Realizing the full potential of recreational cannabis legislation in Canada

The upcoming legalization of cannabis for adult use will close Canada’s near century-long prohibition on recreational cannabis and provide a new legal framework while building a safe foundation for a world-class cannabis economy.

Our country has developed a commendable system for a legal cannabis market. Canada will soon be a globally recognized leader of cannabis legalization, regulation and production and the first G7 country to legalize it for medical and recreational use.

The government’s approval of the Cannabis Act will set a promising industry into motion, generating opportunities for consumers, licensed producers (LPs), suppliers, employees and investors.

With upcoming legalization, the sector will expand and change rapidly. As we navigate this unprecedented landscape, the new law will fuel an ongoing national conversation and we can expect to see the regulatory environment continue to evolve. If Canada is to realize the full potential and embrace the value of the legal recreational cannabis industry, there are important issues that key stakeholders must continue to address and prioritize.

 

Axing the illicit market

While decriminalization and regulation will enable legal cannabis dried flower and oil production for sale to adult consumers, two issues could impact the transition of sales from the illicit market to the legal market.

First is the extent to which new laws are enforced. If consumers can still go to their existing cannabis source, they may see little incentive to buy legal products. Proactive enforcement against unlicensed producers should be encouraged.

The second issue is that today’s diverse product range in the illicit market will not exist in the preliminary legal market under the proposed regulations. To truly impact the illicit market, consumers will require cannabis products beyond dried flower and basic oils. Topicals, edibles, vape oils and other product innovations offer consumption alternatives that prevent first- and second-hand smoke exposure and more readily facilitate consumption for the potential medicinal benefits of cannabis. Choice is fundamental to a thriving market.

Allowing broad product forms will encourage research and innovation of value-added products and intellectual property and help build a robust Canadian industry. This will uniquely position the Canadian model and growers to the international community.

 

Creating educated consumers

The proposed regulations in Bill C-45 for branding, advertising and labelling mirror those applied to the tobacco industry. The bill’s restrictive rules regarding branding and labelling may detrimentally impact consumers’ ability to make informed decisions about cannabis products.

Let’s remember that tobacco regulation is focused on cutting and eliminating its use. Marketing is prohibited, and tobacco packages include graphic health warnings. But it is misguided to compare cannabis to tobacco. Despite very limited permitted research, modern studies are already validating centuries of anecdotal evidence of the medicinal values of cannabis with clinical evidence, for example, for neurological disorders and pain.

Out of over 100 cannabinoids in cannabis, only one is psychoactive. There are many different forms of consumption other than smoking. Whether for enjoyment or health, the nature of cannabis warrants in-depth communication about product attributes.

At Emerald, we believe a tobacco model for cannabis would not best serve consumers or the industry as it migrates from illicit to legal. Recreational legalization provides an opportunity for entrepreneurialism and human nature to meet by opening the line for creative and comprehensive communication in the cannabis market. We encourage a progressive path to achieve this outcome.

 

Keeping kids away

The past few decades in Canada’s history have taught us that a great many Canadians want to use cannabis, regardless of its legal status. The damage of prohibition, markedly the criminality caused by its lack of legal legitimacy, outweighs the benefits.

LPs intend to drive legal customers – adults – to their product. Keeping cannabis out of the hands of children and criminals is in their best interests. The most valuable way for them to achieve this is to adhere to marketing regulations similar to those of the alcohol industry. Adult consumers can then distinguish legitimate and contraband cannabis, differentiate between product attributes and determine which product may best fit their needs.

We are on the precipice of a historic moment in time. Our country is set to open a new, legal industry and usher in exciting opportunities for the Canadian economy. However, with great opportunity comes new challenges. Strict legislative proposals could hinder the full potential of a legal cannabis market, and navigating these new waters will require an ongoing dialogue. At Emerald, we envision a valuable cannabis industry that will work in the best interests of Canadians and will continue to enhance the health and well-being of others through cannabis science. To achieve this, we encourage progressive and timely maturing of the rules to ensure these goals can be achieved.

 

Chris Wagner is CEO at Victoria-based Emerald Health Therapeutics, a licensed producer. Emerald Health Therapeutics (TSX-V:EMH; OTCQX:EMHTF) is part of the Emerald Health group, which includes multiple companies focused on developing cannabis and cannabinoid products with potential wellness and medical benefits.

 

If you are interested in learning more about opportunities in the cannabis sector, and hearing a panel presentation that Business in Vancouver is hosting on July 12, check out BIV's Business Excellence Series: Legalizing Cannabis at the Vancouver Club.