newspaper, about Canada's decision to legalize cannabis. The
. It was a complete privilege to work with Wences and be published in
.
Canadian readers might find this a bit 101, but here is the original English text of the piece.
Get high, sell high: Canada’s cannabis reforms are more
about money than personal freedom
By Paul Gallant
One warm fall night two years ago, a lineup of people
stretched down a block of Church Street in downtown Toronto, all of them
waiting to get into the Cannabis Culture boutique. The store was run by Marc
Emery, known as Canada’s “Prince of Pot,” a marijuana entrepreneur who has gone
to jail a few times for the cause. The store might as well have been selling
bottles of eternal youth, people were so excited. Each time the boutique’s
front door opened, marijuana smoke rolled out into the street, but you’d hardly
notice because there was already a cloud of pot hanging over the sidewalk—so
many people in line were already smoking up. Mostly young, mostly middle-class,
the patrons looked like attendees at a Drake concert. Inside, in glass jars on
a glass counter, there was a choice of 12 strains of marijuana, with names like
Sharks Breath and Girl Scout Cookies and prices ranging from C$5 to C$14 per
gram.
At the store’s peak, more than 1,300 people visited the
location each day. And it was just one of maybe hundreds of marijuana boutiques
that sprung up across Toronto and across the country after Canada’s federal
government announced its plan to legalize marijuana. After the government
started preparing the policy in 2015, Canada quickly became the Wild West of
weed, with entrepreneurs, the police and various governments pulling this way
and that, trying to anticipate what the marijuana marketplace will look like
after October 17, 2018. In the meantime, on sidewalks, in parks, at parties and
at concerts, the smell of dope has become more common than the smell of tobacco.
Canadians tokers embraced the transition period as an opportunity to experiment
and push the limits. Walking to the grocery store, walking to my gym, in
outdoor beer gardens and on restaurant patios, for the last couple of years, I
smell weed everywhere I go.
During the 2015 election campaign, Trudeau had promised not
just to decriminalize marijuana, like the Netherlands with its coffee-shop
culture, but to fully legalize it and create a system for Canadians to grow it,
sell it, buy it and smoke it. The system might also provide ways to export it,
if the rest of the world wanted to buy Canadian. The old system, Trudeau argued
a few weeks before the election, “makes it easier for young people to access
marijuana than it is for them to access beer or even cigarettes and continues
to fund the kind of crime… that is a real challenge for our communities.”
Soon after the election, entrepreneurs and smokers started
acting like all the laws against marijuana had been wiped off the table.
Boutiques and lounges like Cannabis Culture sprung up all over, sometimes
several on the same block. It seemed like there were no rules at all.
But over the last couple of years, the government has made
it clear that Canada’s version of legalization will not be a free-for-all. By
the spring of 2017, seven Cannabis Culture locations, including the one on
Toronto’s Church Street, had been raided and closed by the police, as had many
other pop-up boutiques and dispensaries across the country. Emery and his wife
Jodie were charged with drug trafficking, conspiracy and possession. (A year into
the court process, Emery had been fined a C$5,000 for trafficking—a mere slap
on the wrists.)
When the laws come into effect on October 17, cannabis will
be much more tightly controlled now than it has been over the last few Wild
West years. “On the face of it, the restrictions that the government is putting
on the marketing and the distribution seems pretty strict,” says Jan Westcott,
president and CEO of Spirits Canada, an organization that represents the
distilled spirits industry. Pot growers might eat into the “good times” market
share of his members.
The all-night pot shops and lounges that are still operating
will likely be put out of business. The police will again become interested in
teenagers smoking dope in playgrounds. Unlicensed marijuana dealers will be
arrested and charged.
That’s because the legalization is not so much about fun,
but about money. The days of big-business cannabis companies has begun. You’ve
heard of Bacardi and Smirnoff, Marlboro and Pall Mall? Get ready to hear about
Aurora and Canopy Growth. Sure, Canada’s new pot laws will make life more
relaxed and convenient for smokers. No more need to do drug deals in dark
alleys. But mostly it’s about going corporate, and most importantly, more
taxes. Turn on, tune in, buy low, sell high.
+++
Canada loves to regulate pleasure. Historically, there’s a
culture of trying to protect people from their impulses and the consequences of
too much fun. We had national Prohibition on alcohol from 1918 to 1920 (my home
province, Prince Edward Island, outlawed booze until 1948). Until the 1960s in Ontario,
Canada’s most populous and richest province, liquor-store customers carried
booklets where their purchases were recorded, so employees could say “no” if a
customer was buying too much booze. “Fundamentally, they don’t trust the users
of these products and they want to be sure it’s not too easy to get and it
shouldn’t be too easy for children to get,” says Craig Heron, professor
emeritus at York University’s Department of History and author of the 2003 book
Booze in Canada: A History. Since Prohibition,
provincial and territorial governments have controlled almost all alcohol
distribution. In some provinces you can buy hard liquor only from government
stores, and the sale of beer and wine is also very tightly regulated. There are
complex rules about when you can buy alcohol, where you can drink it and how
much you must pay for it. Bar closing hours are taken very seriously.
