Canadian Cannabis Act Faces Critical Review

NEW YORK— Following the implementation of the Cannabis Act in 2018, Health Canada’s recently released “What We Heard Report” paints a complex picture of the nation’s adult-use cannabis industry. While the legalization of cannabis for adult use has made significant strides in its economic impact and curtailing illegal sales, several challenges lie ahead for businesses and regulators alike.

The mandated review of the Cannabis Act, which came into effect in October 2018, was initiated to evaluate the law’s impact on a myriad of societal facets including youth, indigenous communities, the economy, and the illicit market. Initiated a year later than originally planned, the comprehensive study was conducted by an Expert Panel led by Morris Rosenberg, an esteemed professional with experience in the Department of Justice and the Department of Consumer and Corporate Affairs.

The panel’s primary responsibility was to advise the Health Minister Jean-Yves Duclos and Carolyn Bennett, Minister of Mental Health and Addictions and Associate Minister of Health, on the Cannabis Act’s progression in achieving its intended objectives. Among these objectives were the safeguarding of the health and safety of Canadians and the establishment of a flexible legislative framework that would adjust according to the nation’s needs.

Insights from the report showed a general consensus among public health experts on the need to maintain advertising restrictions and THC limits on edibles. Some suggested even more stringent regulations, particularly concerning age limits and product access.

Furthermore, while there has been notable progress in reducing the illegal cannabis market, concerns remain. The panel noted that “more than half, and up to as much as three-quarters, of cannabis is being obtained from legal sources.” However, whether the legal market is adequately meeting consumer demands remains debatable. Stakeholders highlighted that product price plays a significant role in consumers’ choice between legal and illegal markets.

Concerning the geographical spread of legal retail locations, disparities exist. The report cites examples such as Quebec, which has about one retail store per 100,000 residents, contrasted with Alberta, boasting over 20.

But perhaps the most pressing concern comes from Canada’s cannabis business operators. The hyper-competitive market for producers and retailers, paired with regulatory fees, distributor mark-ups, and taxes, is placing a significant financial strain on companies. Suggestions have been made to amend tax models, regulatory fees, and mark-ups to aid struggling businesses.

Beena Goldenberg, CEO of licensed producer Organigram, acknowledged the journey of the last five years, saying, “We’ve witnessed a remarkable journey from $0 to nearly $5 billion in legal sales annually.” However, she highlighted the need for governmental intervention to address various challenges and ensure a thriving, responsible cannabis industry.

The report marks just the first phase of the Expert Panel’s endeavors, with further efforts in place to continue refining Canada’s cannabis policies. The panel aims to “prepare a final report for the Ministers” by March 2024, emphasizing the importance of adapting and evolving the Cannabis Act to the nation’s ever-changing needs.