It has been a while since we looked at how our good neighbors to the north have been doing with their legalization effort. Uruguay is still the only country to implement a nation-wide legalization system including legalized sales, but it has run into some implementation problems because of lack of access to the American financial system. Canada has a stronger domestic financial industry than Uruguay and both the Bank of Montreal and Toronto –Dominion Bank, among others, appear to have more tolerance for the marijuana industry. But as has been reported over the last couple of weeks, things have not been simple in Canada, where the government has announced that it plans to legalize marijuana by July 2018.
In the United States, most state legalization measures have occurred through ballot measures as opposed to through legislative processes. That approach comes with both pros and cons. On one hand, a ballot measure process can occur relatively quickly. An initiative is drafted by a campaign using whatever stakeholders the campaign wants to assist in drafting, the campaign goes out to get sufficient signatures to put the initiative on a ballot, people campaign for and against the measure, and the people all vote on the measure on a pre-determined date. Once you get past the initial drafting stage, there isn’t much in the way of horse-trading. The measure is what it is. The legislative process, on the other hand, is a never-ending process of starts and stops. Legislation can be drafted, amended, put forth for debate, and withdrawn countless times before it ever gets voted on.
Many stakeholders in Canada have been voicing their concerns about Canada’s proposed legislation. As it stands, the law would give significant authority to individual provinces to develop and implement distribution networks. But many of the provinces have viewed that grant of authority primarily as an additional cost burden. So, Prime Minister Trudeau’s government moved to increase local revenues by adding a 10 percent excise tax. Though this isn’t enough to stop the Premiers from Manitoba, Quebec, and Nova Scotia from grousing that the revenues won’t be very high, it is a push in their direction.
One interesting wrinkle in Canada is the level of potential government involvement in cannabis sales. Ontario, Alberta, and Quebec are all looking at publicly participating directly in the retail system. Ontario plans to open 40 stores through its Liquor Control Board by next summer. This hasn’t been met with enthusiasm by local consumers, who fear government involvement will lead to inferior product on store shelves. Other commentators and industry watchers fear public cannabis monopolies in Alberta and Ontario will open the door to continued illegal market activity.
But as we have seen across the United States, opening a legal marketplace takes a long time and it seems unlikely that by July 2018 Canada will be bustling with open marijuana retail stores packed with product, whether government-owned or privately owned. It looks like the liberal government is moving forward with full steam, but there will continue to be fits and starts along the way before the Canadian market is close to being settled. But on the bright side, even if local retail marijuana isn’t available, Canada Post, the Canadian version of the U.S. Post Office, is going to start delivering recreational marijuana through the mail as soon as legalization moves forward. Maybe physical retail marijuana’s main fear shouldn’t be government regulation — it should be mail-based competition.