Cannabis clubs are becoming more common around the world, particularly in Canada. Unfortunately, some lawmakers and regulators continue to seemingly act as if prohibiting social cannabis use venues will prevent them from operating. A recent example of that can be found via comments made by Ontario Premier Doug Ford after he heard a pitch for cannabis clubs provided by the Ontario Chamber of Commerce.

“I don’t like the idea of having a lounge outside and they’re smoking or doobies or weed or whatever the heck they call it now,” said Premier Ford according to the Toronto Star. “If you want to do your stuff, do it somewhere else. That’s my opinion.”

The recent comments were unfortunate, although, they do not reflect the reality of what is happening throughout much of Canada. When consumers go “somewhere else” it’s often a cannabis speakeasy. Furthermore, people are going to consume cannabis at events such as concerts, just as they have for many, many years. Lawmakers like Premier Ford can choose to stick their heads in the sand and pretend like social cannabis use doesn’t already exist, however, that denial of reality comes at a cost to public health, safety, and revenue.

Common Ground

Whether Premier Doug Ford realizes it or not, contained in his recent comments is an argument for regulating social cannabis use and allowing venues to be licensed. Per Premier Ford’s own words, he doesn’t “like the idea of having a lounge outside and they’re smoking.” What is being proposed is private venues, where people can consume cannabis out of public view.

As responsible cannabis consumers will be quick to point out, they typically don’t prefer to consume cannabis on a sidewalk or in an alley. Speaking for myself, I’d much rather consume cannabis in a private social setting. When I am away from home and I don’t have a private setting to consume in, I’d gladly go to a regulated venue to smoke cannabis instead of doing so in a park or on the side of a building. If Premier Ford’s main argument is that he doesn’t want cannabis consumption to be a nuisance, then he should be advocating for cannabis clubs and not against them.

Accepting Reality

Cannabis consumers and patients want cannabis clubs, other private social venues, and consumption-friendly events. Just as some adults want to consume alcohol around their current friends and family, and/or want to make new friends, the same is true for cannabis. For patients specifically, they need to be able to consume their medicine wherever they are, and social cannabis businesses help facilitate that.

The unregulated cannabis market is going to fill any voids left by deficient public policy. If lawmakers like Premier Ford do not want to pursue sensible public policy and do not want to allow social use entities to legally operate, such entities will still surely exist, they will just be less safe and zero percent of any profits will go to public coffers. Lawmakers in Ontario, Canada, and everywhere else would be wise to embrace cannabis clubs rather than oppose them. Calls for social use reform are not going away, and will only get louder as the emerging legal cannabis industry continues to expand.

Earlier this week we covered a report that was recently issued by the Traffic Injury Research Foundation titled, “Recreational Cannabis Consumption Spaces in Canada.” The report was published with support from the Canada Safety Council and DRIVE SOBER®.

In many ways, the report failed to provide proper context and seemed to try to portray cannabis in the most negative light possible, with a heavy focus on public roadway fearmongering. The results of a recent traffic-injury study are proving to be quite timely, as the findings of this new study seem to contradict many points that were recently offered up by cannabis opponents.

A new study based out of Canada examined traffic-injury hospitalization data in an attempt to see if the launch of legal adult-use sales in Canada was associated with an increase in traffic-injury hospitalization rates. Below is more information about it via a news release from NORML:

Toronto, Canada: The implementation of adult-use marijuana sales in Canada is not associated with any increase in traffic injury-related hospitalizations, according to data published in the journal Addiction.

Investigators assessed nationwide rates of emergency department visits and hospitalizations in the years before and immediately following legalization.

Authors concluded, “Overall, there is no clear evidence that RCL [recreational cannabis laws] had any effect on rates of ED visits and hospitalizations for either motor vehicle or pedestrian/cyclist injury across Canada.”

The findings are consistent with those of a 2021 Canadian study that similarly “found no evidence that the implementation of the Cannabis Act was associated with significant changes in post-legalization patterns of all drivers’ traffic-injury ED visits or, more specifically, youth-driver traffic-injury ED presentations.”

Several studies from the United States also found no significant changes in traffic safety in the years immediately following the enactment of adult-use legalization. However, other assessments evaluating longer-term trends in traffic safety following legalization have yielded inconsistent results.

Full text of the study, “The effect of recreational cannabis legalization on rates of traffic injury in Canada,” appears in Addiction. Additional information is available from the NORML Fact Sheet, ‘Marijuana and Psychomotor Performance.’

