A little over a year ago voters in Canada went to the polls and tossed the Conservative Party from power after a 10-year reign. In their place they elected the Liberal Party, led by the charismatic Justin Trudeau, son of former Canadian Prime Minister, Pierre Trudeau.
One of the major platforms the Liberals ran on was the legalization of marijuana for all adults, aka recreational legalization or adult-use legalization. Now many eyes are on the new government in Canada as everyone waits to see what the Liberals will do.
To get down to the bottom of where we currently stand in the process, we spoke with Jordan Sinclair, Director of Communications for Canopy Growth Corporation.
Where does the Legislation Stand?
The federal government is going to table the legislation in the spring of 2017. There will be a period where they have to debate it. And then it will have to go to the Senate and then they will have to receive something called Royal Assent before it can actually become law.
“That process can take some time,“ says Sinclair. “Even though the rules will start to become clear in the spring it is more likely it will be the winter of 2018 before we start to see recreational sales.”
Although anything is possible with legislation in a country like Canada, Jordan sees little chance of some form of marijuana legalization failing to get through the Canadian Parliament.
“It is a piece of political legislation so there’s always a chance [that it could fail],” Jordan said. “Now the Senate currently has more conservative members in it than liberal members but I still think it has a pretty clear path.”
*Update – 12-7-2016 – Since the interview was conducted, Jordan tells us, “The Upper House has since added more independent senators so that potential roadblock appears to be even clearer than it was before.”
Canopy, the parent company of Tweed – which serves medical marijuana patients throughout Canada – is doing what they can to prepare for eventual recreational legalization. We asked Justin what that actually entails.
“We are trying to actively participate in all of the consultation that is going on,” Jordan told us. “They had an open call for submissions to be able to give your say as to what you think the law should look like. Should you be allowed to advertise? How should we distribute it? So, we were very happy to put in our submission in that way.”
Jordan said that Canopy is looking to scale up as fast as possible, maxing out their available production facilities and looking for new ones as they prepare for the coming adult use legalization.
“We recently announced that we are in a memorandum of understanding with a construction company to build us some more [production facilities] at a favorable rate. I think what that will allow us to do is expand quite quickly and have another avenue to do so that isn’t just purely equity based. What I mean by that is, to date we’ve funded our expansion through issuing shares. So this way I think we can do it in a more creative way that has a lot more ROI [Return on Investment] for our shareholders.”
United Nations Treaties
Many have speculated on the impact cannabis legalization will have on Canada’s participation in three United Nations drug control treaties.
“I think it was a really smart, strategic political move for the Canadians to make the original announcement about legalization at the U.N.,” Jordan said. “I think what that did was make it very clear this was the direction we are going in. We had people on the ground in New York the day the announcement was made and it really didn’t blow any people’s hair back. I think that the international community has a clear line of sight to what the liberal party was planning during the campaign process.”
It’s more likely that the international treaties in question will be renegotiated to reflect the new realities in Canada and that the international community has more important things to worry about in the long run than whether or not Canada is legalizing cannabis, according to Jordan.
What’s to Come?
As the first major country to federally legalize, Canada will face many regulatory challenges. As the rest of the world sits on the sidelines and policy makers break new ground, we asked what form could legalization take? What will the regulations be like? Will legal marijuana in Canada be dominated by the government, or will the free market get a chance to reign?
Jordan said Canopy is looking at the possibility that regulations could be relatively tight when the final rules for legalization shake out.
“For example, let’s say the government only allowed licensed producers to produce dried cannabis flowers and they wouldn’t allow us to produce other things. What that would do is open up the market opportunity back to the existing black market. We have got to be really clear with policy makers on that and if one of the policy objectives is to stop the black market from growing or to shrink it then what we should do is allow for legal forms of access to as many forms of cannabis as they can.”
According to Jordan, it’s a matter of balancing priorities against public safety and public health. Will there be marijuana gummy bears in Canada? Perhaps not, but it’s important to companies like Canopy to present the industry’s side of the arguments.
You can be sure that the Trudeau government is getting a lot of feedback from the companies that will inhabit the future legal adult marijuana market.
For a company like Canopy, which is already established in the Canadian medical cannabis market, the future is bright. Jordan thinks the coming of recreational legalization will enhance things on the medical side as well, spurring more understanding and innovation.
“Now we still basically ask people to go through their own trial and error process to find the right cannabis strain or the ingestion model that works best for them,” he said. “I think that a lot of this can be uncovered by research. Once there is legal access and real substantial tax revenue coming from that it would make a lot of sense for the federal government to provide some framework for research that would allow for medical cannabis patients to treat themselves a lot better. Hopefully that would put a dent into the use of opioid prescriptions by being able to define what and when and how we can treat other forms of pain with cannabis.”
Canopy will continue to pursue things on the medical side and everyone is excited about what will be possible in the future.
On the recreational side, thanks to the built-in customer base that is already familiar with many of the products on the market, Jordan sees legality letting those customers come out from the shadows, spurring further product improvements.
“We are going to start to see products get refined like in other recreational product markets,” Jordan said.
Canada Vs. the States
People in the United States are used to the state-by-state approach that is inherent in our traditions and political system. In Canada, legalization will be at the federal level, which means people in each province will see the same rules and regulations as everyone else. This also means that while the process may seem slow to some, once it’s completed it will be nationwide.
“I think that in the states you can see how a bunch of other people do things so the people who come on board later can pick and choose the best practices. For us the federal approach is fantastic for business, it’s consistent and it has been good for Canopy Growth. The other side of it is that the rules that you have are the rules that you have.” In other words, if you don’t like the rules that the Canadian government settles on you can’t just go to somewhere else in Canada to find rules that might be more beneficial to your business. With consistency also comes a certain amount of rigidity.
No matter what, Canada’s legalization – if and when it comes – will have a major impact not only on the Canadian economy and culture, but it will also send reverberations throughout North America and the rest of the world.
It’s an exciting time to be part of the marijuana law reform movement and Canada will get started on pioneering the federal approach next year.