Four Things Canada Needs To Think About During The Legalization Process

In case you hadn’t heard, Canada is on the brink of a massive legislative change. The Great White North will soon be the second country worldwide and the first G7 nation to legalize the sale and use of recreational cannabis. It is a bold step, but not entirely without international precedent - and plenty of cautionary tales.

Here are four issues that Canadian lawmakers and businesses involved with the cannabis industry need to anticipate when cannabis legalization becomes law.

The banking system

When Uruguay set about legalizing recreational cannabis, they didn’t really have a plan in place for how local banks would work with the pharmacies selling cannabis, according to Hannah Hetzer, Senior International Policy Manager for the Drug Policy Alliance.

Hetzer spent 2013 in Uruguay, working on the campaign to legalize cannabis. She said that when the American banks learned that Uruguayan banks were working with pharmacies that sold pot, everything went south.

“All of a sudden, a couple of US banks came out and said we will not continue to do business with Uruguayan banks if they service any marijuana cultivators or pharmacies,” she said earlier this week at the World Cannabis Congress in Saint John, New Brunswick.

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“So Uruguayan banks sort of freaked out and said, ‘We will no longer hold accounts with these pharmacies,’ so it put the whole thing in limbo.”

She says the situation could be different with Canada, because the United States is more likely to bully a small country like Uruguay than one of its closest allies, but Canadian banks should be starting those conversations now. (Especially since President Trump doesn't seem to have a problem with bullying Canadian Prime Minister Justin Trudeau.)

Fairness and equity for women and people of color

One of the main concerns for a number of current dispensary owners and cannabis growers is how the demographics of the cannabis industry will change when the drug becomes legal.

In order to keep the industry diverse, Hetzer says we have to make a conscious effort to make sure women and people of color have access to the capital needed to start up dispensaries or ancillary businesses.

"If you don't, it's not going to happen," she said. "White wealthy men will enter the space. They have the access to capital, they have the connection, and they haven't been historically disadvantaged."

Her view was seconded by Wanda James - CEO of the Colorado-based dispensary Simply Pure. James and her husband were the first African Americans legally licensed in the United States to own a dispensary and edible company.

"We have a very profitable store that does millions of dollars a year," she said during the World Cannabis Congress, "and yet we're having a hard time raising money for that...It’s because [my husband’s] dad doesn't have four million dollars in the bank to loan us a million," she added, noting that cannabis entrepreneurs in America often have to raise their own capital because banks are wary of doing business with an industry that will continue to operate in a gray area so long as federal prohibition remains law. So company owners almost have to be independently wealthy to succeed. 

"Most of our friends don't have that kind of cash either, so what happens is we are left to pimp out our business."

But James feels optimistic about the recreational regime in Canada because she believes the country's federal regulations will help with destigmatization. That means cannabis entrepreneurs will be able to apply for loans in the same way aspiring restauranteurs or fashionistas would.

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Keith Stroup of NORML (far left) discusses the impacts of legalization with Wanda James, Hannah Hetzer and John Hudak (Brookings Institute)

Cannabis consumption spaces

While the number of possession-related arrests have gone down in states where cannabis is legal, the number of consumption-related arrests has actually gone up in many jurisdictions.

This is because people don’t have anywhere to legally consume the product except for in their own home. And that's not a good option for parents who want to keep cannabis as far away as possible from their kids. And it's no option at all for many veterans, seniors and others living in public housing, which - as a federally funded service - still prohibits cannabis consumption as well as possession.

To allow everyone in legal states to enjoy the benefits of cannabis legalization, James suggests creating cannabis clubs, tasting rooms and other venues that allow on-site consumption.

"I would like to see dispensaries have tasting rooms and lounges next to them, which would be a wonderful thing to happen," she said. "I would love to see social consumption lounges in the same way we do bars."

Hetzer adds that places with membership based cannabis social clubs, such as Uruguay or Spain, could serve as an inspiration.

“There are some where you can pretty much walk in off the street and it looks like a bar,” she said. “I went into this really sort of hipster one, where the person who is a member could go and buy product, and I think just like make it like a bar, where you can buy small amounts of product.”

Arrests

Not all the unexpected consequences of legalization were negative. All three panelists at the WCC agreed that repealing prohibition has driven the overall number of cannabis arrests way down. In fact, the number of arrests in the states with legal cannabis decreased by between 81 and 99 per cent after the drug was no longer illegal.

This is undoubtedly a positive consequence, but it’s also important to consider that people who are already serving long sentences for marijuana offenses aren’t getting out once the drug becomes legal. And in many cases, legal states aren't expunging cannabis-related offenses from criminal records.

"My brother was arrested when he was 17 for 4.5 oz of weed," said James. "He did 10 years in the system, four and a half of those years, my brother spent picking cotton in Huntsville, Texas. He had to pick 100 lbs a day to buy his freedom...The only way that will stop is when we federally legalize, because what we look at right now, at least in America, is pot is used as a reason to remove people’s civil liberties."

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