Canada remains the only country on earth where anyone of legal age can make a legal adult-use cannabis purchase regardless of residency status. The only country to legalize cannabis for adult use prior to Canada doing so in 2018 was Uruguay back in 2013.

Unlike in Canada, Uruguay limits adult-use sales to residents only. Malta is the only other country on the planet right now that has also passed an adult-use legalization measure, however, the only way to legally purchase cannabis in Malta will be via licensed non-profit cannabis clubs, and no licenses seem to have been issued thus far. Malta started accepting applications for clubs late last month.

Until legal sales to non-residents become a reality elsewhere, Canada will continue to be in a league of its own. Canada’s legalization model and related policies are obviously not perfect, although, they are still exponentially better than prohibition.

The industry has succeeded by many measures despite it operating on a playing field that is far from level compared to other legal industries of its size in Canada. Prime Minister Justin Trudeau made comments recently that suggest a leveling of the playing field may be on the horizon. Per excerpts from initial reporting by StratCann:

Prime Minister Justin Trudeau acknowledged the need for the government to “catch up” with the cannabis industry’s concerns around issues like high taxation in a recent public event.

In his response, Trudeau first brought up the government’s historical public-health focussed messaging around legaization, but noted that now that the legal system is established, the government has a need to take a look at ensuring those businesses who “stepped up” in this new industry can survive.

“Now that we’ve got the public health and safety stuff out of the way, or on the way, I think you’re absolutely right that we should absolutely take a much closer look at ‘okay, what do we do then to make sure that this is a beneficial industry?’

As we previously reported, the legal cannabis industry in Canada had created roughly 151,000 jobs as of February 2022. Additionally, the emerging legal cannabis industry is responsible for generating over $15 billion since legal adult-use sales launched in late 2018.

Deloitte estimates that the legal cannabis industry in Canada has contributed over $43.5 billion to the nation’s GDP since the start of legalization. Cannabis companies have directly invested roughly $4.4 billion into Canada’s economy, with the remaining boost to GDP coming from “indirect” economic contributions, and “induced” contributions according to Deloitte.

As impressive as those statistics are, they come from an era in which Canada’s cannabis industry faced needless hurdles, many of which are still in place today. Hopefully Prime Minster Trudeau puts actions behind his recent words and does everything in his power to help his nation’s emerging cannabis industry reach its full potential.

Canada was the second nation to pass a national adult-use legalization measure back in 2018, with only Uruguay preceding Canada in doing so (2013). Yet, unlike Uruguay, Canada allows legal sales to anyone of legal age whereas Uruguay limits it to residents only.

As such, Canada provides the best example for international observers to monitor and see what is working with the nation’s regulated industry and what is not working. With other nations considering legalization, any insight Canada can provide is valuable.

One of the biggest measures of success for legalization is whether or not consumers transition away from the unregulated market into the regulated market. According to a recent study in Canada, that is exactly what is occurring, and at an increasing rate. Below is more information about it via a news release from NORML:

Waterloo, Canada: Canadian cannabis consumers are steadily transitioning from the unregulated market to the legal market, according to data published in the Harm Reduction Journal.

Investigators affiliated with the University of Waterloo, School of Public Health surveyed over 15,000 cannabis consumers regarding where they obtained their products. Researchers evaluated data for the years 2019 to 2021. (Canada instituted licensed retail sales of cannabis products in October 2018.)

Authors reported that the percentage of respondents legally sourcing their cannabis products increased year over year. Respondents were most likely to purchase cannabis-infused drinks, oils, and capsules from the legal marketplace. About 55 percent of respondents said they obtained cannabis flower exclusively from legally licensed retailers.

In 2019, fewer than half of consumers acknowledged obtaining their cannabis products from legal sources. According to separate consumer survey data published last year, that percentage rose to nearly 70 percent in 2020.

“Legal sourcing of cannabis was greater in 2021 than 2020 for all ten cannabis products [surveyed]. In 2021, the percentage of consumers sourcing all their products legally in the past 12 months ranged from 49 percent of solid concentrate consumers in 2021 to 82 percent of cannabis drink consumers,” investigators reported. “Transitioning consumers of all cannabis products into the regulated market is important for public health and safety. Future studies should continue to examine cannabis product sourcing in Canada over time, as well as ways to displace the illegal market for all cannabis products without also promoting the use of high-potency cannabis products.”