And that’s just booze. Our tobacco laws are among the
strictest in the world. Taxes make cigarettes very expensive (an average of
C$14 for a pack of 20), and, in the stores that sell them, cigarettes packages
must be hidden behind unlabelled doors. Health warnings must cover 75 per cent
of the packaging. A new law expected soon will prohibit any branding on cigarette
packages—all brands will be forced to use the same font on a plain brown
background. So much for selling smoking as a glamorous lifestyle.
So nobody would have pointed to Canada as the first country,
after tiny Uruguay, to legalize pot. Though almost half of Canadians (49.4 per
cent of men, 35.8 per cent of women) will smoke marijuana at least once in
their lifetime, according to the government agency Statistics Canada, only 14
per cent of Canadians aged 15 years and older reported use of cannabis products
in the previous three months. Fewer Canadians smoke up than Icelanders, Americans,
Italians and Kiwis.
Marijuana was made illegal in Canada in 1923—almost 100
years ago. Maximum penalties for possession of up to 30 grams are a fine of $1,000
or six months in jail, or both. Being convicted of trafficking pot can bring a
sentence of life in jail. But since the 1990s, government and police haven’t
been particularly interested in enforcing marijuana laws. The Baby Boomers
generation, which still holds the strings of power, associate weed with happy
memories of their wild, freewheeling youth—something to take as seriously as a
few beers. The police have better things to do than arresting people for a
joint. In Vancouver, the country’s most relaxed jurisdiction, growers like Marc
Emery were mostly left alone to refine their products, creating hybrids for energy
or relaxation. Canadian growers became known for more and more THC content in
their weed, providing an intense high.
After a court ruling in 2000, the government was forced to
permit the use of marijuana for medical purposes. At first, the government
envisioned a system where medical marijuana was grown and distributed by the
government, for people who had a prescription and a diagnosed health problem,
like cancer. But cannabis clubs and lounges opened that were very relaxed about
requiring a prescription. Their legality was questionable, but they were mostly
discreet, and the police didn’t pay them much attention. But then Justin
Trudeau and his Liberal Party won the 2015 federal election, after promising to
legalize marijuana across the board. Suddenly the cannabis suddenly industry
exploded. Nobody cared about discretion anymore.
+++
Although pot legalization is good for the “nice and easy”
Canadian brand, Trudeau is not interested in making Canada a party destination,
like the Netherlands. He’s mostly interested in making money. While there will
be additional healthcare costs due to increased marijuana use, legalization is
expected to be very profitable for all levels of government. Government revenue
from the control and sale of alcoholic beverages was C$11.9 billion in
2016/2017. Government revenue from tobacco sales was an estimated C$8.4 billion
in 2016/2017. Cannabis is expected to be taxed at C$1 per gram, or 10 per cent
of a product’s price, which may earn the federal government C$100 million in
the first year. But there will also be revenue from sales tax, government
distribution profits, licensing and property taxes, leading some to speculate
that various levels of government could make C$2 billion annually from pot.
Will crime go up or down? Right now, most crime in Canada
related to marijuana are connected to its sale and use. About 58 per cent of
police-reported Controlled Drugs and Substances Act offences in 2016 were
cannabis-related (the rest were for offences relating to the importation,
exportation, trafficking, production and possession of other drugs). Of course,
these marijuana-related “crimes,” 54,940 of them in 2015, will disappear off
the books when marijuana becomes legal. Even then, cannabis-related offences have
decreased over the last five years, maybe because the police aren’t even trying
to enforce them any more. The rate of drug-impaired driving is low (8.5 incidents
per 100,000 trips), especially compared to the rate of alcohol-impaired driving
(186 per 100,000).
Although legal pot is a new frontier, it will probably look
a look like a combination of existing alcohol and tobacco regulation. Canada’s
10 provinces and three territories will be in charge of distribution, just like
with booze. The provinces and territories will also make rules about who gets
to sell (in some cases, just the government; in others, government and private
stores) and under what conditions. Municipalities will be able to create their
own rules, and may be able to prohibit the sale of marijuana altogether—some Canadians
may have to buy their legal dope online from government websites. Better than
striking a deal in an alleyway from a dealer who’s a friend of a friend, I
suppose, but not as convenient as popping by one of Amsterdam’s coffeeshops.
Actually, when you look closely at the provincial laws,
there will be very few places outside the home where Canadians will be able
smoke marijuana; there’s been a debate about whether it should be allowed in places
like seniors’ homes. Smoking tobacco isn’t allowed inside most public
buildings, including bars and nightclubs, and, so far, it looks like pot will
be treated the same way. Though some provinces will allow “public” smoking,
there are rules to keep it away from where children might be.
Just weeks before the official legalization date, there is a
tremendous uncertainty about how things will unfold. Alberta, the province with
the most liberal liquor laws, will allow as many as 250 retail locations, some
private, some government, to open in 2018. Ontario first planned to open
government-run stores. Then the provincial government changed and declared that
pot will be sold only through a government website until April 1, 2019, when a
plan for private retailers will come into effect. Most provinces will allow
consumers to grow as many as four plants at home for personal use; Quebec,
usually seen as a liberal province, won’t allow it.
