5 THINGS THE CANADIAN CANNABIS INDUSTRY GOT RIGHT
There is always a lot of news from the Canadian cannabis industry about wasted inventory, top-tier executives receiving unwarranted levels of financial compensation for at best poor work, and the ill-advised decisions made by some of the mismanaged MSOs along their long journey in the sector. And while all of this may be correct, the fact is, that the Canadian model has many positive elements and it is a model being suggested for Ireland and other European countries that are looking at legalising medical and recreational cannabis use.
The Cannabis Review decided to ask five of Canada's leading industry experts, from across different fields, what is the one thing they think Canada got right and why.
1. ADMITTING THE WAR ON DRUGS FAILED
Deepak Anand (Founder Materia Ventures or Principal ASDA Consultancy Services)
"I would say the 1 thing Canada got right is it took upon itself to become (and to this day remain) the first G7 country to legalize cannabis at a federal level. The Minister of Health of Canada is also the first (and only) G7 nation to confirm at a UN level that the war on drugs has not worked and it has been a failure therefore it was embarking on a different approach with the legalization of cannabis."
2. MICRO-PRODUCERS & CULTIVATION
Matt Lamars (Business journalist, International market analyst, Researcher)
"Licensing micro-producers. Most cannabis production licenses handed out in Canada before around 2020 were for cultivation with no limit on canopy size, which usually means mass-scale cannabis production. Since then, however, the government has handed out hundreds of licenses for micro-producers, exceeding the number handed out for large-scale production. Micro licenses have a limited canopy size and are generally considered "craft". Because they have a limited canopy size, they have to run their businesses smartly, efficiently, and always with an eye on their costs. In other words, they can't run their businesses like large Canadian macro-producers. No one knows what share of the market will be met by macro vs. micro-production in the future, but at present, it's the macros that should be learning from the micros, not vice versa.
Some large producers got it right Not all large Canadian cannabis producers are losing billions of dollars and destroying most of their unsold inventory. A large-scale cannabis production business is a marriage of agriculture and consumer packaged goods. Most large cannabis producers don't understand that, and usually, put too much focus on the CPG side of the business at the expense of the agriculture side. But not all. It's no surprise (to me) that vegetable greenhouse company Village Farms put the right people in charge of their cannabis production subsidiary Pure Sunfarms to get the right outcomes. They bring fresh produce to market, in this case, packaged cannabis sold as CPG. Companies like Organigram are also getting the right balance between agriculture and CPG. Companies that hit the right balance between CPG and agriculture will dominate the Canadian market in the future."
3. PROVINCES ALLOWED TO CREATE THEIR OWN RETAIL MODELS
Mitchell Osak (Trusted Advisor to Global Cannabis & Psychedelics Companies)
"Canada got 2 interrelated things right.
1a Established the G20's first federal regulatory regime for adult use of cannabis in 2018. So far, the Federal government's objectives have been met:
1) protecting public health,
2) safeguarding young people,
3) combating the illicit market.
Federal legalization enables B2B sales, harmonized product and cultivation standards and banking across all provinces (unlike the US).
The regime has approved hundreds of cultivation and sales licenses which sparked a vibrant industry and did not limit participation to just the big, moneyed players. Finally, the regulatory regime was created and implemented by Health Canada. This provided for a clear (albeit strict) set of rules around packaging, THC limits etc which gave (relatively) clear guidelines to producers and promoted safe and responsible usage.
1b At the same time, provinces were allowed to create their own retail access models (eg age of majority, number of stores and role of government middleman). This separation of regulation design, powers and implementation has created public policy case studies for how adult use legalization can be implemented in different jurisdictions within the same country. These lessons are very relevant for similar government models like Germany and the US where there are competing powers and responsibilities by the level of government.
Overall, Canada's regulatory framework has germinated into a highly competitive industry which has led to falling retail prices, widespread retail access, improving product quality, and a growing assortment of products. It is not, however, without its major problems."
4. CLEAR PATHWAY FOR CHILDREN TO ACCESS MEDICAL CANNABIS
Dr. Evan Lewis (Vice President of Psychedelic Neurology at Numinus)
"Canada created a model that had a specific, formalised pathway for children to easily access medical cannabis (Not inclusive of the cost of a product, which is a barrier to access)."
5. LEGACY CANNABIS OPERATORS ALLOWED TO PARTICIPATE
Stephen Verbeek (CEO at Hello Cannabis)
"One thing the Canadian government eventually got right was allowing for legacy cannabis industry participants to transition into the legal industry. This wasn’t the case at first but eventually, the priceless value and experience that the Legacy members bring have already made a significant impact on the entire industry. Quality and price of products have improved, as well as more customers converting from the legacy market to the legal industry. The transition is happening faster than I anticipated and it’s refreshing to see that the legacy industry has the option to move their respective companies to the legal market."
Next Story: Top 5 Things The American Cannabis Industry Got Right to be published next week.
A special thank you to our esteemed guests who contributed to this article.