Is Change On The Horizon For The Canadian Cannabis Industry?

An overview of the potential regulatory changes that could change the Canadian cannabis industry

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Friends, 

When Canada became the first G7 nation in the 🌍 to legalize cannabis for adult use on October 17th, 2018, it was a given that the policymakers weren’t going to get everything right the first time around.  

Two years into cannabis legalization, the flaws of the original framework have become clear to many. The good news is that change appears to be on the horizon. 

On December 11, Health Canada issued a 30-day call for the public to comment on these issues ahead of the full review of the federal legislative framework for adult-use cannabis here in Canada, which will begin no later than October 17, 2021. 

What items are up for discussion? 

1️⃣ Products Packaging

It’s no secret that many consumers, myself included, have been quite frustrated with the limited information currently available when purchasing cannabis in Canada, with few producers featuring their products' terpene profiles. 

If this critique is echoed enough to become a common theme, it may very well result in mandatory terpene profiles on products packaging, as is currently the case in the state of Nevada. 

As a consumer who would love to have access to this information, I think there's a very high likelihood this change will be brought into effect by Health Canada in order to reduce the current obsession with high THC percentages. 

(📸 / BLKMKT)

2️⃣ Craft Cannabis

Based on Health Canada’s consultation notice, it’s also likely that we will see additional changes that will positively impact smaller cannabis producers. 

In a nutshell, Health Canada wants to know if Canadians perceive that a lesser regulatory burden for these types of producers is appropriate given their scale, and if the current framework puts smaller growers at a disadvantage.

One of the most obvious changes that needs to occur for smaller producers to thrive is allowing farm gate sales, whereby consumers could visit a craft producer’s production facility and purchase cannabis on-site—much as one does with craft breweries. 

In addition to providing craft producers with a much needed competitive advantage, farm gate sales would also give rise to a new branch of the cannabis industry: Canna-tourism. 

3️⃣ Cannabis Beverages

A category of cannabis that I’m very bullish on long-term is cannabis beverages, though it could take as long as a decade or more before this emerging category gains any meaningful market share. 

Besides the fact that these products cannot currently be sold in restaurants, consumers are currently limited to purchasing five units of a standard cannabis beverage, and in some cases much less. 

This constraint stems from Health Canada’s insistence that although individuals can purchase up to 30 grams of dried cannabis, they can only purchase 2.1 liters of cannabis-infused beverages—regardless of potency. 

Although companies like Aurora and The Green Organic Dutchman have succeeded in finding ways around these rules by releasing cannabis shots and powders which can be bought in much greater quantities there remains a clear need for legislative adaptation in this area. 

(📸 / ARTET)

4️⃣ Cannabis Research

Last but certainly not least on Health Canada’s list is the issue of how “non-therapeutic research (research that’s not seeking to understand the medical properties of cannabis) with cannabis involving human participants” should be carried out. 

The two most interesting questions posed are:

1. Who should and shouldn't be allowed to participate in this research?

2. Which types of cannabis and dosages can be researched?

Furthering our understanding of how adults are using cannabis has obvious benefits and this revision to the existing framework could also have many positive downstream effects from a product development standpoint.

Currently many producers have to develop products and launch them in order to understand whether they’re a hit, however, with the means to test products ahead of time many producers could potentially see significant cost savings.

When will these changes be brought into effect? ⏳

In spite of asking all the right questions, it’s worth considering that Health Canada’s focus when it comes to cannabis is largely a harm reduction-first strategy, not improving the economic health of the industry. 

It could be argued that improving access to the legal cannabis market helps to displace the black market and certainly reduces the consumption of cannabis that hasn’t been tested. 

Personally, I’m not holding my breath on Health Canada looking at the industry through this specific lens—rather, I can see smaller, yet highly impactful changes such as mandatory terpene profiles on packaging and farm gate sales being permitted. 

Although it will likely take many more years before Canadian policymakers “get it right with the regulations,” incremental progress consists of small steps in the right direction. 

Then, before you know it, the cannabis industry will be where it needs to be. Having expectations that each of these changes will be made within the next decade will only result in disappointment, however.

In the meantime, let's celebrate the fact that Canada is one of the only nations on earth currently permitting adults to purchase cannabis. 

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