Canada moving toward marijuana legalization

Canada is moving toward legalization of recreational marijuana, which the Liberal Party has promised in last year’s election.

There are many problems that must be cleared for legislation to be written for legalization, and everybody understands that recreational marijuana will not become available overnight to buy freely at stores. Still a sense of expectation is growing among Canadians and marijuana producers as if legalization of cannabis would happen any time soon.

When Justin Trudeau’s Liberal Party defeated the Conservative Party in the October election, stock prices of marijuana-related companies shot up, as much as by 7 % on the TSX Venture Exchange.

Immediately after taking office, Prime Minister instructed his Cabinet and Party to start studying how to proceed to make good on his campaign promise to legalize marijuana, naming Bill Blair, MP and former Toronto Police chief, as a parliamentary secretary to the minister of justice, responsible for working out the best model to legally distribute the drug for recreational purposes to adults, while finding ways to keep it out of the hands of children. Blair will have to tackle difficult problems on where to sell – dispensaries, pharmacies, or liquor stores – and who can grow the grass, how to regulate, and how to tax, to name just a few. Some of the biggest concerns are how to keep the drug from children’s access, and how to prevent the money from sale of recreational marijuana from flowing into the hands of criminal groups.

The Canadian media which were running stories suggesting as if marijuana would be legalized soon are now more low-key and reporting more about problems to be cleared. There are talks that it would take at least two years, or in the worst-scenario case, four years until the next general election.

Still expectations are rising for complete legalization of marijuana. According to the recent opinion polls, legalizing marijuana is supported or somewhat supported by a strong majority of 68%. By province, British Columbia leads the way with 75% overall support for legalization. On the other hand, 30% of the population is opposed or somewhat opposed to the legalization of marijuana.  (Globe and Mail, February 29)

The polls of 1,000 Canadians, conducted by Globe and Mail and Nanos Research, also found that Canadians would prefer that cannabis be sold in dedicated dispensaries (44%) or pharmacies (43%) than through regulated liquor stores (36%), which is preferred choice of Ontario Premier Kathleen Wynne.  Only 3.2% preferred convenience stores. Of course, neither Blair nor the Health Minister would comment about their preferred choice.

Use of marijuana for medical purposes became legal in 2001 under the Conservative government in Canada, and Canada is home to 50,000 licensed medical marijuana users and 26licensed producers, all of whom are regulated by Health Canada. (Globe and Mail, January 5) Under the Liberal government, which has promised to legalize recreational marijuana, those figures are expected to grow. Even under the current system that makes recreational marijuana illegal, “there are about 500,000 medical-cannabis users in Canada over the age of 25, according to Health Canada. The number has skyrocketed in recent years – because anyone complaining of the slightest bit of pain can get a prescription. Walk into some of the storefront marijuana dispensaries in Vancouver and you don’t even need that.” (Globe and Mail, February 26)

Canadians today can get marijuana legally for medical purposes at licensed dispensaries, if you have a prescription. The size of this medical-marijuana market is estimated at C$80 million to C$100 million. But when recreational marijuana is legalized, the market could expand to C$2 billion to C$5 billion. That’s why pharmacies’ and liquor stores’ industries are already lobbying so hard for slices of the lucrative market.

When the Conservative government legalized medical cannabis, Canadians with authorization from a physician could grow their own cannabis plants or designate someone to do so for them. Under that program, the number of production licenses went from fewer than 500 in 2002 to more than 22,000 by 2012. (Globe and Mail, February 26)

Alarmed by the pace of proliferation of both users and growers, the Harper government decided to change the rules. Under the new plan, the number of growers was restricted and their operations more tightly controlled. Products had to be ordered online. Costs for users became prohibitive to ordinary users, until finally a disgruntled group of users won a court injunction against the new structure in mid-February.  (ibid.)

As a result, both the old and new systems were allowed to operate concurrently, creating a mess. In the absence of any government leadership, dispensaries started popping up in Vancouver, almost in defiance of Ottawa, as Globe and Mail describe it – both licensed by Vancouver’s local authority, and not legal. Doctors who were unwilling to issue prescriptions for medical marijuana under the anti-drug Harper government are now expected to be encouraged to issue medical-marijuana prescriptions under the Liberal government, which has promised legalization of overall cannabis.

Marijuana legalization brings bonus in tax revenues to the federal and provincial coffers. CIBC World Markets’ survey estimates tax revenues as much as C$5 billion annually – on the order of 0.25% of GDP. The numbers were estimated on the basis of current estimates of Canadian recreational pot consumption, the revenue experience in U.S. states that have legalized and other factor – such as prevailing “sin tax” rates on alcohol and tobacco. (Globe and Mail, January 28)  The government must be careful not to be ambitious or greedy to set high rates for taxing cannabis sales so that high tax rates will not make legal cannabis prices too high for users. In that event, users often turn to black markets for cheaper pot to allow flow the drug money into the hands of criminal groups.

In Colorado, legalization boosted the U.S. state’s tax revenues drastically. But Prime Minister Trudeau maintains that legalized pot will not be a cash cow and that all revenues will be used to address mental health and addictions issues.

As cases in the U.S. states of Colorado, Washington and Oregon show, revenues come not only from taxation on legalized marijuana sales, but also from “pot tours” from other states and countries where recreation marijuana is not yet legal. Canada will have to be bracing for the rush of such pot tourists in the event of cannabis.

Minimum age requirements, like those for alcohol and tobacco, to prevent marijuana bought by minors; public health and addictions problems; driving while marijuana high; designating places where users can smoke the grass, like coffee shops, and many other issues are still have to be debated and tackled. (CBC News, January 11)

How legalizing marijuana will affect Canadian society and Canadians’ life style? The process for legalization and the post-legalization Canada would be an interesting case study of Canada as the world’s marijuana leader.


By Yoshikazu Ishizuka, TOCS senior consultant

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