“Where we are going to be on October 17 is going to be
vastly different from where we’ll be five years from now,” says Westcott. “One
of the aspects of this whole thing is that there’s almost no medical research.
Almost zero, partly because it’s been illegal.”
The reforms are a dream for medical, sociological and crime
researchers, who will finally be able to conduct experiments, and observe how legal
access to marijuana plays out in various jurisdictions. Will violent crimes go
up or down? Will productivity at work go up or down? Will there be more health
problems or fewer? Will the black market shrink and disappear? Will more people
smoke more pot in the provinces where pot is more freely available? What we do
know already about marijuana is that it’s less harmful than alcohol, at least
in the short term.
“When it’s legalized, it’s likely that cannabis will in many
cases substitute for alcohol,” says Tim Stockwell, a professor of psychology at
the University of Victoria and director of the Canadian Institute for Substance
Use Research. “[For example,] although cannabis is not a good thing to use
while driving, people tend to go slower, while people who are drinking tend to
go faster. There is some evidence that impaired driving and road crashes could
be reduced. That may also apply to violence…. There are 60 ways that alcohol
can harm you; there are only two or three ways cannabis can.”
It will take years to collect statistics on how legalized
pot will transform Canadian society. But the most dramatic change has already
been taking shape on the business side. Because the provinces will be the main
distributors—and they’ll want to buy in bulk—the playing field will be skewed
toward big players that can cut deals to sell to uniform-quality pot to populations
of millions. This new industry, perhaps one that will eventually rival alcohol,
tobacco and pharmaceuticals, intends to go global. Although nine U.S. states
now permit the sale and use of marijuana for recreational purposes, and 36
permit it for medical purposes, the drug remains illegal in the U.S. nationally.
Federal enforcement officials in the U.S. have let the pro-pot states do their
own thing—within reason. That’s kept their industries small, more local and less
corporate. In Canada, companies like Canopy Growth (WEED.TO), Aurora Cannabis
(ACB), Aphria Inc. (APH) and Cannex Group Holdings Inc. (CNNX) are listed on
the Canadian Stock Exchange. Investors have already made millions on this
industry, which, in the U.S., still has difficulty accessing traditional
financing.
This summer, Corona beer maker Constellation Brands invested
C$4 billion into Canopy Growth, which already had an estimated value of C$10
billion. Just last year, Constellation Brands had made a C$200-million
investment last summer to help Canopy produce a non-alcoholic cannabis-based
beverage (which will not be legal in the early days of legalization). Canopy
predicts as many as 30 countries are likely to allow medical marijuana in the
near future. Its chief executive, Bruce Linton, says the company is targeting
C$1 billion in overseas acquisitions over the next 12 months. With the right
strategy, Canada could become to pot what Hollywood is to movies or Silicon Valley
is to tech.
Although great fortunes await, the pot business still
carries risks. Some employees at legal-in-Canada cannabis companies have been
turned away at the U.S. border and banned for life from entering the U.S.,
deemed inadmissible because they are considered to be living off the profits of
the drug trade. Going global might be trickier than some investors think. Unlike
in California, one of the nine U.S. states where recreational marijuana is
legal, medical marijuana outlets may not get preferential treatment in getting
licences to sell. The provincial and territorial governments that will be doing
the licensing are unlikely to issue licences to businesses that broke the law
during the Wild West period. Mark Emery, for example, by being a pioneer, may
have shut himself out of the legal pot business. There have been calls for a
“marijuana amnesty” to clear the criminal records of people convicted of past marijuana
offences. Considering that the government apologized last year to LGBT
Canadians for past laws against homosexuality, you have to wonder if the
government might apologize to potheads for past government persecution.
After three Wild West years, it may be hard for the
government to restore Canadian-style law and order. Businesses that have made big
profits in the last few years may be reluctant to close, even if they don’t get
licences. Potheads who have grown accustomed to smoking up wherever they want
may not want to limit their use to their own home. Police officers who have
spent years turning a blind eye to marijuana use will have to again become
diligent, arresting black-market dealers, people who are smoking in the wrong
places and people growing more plants than they’re allowed. Sounds like a real
nuisance.
Habits are hard to break. This month I dropped by the fifth
annual Karma Cup, a cannabis trade show held in a parking lot on Church Street
in Toronto, across the street from where Cannabis Culture did its booming
business. Crowds packed in to sample the wares of dozens of booths selling
“elite cannabis products” that were judged for quality. There were lots of Guns
N' Roses T-shirts, leather jackets and dreadlocks. Many of the
products—edibles, for example—probably won’t be legal after October 17, but at
this point who cares? I didn’t see police anywhere, even as the clouds of marijuana
smoke wafted down the block.
Yet now there is a multi-billion-dollar industry with
lobbyists and the power to create thousands of jobs and fortunes for investors.
Industry demands for a level playing field will put the police and the
government under much more pressure than worried parents, priests and school
teachers ever did. The stakes are much higher than a few joints in the school
playground. Canada has created a new industry and the world is watching.