A primary market of the marijuana industry in Canada will remain illegal for at least another year after the federal government there legalizes weed for recreational use. Experts say that this will make it much more difficult for Prime Minister Justin Trudeau to undermine the black market, since it will give illicit traders an opportunity to give illegal Pot products a new, underground, home for sales.
Cannabis beverages, edibles, and vaping products are among those that the country will still outlaw once legalization comes into effect on October 17 this year. The government has stated that it needs more time to address the “unique risks” involved with some sectors of the market, including time to draft regulations to control quality, portion sizes, dosages, and packaging.
Until the government completes these processes, a crucial segment of the market will stay unavailable to people, at least not legally, which will likely undermine the stated point entirely of the government legalizing in the first place, which is to starve out illegal trade. In Canada, you can already buy THC-infused cookies to lollipops and truffles online and through dispensaries not sanctioned by authorities.
In a telephone interview, Bruce Linton, chief executive officer of Canopy Growth Corporation, Canada’s biggest cannabis producer, said, “You either switch to what we provide or you stick with the illicit market.” Use what we sell or go to jail. That is the choice consumers face. In a June report, Deloitte said there has been an “explosion of interest” in edibles, such as baked goods, ice cream, drinks, and candies.
There is no denying that the edibles market is huge and growing. Deloitte predicts that six out of 10 recreational weed users will prefer edibles to other forms of marijuana, and that edibles will become a key component of a legal pot market projected to exceed $3.3 billion in its first year. That is around 4.3 billion in hard Canadian dollars. The government cannot afford to dilly-dally too long.
Major Concerns of Delay
People have already been urging the government to make such products urgently available, as quickly as possible, to enable legal suppliers to compete fairly with the “same diversity of products” that are available from illegal traders on the black market, according to a summary of consultations. “We will have a consultation in the fall and we will adopt the regulations for edibles in 2019,” said Mathieu Filion, spokesperson for Canada’s health minister, via email.
Initially, the government intends to legalize only those products that “will not cause eyebrows to raise,” while slowly introducing others incrementally, in an attempt to be more effective at wiping out the black market, Linton explained. Such a move will give businesses like Canopy “breathing room” as it, and others like it, get products ready for the initial launch this fall.
Last year, Constellation Brands Incorporated, the Corona beer retailer, purchased a minority stake in Canopy Growth. Competitors, such as The Green Organic Dutchman, intend developing a manufacturing and product-testing center to explore the use of cannabis in, well, everything, from sports drinks to juices, even iced teas. Linton expects that different products will become legally available in “mid-2019.”
According to Matt Bottomley, an analyst at Canaccord Genuity Corporation, a company based in Toronto, during a telephone interview, edibles could account for easily 10 percent of Canada’s entire marijuana market once the government legalizes a wider range of products for retail. Until then, the illegal black market will likely continue to thrive unabated.
“You are not going to convert people into legal customers or legal patients until you have the product classifications that will appeal to them,” Bottomley stated the obvious. “Vape pens, edibles, beverages, things like that still need to be formulated in a version of this legislation.” As any market will tell you, consumers are demanding and notoriously fussy. If you cannot provide what they want, they will go to someone who will.