Full text of the study, “Legal sourcing of ten cannabis products in the Canadian cannabis market, 2019-2021: A repeat cross-sectional study,” appears in the Harm Reduction Journal.

One of the most hotly-debated topics in the cannabis industry relates to banking access for companies. Many companies over the years have experienced banking issues related to cannabis prohibition around the world, and yet, many other countries have had no issues.

Understandably, there are people in the cannabis industry that think banking reform is a top priority, while others don’t seem as concerned about it for one reason or another. Many advocates are not necessarily opposed to banking reform, but rather, do not want to see it tied to social justice and equity efforts and simply decided on its own merits. Conversely, there are also others that do wish to tie the two together.

Certain members of Canada’s cannabis industry are apparently no longer interested in debating in the ‘public square’ and have taken their fight to the court system. Below is more information about it via a news release from Groupe SGF:

Groupe SGF (Cannabis Legal Advisors and Consultants) announces the launch of a class action lawsuit on behalf of Mr. Gabriel Bélanger (Founder of Origami Extraction Inc.) against the Desjardins Federation, National Bank, Royal Bank, Bank of Montreal, TD Bank, and CIBC. The lawsuit alleges that the named banks have engaged in financial discrimination against actors in the legal cannabis industry in Canada.

The legal cannabis industry in Canada faces financial discrimination

The plaintiff, Gabriel Bélanger, is determined to expose to the Superior Court all he has suffered as an actor of the legal cannabis industry in relation with the defendants. The main allegations involve denials of opening bank accounts, sudden closures of current bank accounts, and denials of access to various financial tools such as mortgage loans and credit lines for legal cannabis industry businesses.

The class action includes all individuals or corporations that, directly or indirectly, do business with the major defendant banks and who are involved in the legal cannabis industry since October 17th, 2018.

For more information on the class action, please visit Groupe SGF’s website at https://groupesgf.ca/action-collectives-banques.

“For far too long, Canadian banks have treated the cannabis industry like pariahs, as if it was still completely illegal. By doing so, they are depriving the Canadian, but especially the local economy of developing a promising market.”

Me Maxime Guérin, Lawyer, Groupe SGF – Cannabis Legal Advisors and Consultants

Groupe SGF is a Quebec law firm specializing in the cannabis industry. The company represents the interests of industry actors facing legal and financial challenges.

The plaintiff, Gabriel Bélanger, engineer, is the founder and main shareholder of Origami Extraction Inc., a cannabis micro-processing company located in Beauce.

SOURCE Groupe SGF – Conseillers juridiques et consultants en cannabis

For further information: Maxime Guérin, Lawyer, 418-476-2906 (dedicated line), 1-866-782-5910 (toll-free), max@groupesgf.ca

Canada still serves as the largest legal, national cannabis adult-use market, with sales originally launching in late 2018. The nation serves as the largest national cannabis public policy experiment, and industry and policy observers around the globe are keeping a close eye on any and all data coming out of Canada.

Every year Canada conducts a survey to gauge, among other things, the rate at which consumers purchase their cannabis from legal outlets versus the unregulated market. One of the most important stated goals of governments that pass legalization measures, including Canada, is to transition cannabis sales away from the unregulated market into the regulated system.

According to the most recent survey out of Canada, more and more people are making their purchases via regulated sources, a growing trend that has occurred for multiple years now. Per Toronto Sun:

The results of the 2022 Canadian Cannabis Survey were released last month. It found that a greater proportion of respondents reported a legal source as their usual source of cannabis compared to 2021, with legal storefronts being the most common source since 2019. A smaller proportion reported illegal storefronts and illegal online sources in 2022 compared to 2019.

The proportion of those who purchased cannabis in the past 12 months from a legal storefront did so 61% of the time, according to the survey, up from 53% in 2021. Only 2% said they purchased products from an illegal website, 1% from an illegal dispensary and 1% from a cannabis dealer.

The unregulated cannabis market will never be 100% eliminated in Canada or any other jurisdiction that is home to large populations. Just as there are still people selling unregulated alcohol and tobacco products in Canada, so too will the same occur with cannabis.

The name of the game is to mitigate unregulated sales as much as possible, and Canada is doing a great job of that so far. Transferring a decades old unregulated market into a regulated one is not an easy task, and takes time to fully materialize.

