Canada Legalizes Cannabis: Industry Insight

“Legalize it… don’t criticize it”. The infamous song lyrics have become reality -- at least in Canada.

Senate approval of the Cannabis Act legislation in June officially ended 90 years of cannabis prohibition. Canada is now the second country worldwide to fully legalize cannabis.

Cannabis legalization overview

Overall, the country’s approach towards the liberation of cannabis is legalization with strict control. Following the vote, provinces and territories were given a few months of lead time to setup initial regulations and logistics and around sale and distribution. Current regulations and restrictions around recreational cannabis use can be found here. After the October 17 legalization date, these local governments retain responsibility for determining:

  • How cannabis will be sold
  • Where stores will be located
  • How stores will operate

As well, provinces and territories retain flexibility to alter or add restrictions, including:

  • Lowering possession limits
  • Increasing the minimum age
  • Restricting where cannabis may be used in public
  • Setting added requirements on personal cultivation

Restrictions aside, it is believed that sale of cannabis could eventually be worth in the area of 5 to 7 billion annually, depending on areas of the country. Private retailers for recreational cannabis will be permitted in Alberta, for example, while New Brunswick will control sale through a chain of provincial governmental stores.

Legalization with strict control

Traditionally a conservative province, New Brunswick is an interesting case study for the impact of cannabis on jobs and economic growth. The government has invested millions in cannabis growth and production facilities, and has secured a central licensed provider. Government oversight is focused on job growth and ensuring cannabis is sold and distributed in a responsible way.

Early issues, such as pesticides contamination in cannabis products, have been met with redevelopment of growing and harvesting methods and standards. New Brunswick college is launching a specialized program on cannabis cultivation. Equally industrious cannabis enterprises and provincial programs abound throughout the country.

In Ontario, structured, government-controlled programs such as the Ontario Cannabis Store website (the only legal option for recreational cannabis purchases), will soon expand to include private enterprises based on best practices for sales and distribution. The Ontario government has introduced legislation to help establish the Alcohol and Gaming Commission of Ontario (AGCO) as the main regulator for granting cannabis store licenses. The Ontario Cannabis Store would then be the exclusive wholesaler to these stores in the near term -- with private retail licenses issued in 2019 under AGCO guidance and control.

These might seem like baby steps, but the benefits to private industry may be the enactment of controls and best practices to ensure the most productive business operations take root. The methods will also be a controlled way to monitor changes in public and economic health -- and adjust implementation strategies accordingly.

Beyond the immediate legal developments, entrepreneurs large and small have been leveraging resources towards the creation of cannabis-derived (and cannabis-inspired) products and services. The government is forging ahead as well, with important partnerships in medicinal cannabis research and funding opportunities.

Medical cannabis and pharmaceutical developments

In June, the Canadian pharmaceutical company Sandoz Canada announced a partnership with Tilray, a Health Canada licensed medicinal cannabis producer, marking entry of the first Canadian pharma company into the medical cannabis field. The alliance is intended to support the rising interest in medicinal cannabis and to address unmet needs for access, proper dosing, and alternative treatments for chronic pain, opioid use, and other important conditions.  

Broader access, increased product innovation, research, and education are focal points for the partnership. Although Sandoz does not intend the work in the recreational cannabis markets, such initiatives open the door for further development of the Canadian medicinal cannabis field.

There have been a host of smaller pharmaceutical and biotechnology companies designed specifically around cannabis for medicinal applications, and perhaps recreational use, as this part of the industry opens up.

CanniMed, now part of Aurora Cannabis, has focused for a number of years on medical cannabis products primarily for pain management. The company has 17 years of pharmaceutical cannabis cultivation experience, having served as the sole licensed provider to Health Canada under the former Marijuana for Medical Purposes Regulations (MMPR). Partnered with the considerable resources of Aurora, the combined enterprise has a sizable presence in the areas of cannabis cultivation and processing for medicinal products.

Initiatives and funding for cannabis research

The Canadian research environment continues to strengthen with a number of high-quality funding initiatives. A recent publication in Nature detailing chemometric analysis of cannabinoids and the inadvertent discovery of over 20 novel cannabinoids, showcases the effect of funding entities such as the Canada Research Chairs Program in fostering valuable research.

Cannabis consumables and recreational product development

No discussion of cannabis would be complete without mention of interesting products for consumption. Entrepreneurs are exploring original and innovative cannabis applications – case in point, cannabis brewed beer. We’ve discussed the hops versus hemp connection previously, and companies such as Province Brands are concocting techniques to create libations outside the mainstream alcoholic beverage model.

Although cannabis edibles are not expected to become legal until a year after October 17, companies are busy developing products ranging from brownies to honey, to even cannabis-infused cocktails.

Canadian cannabis outlook

It's no doubt that full legalization of cannabis will have many sucesses and shortcomings as the process moves forward. Key factors will include a controlled approach dictated by local governing bodies, in order to foster the development of best practices for the consumer industry,

Canada is already a leading force in the medical cannabis industry and with hemp legalization now a reality in the US, the two forces are poised to create a whole new world of cannabis possibilites.