Oh Canada! Oh Cannabis!

Working together, California and Canada can lead the way toward a well-regulated and fully banked Cannabis marketplace.

  ·  The Huffington Post   ·  Link to Article

Justin Trudeau campaigned for “Real Change” and included many platforms differentiating him from the Conservative Party’s message. One real and big change proposal included legalizing adult-use cannabis in Canada. Citizens in Nanaimo believe this campaign issue helped elect Liberal Party leader Justin Trudeau as Prime Minister on October 19, 2015. Adhering to his party’s promise, the government has set up a task force to create a policy framework for legislation to legalize recreational use in 2017.

In a Newsweek article, Trudeau said he wants to change the law for two reasons: to better protect young people from marijuana by providing increased control over points of sale and to take revenue away from organized crime.

Canada first enacted the Marihuana Medical Access Regulations (MMAR) in July 2001 and more recently enacted the Access to Cannabis for Medical Purposes Regulations (ACMPR) in August 2016. Today, Health Canada oversees 34 federally licensed companies serving about 80,000 registered patients. Like California, Canada has close to 40 million residents. Medical cannabis is legal throughout and adult use is widespread. However, when it comes to regulation, California and Canada diverge.

In Canada, there are only 34 federally licensed medicinal cannabis operations. In Canada, licensed facilities are required to function as grower, manufacturer, and distributor. There are no licensed retailers. All sales are delivery-only and sent via the equivalent of our U.S. Postal Service since there must be proper tracking from the distribution site directly to a patient’s home. It is estimated that these legal operations generate approximately $100 million in revenues.

In California, the marketplace is emerging very differently. Licenses are available in several categories, including cultivation, manufacturing, distribution, testing, and retail. California promises unlimited licenses but limits the number of licenses any one business can hold.

In Canada, licensed businesses have full access to four of the “Big Five” Canadian banks, thus able to transact business via credit cards, checks, and electronic funds transfer. This is an important reminder to our representatives and colleagues in Washington, D.C. when it comes to cannabis - federal policy is failing.

We toured one of the 34 federally licensed facilities which opened in April 2014. Tilray chose to open their 65,000 square foot state-of-the-art facility on the small island city of Nanaimo due to the diverse/skilled talent pool, the region’s cost of doing business, renewable power, transportation logistics, and being heavily wooed by the local elected officials/community who saw this as a job creator for their residents who had traditionally worked in the coal and lumber industries. In fact, Tilray employs about 160 people today, with about 90% of their employees hired from the local community.

Storefront operations are prohibited, however many brick-and-mortar businesses operate due to a 2000 Supreme Court ruling providing access for compassionate needs. Although technically these store front operations are illegal under federal law, there is no political will to close down these operations. It is estimated this market generates $2 billion.

Since Canadian facilities are required to function as grower, manufacturer, and distributor, they end up storing a lot of product. One of the government’s strict requirements for obtaining a legal license is having the appropriate vault for the storage of the cannabis product. Health Canada has a website listing the different security requirements based on inventory limits and location ranging from 1-11. Based on Tilray’s business model and location, they are required to have a Level 9 vault to house all product (that is not growing) each night in this maximum security vault. There is barbed wire fencing along the perimeter and about 270 security cameras onsite. It was confirmed that Health Canada officials routinely visit their premises unannounced for inspections.

These licensed cannabis operations are taxed exactly like any other corporate enterprise in Canada. It seems there is consensus that the medical cannabis operators should be licensed and regulated similar to the liquor and wine industry.

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Policy makers on both sides of the border would benefit from continued dialogue; the issues facing Canada and the State of California are parallel in many ways. Working together, California and Canada can lead the way toward a well-regulated and fully banked Cannabis marketplace.