The emerging cannabis industry has the potential to transform communities and boost opportunities for those that live where cannabis commerce is permitted. A report from earlier this year by Deloitte highlighted just how much the legal cannabis industry has helped communities in Canada.

One of the major takeaways from the analysis is that the legal cannabis industry in Canada had created roughly 151,000 jobs as of the report’s publishing. In addition to generating new jobs across the country, the emerging legal cannabis industry was responsible for generating over $15 billion since legal adult-use sales launched in late 2018.

The overall economic boost from Canada’s legalized industry is substantial. Deloitte estimated that the legal cannabis industry in Canada had contributed over $43.5 billion to the nation’s GDP since the start of legalization as of February. Cannabis companies have directly invested roughly $4.4 billion into Canada’s economy, with the remaining boost to GDP coming from “indirect” economic contributions, and “induced” contributions according to Deloitte.

First Nations in Canada are progressively getting more involved in the emerging cannabis industry, and in Saskatchewan specifically, lawmakers are pushing for First Nations to be able to self-govern and self-regulate the cannabis industry on-reserve. Below is more information about it via a news release form the government of Saskatchewan:

Today, the Government of Saskatchewan introduced two pieces of legislation that lay the groundwork for increased First Nations self-governance.

The Summary Offences Procedure Amendment Act, 2022 will provide a legal framework that First Nations communities can use to enforce laws and bylaws on reserve.

“The Government of Saskatchewan is proud to take this important step as part of our ongoing work with the Muskoday and Whitecap Dakota First Nations,” Justice Minister and Attorney General Bronwyn Eyre said. “These amendments will allow these and other First Nations communities in the future to use the more simplified summary offences procedure, instead of the long-form process under the federal Criminal Code, to issue tickets and fines such as those issued for traffic violations and other provincial offences.”

These amendments follow a Memorandum of Understanding that was signed by the Government of Saskatchewan, Muskoday First Nation and Whitecap Dakota First Nation on October 18, 2019, to address longstanding issues around the enforcement of First Nations’ laws.

“First Nations assert their jurisdiction and maintain community safety by creating laws under the Indian Act, land codes, and other federal legislation but there have been difficulties in enforcing these laws in the courts,” Chief of Whitecap Dakota First Nation Darcy Bear said. “Through our work with the provincial government, the amendments to SOPA will give us access to prosecution and enforcement tools that will give force to our laws in areas such as environmental protection and community safety; and strengthen the place of our laws alongside federal and provincial law.”

“Our government supports First Nations exercising their authority over on-reserve distribution and retailing of cannabis through a legal framework with SLGA,” Minister Responsible for SLGA Lori Carr said. “This change further fosters reconciliation by ensuring First Nation-owned businesses are able to fully participate in the economic opportunities presented by the retail cannabis industry.”

The proposed amendments provide First Nations the opportunity to create their own First Nations regulatory framework consistent with federal and provincial legislation to establish a local cannabis authority. Once established, stores regulated by First Nations will have access to federally regulated cannabis products.

These amendments will also require all Saskatchewan cannabis retailers to only ask for proof of age when a purchaser appears to be under the age of 25. Currently, retailers are required to ask for proof of age from all purchasers.

Canada was the first G-7 nation to legalize cannabis for adult-use at the national level, and the second nation to do so on earth, only behind Uruguay. Yet, unlike Uruguay, Canada allows adult-use sales to anyone of legal age regardless of their residence status.

In many ways what has gone on in Canada since the launch of legalization in 2018 has served as the greatest cannabis public policy experiment since the dawn of prohibition. Many countries around the globe have kept a close eye on legalization unfolding in Canada to gain any insight and lessons learned.

Back in September Canada’s government launched a legislative review of the Cannabis Act so that it could determine any internal lessons to be learned.

“The objective of the Cannabis Act is twofold. First, it aims to protect the health and safety of Canadians while serving as a flexible legislative framework that adapts and responds to the ongoing and emerging needs of Canadians. Second, it provides for the establishment of a diverse and competitive legal industry made up of small and large players to displace the illicit market.” the government stated at the time of the launch of the review.

“Parliamentarians recognized the need for an early assessment of the Government’s new approach to cannabis control, and included a provision requiring a review in the Act. The review will help ensure that the Act adapts to the current situation and continues to meet Canadians needs and expectations.” the government stated back in September.

Part of the legislative review process involves soliciting feedback from the general public. On the four year anniversary of legalization in Canada, Health Canada announced that it was opening an online questionnaire and encouraged all Canadians to provide comments regarding their views on how legalization was going.

