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How the Legalization of Cannabis Will Impact Canada

The world is watching as Canada becomes the second and largest country to legalize cannabis.  How will legalization impact residents, businesses and cannabis consumers in Canada? Experts forecast very good things ahead.

In Canada, Legal Weed Takes a Huge Leap

Canada’s road to legal weed has been much different than that of the United States and Uruguay. While cannabis remains federally prohibited in the United States, it is formally legalized nationwide in Canada. This allows for complete regulation of the sale, distribution, taxation and even exportation of the product. 

Uruguay began with very strict laws and regulations, but low supply has meant that the illicit market still thrives. Meanwhile, large-scale cannabis operations hope to ensure steady supply for not only Canadian residents, but for exportation to countries where medical cannabis is legalized but not readily available due to developing or non-existent growing facilities. These countries are looking to Canada to meet the demands of their medical cannabis consumers.

As the first G7 nation to legalize cannabis, Canadian companies are jumping at the opportunity to capitalize on the commodity. This is especially true in the financial sector, with banks like Canaccord Genuity and Bank of Montreal becoming early financial advisors and investors for cannabis companies such as Aurora Cannabis and Canopy Growth Corporation.

The History of Cannabis in Canada

After nearly a century of prohibition, Canada became the first country to legalize medical cannabis in 2001. Public opinion continued to shift toward the positive over the next decade, and marijuana advocates got a major win with the election of Prime Minister Justin Trudeau in 2015. A major tenet of Trudeau’s platform was the swift legalization of cannabis nationwide. He made good on the promise in 2017 and 2018, with the passage of the Cannabis Act, or bill C-45. After initially setting a date for implementation in the summer, provinces asked for more time to transition to the new framework. The official date of legalization was set for October 17, 2018.

Trudeau’s aim is to keep cannabis out of the hands of criminals and minors and to ensure complete government oversight and regulation of the product. The federal laws outline the broad legalization of the drug, but leaves provinces and municipalities to further restrict the sale, distribution and consumption of cannabis. 

On a federal level, persons over the age of 18 may purchase up to 30 grams of fresh or dried cannabis, oils, gel caps and pre-rolled joints. Households may cultivate up to four plants for personal use, and there is no limit to the quantity of cannabis one may possess in their personal residence. Residents will also be able to purchase cannabis online, which is beneficial in provinces with few stores. Ontario is the only province where residents must buy cannabis online, with orders delivered by the Canada Post. Brick-and-mortar stores will be licensed and open by April 2019 according to the province’s current timeline.

The Impact of Legalization

Canada’s cannabis industry will be a test of the impact on black market sales, tax revenue and job growth. But many residents and lawmakers worry about the impact of legal weed on impaired driving and border crossings. The government has implemented changes to impaired driving laws, bolstering punishments for cannabis-related offenses. Officials have been pre-emptively reminding residents of issues crossing the Canada-US border, as it remains illegal to bring marijuana from Canada into the United States.

Home to approximately 37 million people, industry experts estimate that about 5 million Canadians were cannabis users prior to legalization. This is expected to increase by 19 to 20 percent, though estimates vary. Total spending on cannabis is expected to surge up to $1.4 billion in the first quarter. Excise taxes will be much lower than those of alcohol and tobacco, only 10 percent of the purchase price or $1, whichever is greater. Taxes for alcohol total between 47 to 80 percent, based on the percentage of alcohol in the product.

More than 100 companies have received licenses to grow marijuana, stoking concerns of oversupply and dropping prices as seen in US states like Oregon. However, some experts warn of a slow ramping up period post-legalization as growers and licensed dispensaries get on their feet. Supply is expected to increase over the coming months.

Parliament is expected to discuss additional regulation and expansion of other means of cannabis consumption in 2019. This includes the production, sale and distribution of edibles, concentrates and topicals. In the meantime, consumers should consult the laws of their province and municipalities to confirm details regarding the purchase and consumption of cannabis.


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