Canada: A Tale Of Two Cannabis Markets

As of June 30, 2017, there were 201,398 Canadians registered to purchase cannabis from licensed producers and 6,880 registered to grow for personal use as provided for in the federal regulations that support the Canadian medical cannabis market.1 Canadian licensed producers are large-scale indoor or greenhouse grows, some with hundreds of thousands of square feet of canopy. At market close on October 17, 2017, four publicly-traded companies that own licensed producers as primary assets had market valuations exceeding a billion dollars (CAD), and each was listed on the Toronto Stock Exchange, Canada's leading stock exchange. Each of those entities also holds international cannabis assets — chiefly in Germany and Australia. Cannabis is a big business in Canada and Canadian expertise is gaining global traction.

Canada's Cannabis Market

Medical cannabis has been legal and federally regulated in Canada for over sixteen years. The system was established in 2001 with options for personal production or to purchase directly from Health Canada, sourced from a Saskatchewan-based plant biotechnology company called Prairie Plant Systems (now a licensed producer and subsidiary of CanniMed Therapeutics Inc. (TSX:CMED)). A commercial medical cannabis system was introduced in 2013, eliminating growing for personal use and allowing only purchases from licensed producers. In 2016, the law was again updated, reintroducing personal production alongside licensed producers.

Canadian law is about to change again. The Government of Canada has committed to descheduling cannabis from the Controlled Drugs and Substances Act and regulating cannabis for adult use under new legislation called the Cannabis Act. Canada will be the first G20 nation to step away from cannabis prohibition and toward regulation, with the twin goals of protecting youth and eliminating a key source of revenue for organized crime. The timeline leaves about eight months before the Cannabis Act becomes law, thereby creating a regulated adult-use market for cannabis in Canada.

Colorado's Cannabis Market

What will life after Cannabis Act look like? In Colorado, cannabis is regulated for production and sale in both medical and adult use markets. As of September 30, 2017, 502 adult use stores and 510 medical centers were licensed by the State of Colorado Marijuana Enforcement Division, many of which are co-located as an adult use store paired with a medical center at a single location.2 The shelves of these storefronts hold a variety of dried cannabis, concentrates (shadder, hash, live resin, rosin, distillate, etc.), infused foods and beverages, tinctures, lozenges, topicals, clones and seeds. Dried cannabis can be sold rolled for smoking. A wide variety of concentrates are commonly available loaded into pens similar to e-cigarettes for discreet use. Infused foods are available for a variety of palates. The products are diverse, and both medical and adult-use markets are convenient and accessible. Whether purchased for medical purposes or otherwise, federal illegality prohibits cannabis from leaving Colorado's borders.

In contrast to Colorado, Canada's current medical cannabis system under the Access to Cannabis for Medical Purposes Regulations (the "ACMPR") allows purchase exclusively by mail delivery. Licensed producers ship cannabis across the country to clients who are entitled to fly with anywhere from 15 to 150 grams of cannabis, depending on their permitted daily allowance of cannabis. As of October 16, 2017,3 there were 67 issued licenses for production, sale or both. The ACMPR currently offers only two products for immediate consumption — dried flower and cannabis oil. Canadian cannabis oil is liquid food oil infused with cannabis extract, similar to "edibles" without the food matrix or "topicals" without creams or thickeners, and is not to be confused with vaporizable concentrates. Both products are manufactured to strict production standards that are uniform across Canada. Dried flower is sold in 5 grams increments and cannot be rolled for smoking or prepared in any other dosage form. Cannabis oil is sold in a bottle with a dropper, a spray pump, or capsules. The Cannabis Act allows import and export of cannabis for medical or scientific purposes, and a handful of licensed producers have already exported Canadian products under the ACMPR for distribution to pharmacies in Germany and other jurisdictions for clinical trials or medical use.

The Colorado cannabis industry is in many ways the inverse of the current Canadian cannabis industry. The storefronts and product diversity, combined with a much lower barrier to entry, and a far more permissive advertising environment, have resulted in significant competitive pressures in terms of product design, marketing, effective production and other innovations in Colorado. Some of these innovations would be welcome additions to the Canadian cannabis industry from the perspective of patients. Based on the Cannabis Act as published on April 13, 2017 and announcements related to the regulation of concentrates, solids containing cannabis (e.g. infused foods, lozenges, creams, etc.), and non-solids containing cannabis (e.g. infused beverages, some infused foods, etc.), the future Canadian medical and adult-use markets may be adopting some strengths of the Colorado approach. While the Canadian adult-use market will begin with the same two products available in the current medical market, the Cannabis Act provides for product expansion in the future. The Cannabis Act also allows provincial regulation of distribution and storefront sales (adult use or medical). Distribution is likely to be operated by provincial monopolies in all or most provinces. Ontario and New Brunswick have announced a provincial monopoly on cannabis storefronts, and industry participants are looking to Alberta and British Columbia with hopes of private retail sale opportunities.

Canada's stringent regulations on quality and production, coupled with federal legality, means that Canada is well-positioned to export talent, technology and the products themselves internationally. Learning from Colorado and other states to improve product diversity and introduce storefronts, while maintaining stringent and consistent quality controls, will soon position Canada as a world-leader in the cannabis industry.

Footnotes

1 Cannabis Market Data, Government of Canada, 2017.

2 MED Licensed Facilities, Colorado Department of Revenue, 2017.

3 Authorized Licensed Producers of Cannabis for Medical Purposes, Government of Canada, 2017.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions