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The business of cannabis legalization in Canada

Travelling through new “green” Canadian landscape

By Miguel Morales

A new business emerges

 

Cannabis has a long and storied history with Canadians. However, thanks to prohibitive laws introduced in 1923, most of that history has been shrouded in a world of criminality. Now, the Canadian government is looking to reverse the prohibition of marijuana and make it finally legal for consumption for a recreational market after 17 years of legal consumption for medical patients.

 

Businesses such as Tokyo Smoke — a “coffee shop” looking to be in the same vein as those in Amsterdam — are currently laying down foundations for recreational cannabis use in multiple cities to take a bite at the potential $22.6 billion a year market.

 

However, businesses like Tokyo Smoke are still in the dark about how cannabis legalization will take shape in the province of Alberta.

 

How provinces will deal with private businesses is still unknown considering that each one of Canada’s provinces will implement different laws concerning the sale, which in turn could affect how cannabis is sold. In Alberta’s case, the government has elected to allow for private retail shops.

“[Cannabis] is going to be very dependent on a province-to-province basis and Alberta right now is allowing a lot of private retail. B.C. for example are doing a mix of private retail and government run facilities. Ontario is going to run through the government in terms of supply and demand and I believe they will keep all the profits from that.” said Shane Kuhn, general manager of Tokyo Smoke.

 

Alberta is currently planning for the sale of the product to be overseen by the AGLC, Alberta Gaming and Liquor Commision, which would put the same heavy scrutiny that is on alcohol in the province.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

the current lead in the City of Calgary's cannabis legalization project, Matt Zabloski, who are looking at how the new landscape will affect the city said, “the Alberta Gaming and Liquor commission is now going to be regulating retail sales in the province and [deciding] what some of those regulations are. So it [will be] really involved [with] the background checks for the owners and the retail stores, but in addition to that, they’re looking into the financial backing. Where the money is coming from, whether or not it's coming from the sources who are the associates of the ownership, and then things like criminal background checks for the people working there.”

Shifting environments

 

This environment of context flux to the lead of legalization is also affecting the supply side of the equation with places like GTEC Holdings Ltd. owners of GrenEx, the first licensed cannabis producer in Edmonton, Alta., shifting and changing how they approach the selling of the product.

 

“It's a very fast-changing industry,” said David Lynn, senior vice-president of GTEC Holdings Ltd. "There's new developments pretty much on a weekly basis, particularly in terms of laws and regulations both at the federal and provincial level. So we, for example, have written a strategic plan and essentially because things are changing weekly, you have to be very nimble and able to adapt. You don't necessarily throw your plans out the window but you have to keep tweaking them as the announcements come out.”

 

While recreational cannabis use is still in the process of becoming legal, medicinal usage has been legal since 2001 after the Access to Cannabis for Medical Purposes Regulations was put into effect and clinics popped up to give information about the drug to the population.

 

420 Clinic, established in 2014, is a cannabis-specific clinic that helps with misinformation about the drug but currently does not handle any of the product. They are looking closely on how the new regulations and legal recreational use will affect them with plans to go into the retail space.

 

“We're not supplying any product to anybody because only licensed producers can do that, so our business is going to change quite significantly because we don't touch any product at all right now, we are just a resource centre,” said Amber Craig, vice-president of marketing for 420 Clinic. Obviously with the ability to sell product legally that's going to  present some opportunities.”

Currently the estimated time of legalization specifically in the retail area is August after the federal government announced delays of eight to seven weeks past the initial date.

 

John Simon, former CEO of GrenEx Pharms, and now the CEO of a company called Pebble Grass (a similar cannabis LP or ), both dealing with the production side of the cannabis industry said, “The big change is going to be the legalization, so once we get to legalization and we open up this whole recreational market, that's going to be a huge change for the whole industry. And that's what were trying to prepare for now, is trying to get enough capacity to meet that demand for that recreational market.”

 

Simon believes that because of these regulations put into place, this will garner interest from the international community as well. A big difference between the markets in the United States and Canada is that the US still holds cannabis as federally illegal, where each state has to coordinate their own forms of sale while not using the federal systems that make distribution far more possible, like the federal postal service.

 

Unfortunately for Albertans, online sale of cannabis will be controlled by the AGLC, and private retailers will not have the opportunity to sell their product online, at least for the foreseeable future.

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