“As we look to the future, the Government of Canada will continue to provide clear, consistent and evidence-based information on the health and safety effects of cannabis use to people across the country, so they can better understand the risks and make more informed choices.” Health Canada stated back in October. The public comment period has since closed (on November 21, 2022).

Canada’s Chamber of Commerce recently offered up its recommendations regarding legalization in Canada and what the government can do to help cannabis businesses battle the unregulated market in a meaningful way.

“As part of the legislative review, the NCBC is proposing several recommendations to help businesses in the legal sector remain economically competitive in the long term and continue to displace the illicit market per the tenets of the Cannabis Act.” the Chamber of Commerce stated in its submission to the government.

The Chamber’s recommendations include:

• Minimizing harms to protect Canadians
• Education and awareness to support informed choices
• Progress towards establishing a responsible supply chain
• Access to cannabis for medical purposes

Canada’s legal cannabis industry is at a crossroads of sorts, in that a favorable legislative review combined with public policy and regulatory improvements could set up the nation’s industry for robust growth and reduced uncertainty well into the future.

Conversely, a review that yields an outcome that is not favorable could result in kneejerk public policy changes. If so, that would likely ensure that the unregulated industry thrives at the expense of the regulated market in the future. People can read the Chamber’s full submission language at the previously cited link found earlier in this article.

I am one of those lucky people that lives in a legal cannabis jurisdiction, and in my opinion, I live in the best legal market for cannabis consumers on earth. The State of Oregon in the U.S., where I reside, passed an adult-use legalization measure in 2014, with regulated sales beginning in 2015. Since the start of regulated sales, Oregon’s unregulated market as it pertains to domestic consumers has progressively shrunk, so much so that it’s virtually non-existent these days. That has resulted in me often being asked by cannabis observers around the world how Oregon did it?

Oregon is obviously not the only place to allow regulated sales, and yet, most other legal markets struggle with competing with the unregulated market. To be sure, unregulated cannabis is still cultivated in Oregon, however, none of it stays within the state’s borders from what I can tell, which is not a coincidence in my opinion given that Oregon has the lowest prices for legal cannabis products in the nation. Presumably, unregulated Oregon cannabis goes to other jurisdictions that have yet to legalize sales, and in some cases, some of it likely even goes to other legal markets where the price of legal cannabis is exponentially greater.

Price Matters

I have read my fair share of theories and expert analysis pertaining to ‘what needs to be done to combat the unregulated cannabis market’ and while much of it provides some level of insight, at the end of the day it’s an extremely straightforward ‘riddle’ to solve. As with anything, price matters, which is what yet another recent study determined, this time out of Canada.

“Higher prices and inconvenience of legal sources were common barriers to purchasing legal cannabis,” researchers concluded. “Future research should examine how perceived barriers to legal purchasing change as legal markets mature.”

A previous study from 2018 determined that cannabis consumers are willing to pay a bit more for regulated cannabis from licensed outlets compared to the regulated market, however, there’s a limit to how much more they are willing to pay. Every dollar that gets added to the price of legal cannabis results in some percentage of customers choosing to go the unregulated route, and thus, lawmakers and industry regulators should strive to do what they can to keep prices low.

Reasonable Taxes And Regulations

When people think of the government’s involvement in the cannabis industry, they often seem to oversimply it. After all, there’s more to operating in the industry than just initial licenses and taxes. Every regulation that is added to the cannabis industry contributes to a higher final price at the point of purchase. Evolving packaging requirements, security requirements, and many other regulatory components make operating a cannabis business expensive.

Current tax provisions for cannabis businesses are such that those business have to pay considerably higher taxes compared to other legal businesses, and for those that have banking access issues, additional security expenses may also be involved, such as armored transport services. Then there’s also, of course, the taxes on purchases themselves, which also adds to the final price for legal cannabis. Collectively, all of the costs and taxes can add up.

Meanwhile, nearly all of those aspects of the legal cannabis industry that drive up prices for legal products do not exist in the unregulated market, and as such, prices for regulated products will never be equal to prices for unregulated products. The goal is to get legal prices as low as reasonably possible so that the other benefits of regulated cannabis (testing, convenience, wider selection, etc.) are worth the extra cost. If lawmakers tax legal cannabis to death and regulators fearfully implement regulations that are obviously overkill, the unregulated market will always thrive, and it doesn’t have to be that way.