market. The marketing restrictions mean they will be unable to distinguish and build their brand. The net result is: most producers are opting to be selective in marketing a limited range of products by hanging their hats on quality over quantity. The goal appears to be to start slow, canvas the consumer’s appetite for the product, and build up from there.

It will be interesting to observe the cannabis 2.0 industry take shape with the producers testing the Canadian waters with their craft product, while the consumers benefit from a smaller selection but of the good stuff.

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Legalization of Cannabis – One Year Later

By Samah Rahman

A year has passed since Canada became the first G7 country to legalize cannabis nationwide. On November 5, 2019, the University of Ottawa held a panel for alumni and friends at a rustic downtown Toronto venue, for a year-in-review of the triumphs and pitfalls of legalization.

The panel consisted of leading innovators in the cannabis industry: Lisa Campbell, CEO, Lifford Cannabis Solutions; John Fowler, Founder, The Supreme Cannabis Company, Inc.; Alison Gordon, CEO, 48North Cannabis Corp., and Mark Zekulin, CEO, Canopy Growth Corporation. The panel was moderated by Adam Dodek, Dean of the Faculty of Common Law at the University of Ottawa.

Here are 7 takeaways from the session:

1.The biggest surprise of the year?

“Private retail,” said Lisa. There is opportunity available for private retailers, but Ontario has been slow to respond to the demand. Ontario only has 24 stores, while there are over 300 in the West. According to the panel, we need to harness the opportunity currently out there.

2. Did we miss out by skipping over decriminalization and heading straight to legalization?  

Consensus: no. From a legal perspective, decriminalization is technical and not always effective; for example, when you are able use but not sell the product, it only emboldens the illegal market. And in case, there was a type of pseudo decriminalization in Canada prior to legalization given the lack of strict enforcement.

3. Why did we not hear any cannabis talk in the recent federal election?

According to Alison, we should have talked more cannabis at the federal election; after all, legalization is a success story in Canada. John agreed. Canada should have taken a victory lap given that legalization has led to the biggest politically-driven job creation initiative in recent Canadian history.

4.In the first year of legalization, who are the winners and the losers?

Winners: the rural communities who were able to pick up good business, even prior to legalization due to their progressive leadership. The growth of cannabis related businesses have revitalized such communities, said John.

Losers: the consumers, due to the lack of choice, brand, quality and access of cannabis. Lisa projects that soon cannabis will bottom as a commodity, and there will be a demand for craft cultivation.

Another lost opportunity according to John is the lack of global leadership displayed by Canada. All eyes are on Canada, but there is complacency within the nation. Canada is not pushing international boundaries and setting an innovative model for the world, despite being in a position to do so.

5.Why is there still a thriving black market claiming 30% of cannabis sales and how can this be remedied?

First, there is a lot of misinformation permeating the market. Meanwhile, the government is regulating from a place of fear and not allowing dissemination of knowledge and information about why consumers should choose legal cannabis. The industry needs a platform to communicate with the consumers.

Second, it is difficult to grow well at scale, particularly given the regulatory responsibilities on producers. We need to overcome this regulatory challenge.

Finally, in the initial task force, we proposed a data-driven approach to cannabis regulation. We have since, deviated from this approach. We must revisit it and encourage an inclusive and transparent branding environment.

 6. Is there a model out there that is getting cannabis policy right?

Alberta and Saskatchewan! They have found a way to set up an open market system. Ontario has included cannabis use under the Smoke-Free Ontario Act,[1] and this limits where you can use cannabis. If Ontario can incorporate cannabis into the hospitality industry like in Colorado by providing spaces like cannabis lounges, it would help with the tourism industry and present the next generation of business opportunities.

7. What’s in store for year 2?

We can expect added efficiency, as producers start mastering the art of legal cultivation at scale. We will also see an immense growth in storefronts, which will be positive for producers, but will present a challenge for entrepreneurs, according to John.

Finally, Canada will enter into the next stage of its legalization story with the introduction of “Cannabis 2.0”. The induction of edibles, extracts and topicals will present a new way of connecting with consumers. Canada should strive to take on a leadership role at the advent of such change. Things are happening in Canada that aren’t happening anywhere else in the world, according to Mark.

The panel concluded on an optimistic note that ensnared the entrepreneurial minds in the room when John shared a simple but powerful sentiment: cannabis will never be smaller, than it is today. 

[1] 2017, S.O. 2017, c. 26, Sched. 3

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