Canada getting too high on prospects of recreational marijauna industry?

By Tim Kalinowski


With the implications of legal cannabis top of mind the past week with Alberta-based Aurora’s hostile takeover bid of Saskatchewan-based CanniMed making headlines across the country, a bear market of sorts seems to be shaping up  ahead of Canada’s move to legalize recreational marijauna in 2018.
Medical marijuana providers like Aurora have had a monopoly on the trade in Canada for the past several years, but with the federal government opening the marketplace up there may soon be a flood of companies jumping into the recreational marijauna growing industry.
The Alberta government also moved one step closer to being prepared for the surge in recreational marijuana which may soon be coming by passing Bill 26: “An Act to Control and Regulate Cannabis” in mid-November.
The act essentially decided the parameters of how the drug would be sold in the province when it does become legal. As the Globe and Mail stated on Nov. 16, summarizing the policy:
“Alberta will let the market reign when it comes to bricks-and-mortar cannabis stores— allowing licensed private outlets to spring up across the province, with the numbers and locations being determined mainly by owner-operators.”
So essentially creating a market system for cannabis parallel to the current system used for alcohol consumption in the province.
Even former Harper-era Conservative cabinet minister, and former police chief, Julian Fantino— who was one of the most vocal opponents of legalizing marijuana while serving on the front benches of Parliament— has apparently seen the dollar signs lighting up the night like so many roaches at a Pink Floyd concert. Fantino recently announced his partnership in the medical marijuana business Aleafia Total Health Network.
All signals appear to be positive for a marijuana revolution in Canada, but Stephanie Oneto, an associate professor of marketing at the University of Wyoming specializing in the marijuana industry in the United States, adds a a few words of caution.

“There has been a lot of growing pains in this industry down here (in the United States), especially as it pertains to farmers,” Oneto says. “It is this interesting situation because the federal government says it is illegal, there hasn’t been really any regulations about the kinds of pesticides used in operations, or growing conditions and certification.
“There is not one agency which regulates what is being done to the crop, and retailers have been experiencing some unique challenges with that.”
Canada will likely avoid some of these pitfalls, says Oneto, because the legalization push is coming from the federal government.
By being at odds with Washington, states where marijuana, either medical or recreational, is legal have essentially had to engage in what amounts to money laundering to ensure growers’ taxes can be legally turned into state revenues.
“Banks won’t touch marijuana money south of the border for fear of federal government reprisals. Quality control has been problematic.
“And because of all these grey areas south of the border, there is still quite a bit of criminal activity associated with certain tangents of the of legal marijuana industry, Oneto says.
“Growers are tight-lipped about their operations down here,” she explains. “They don’t want to talk about the revenue or the size of their operations because of some of the challenges they are having with the American banking industry.”
While many of these challenges likely won’t exist in Canada, Oneto admits, this country will have to ensure it has all its ducks in a row before legalization comes into affect.
“You have to make sure things are in place to handle that kind of change,” she says. “But I do think it is definitely going to take off in Canada. I can’t imagine it not.
“States which have legalized have had a huge boom in terms of tax revenue and tourists,” she adds. “People have migrated to states which have legalized. So you see other industries benefiting from this as well.”
Neither CanniMed nor Aurora had responded to an interview request from Ag-Matters by press time.

CP/AP Photo Glen Stubbe
Canada seems intent on charging headlong into a brave, new recreational marijauna future despite some of the persistent challenges involved in legalization, and Alberta appears to be in the forefront of that effort.
CP File Photo
While the potential for legal pot profit is immense, the pitfalls may be greater than some think, says U.S. expert.