Outside the Beltway

Marijuana Legalization Takes Effect In Canada

Marijuana is now legal in Canada, and many people are watching the country to see how it adjusts to this change.

Doug Mataconis · Wednesday, October 17, 2018 · 14 comments

Starting today, marijuana use and possession became legal in the entire nation of Canada, fulfilling a promise that Prime Minister Justin Trudeau had made during the 2015 General Election:

MONTREAL — Canada on Wednesday became the first major world economy to legalize recreational marijuana, beginning a national experiment that will alter the country’s social, cultural and economic fabric, and present the nation with its biggest public policy challenge in decades.

On Wednesday morning, the government announced that it would introduce legislation to make it easier for Canadians who had been convicted of possessing small amounts of marijuana to obtain a pardon.

While the government is not offering a blanket amnesty, Ralph Goodale, the public safety minister, said at a news conference in Ottawa that as “a matter of basic fairness,” the government would seek to end the minimum waiting period of five years to apply for a pardon as well as waiving the fee of 631 Canadian dollars.

“We will make the application process as simple as it can be,” Mr. Goodale said, adding that details would not be available for several weeks.

Newfoundlanders became the first Canadians to be able to smoke pot legally on Wednesday, when retailers there opened in the country’s easternmost province at midnight.

Across the rest of the country, government-run stores were preparing to greet consumers, who will be able to choose among pre-rolled joints, fresh or dried marijuana flowers and cannabis oil — all of which are permitted under the new federal law.

At a government cannabis store in eastern Montreal, a line stretched across a long city block on Wednesday morning. Hundreds of people, some of whom had been waiting since 3:30 a.m. for the store’s 10 a.m. opening, waited, some smoking joints, filling the air with the pungent smell of marijuana.

As the first customers left the store with dried cannabis in brown shopping bags, the crowd cheered.

“I have never felt so proud to be Canadian,” said Marco Beaulieu, 29, a janitor. “Canada is once again a progressive global leader. We have had gay rights, feminism, abortion rights — and now we can smoke pot without having to worry police are going to arrest us.”

Kate Guihan, 29, a beautician, had been in line for hours.

She said she planned to celebrate the “historic moment” on Wednesday night with several puffs on a joint. The low cost of government pot, she added, was a big draw for her, along with the fact that legal marijuana was screened and devoid of contaminants found in some black-market marijuana.

“This is a great moment for Canada,” she said. “It will bring in money, help reduce the black market.”

Marijuana advocates were also jubilant about the day.

“The fact that we are moving away from a Prohibition model is a victory for human rights and social justice, an economic windfall for the Canadian economy and a sign of social progress,” said Adam Greenblatt, a director at Canopy Growth, a producer that has been valued at more than $10 billion.

Others were more cautious.

“Legalization of cannabis is the largest public policy shift this country has experienced in the past five decades,” said Mike Farnworth, British Columbia’s minister of public safety.

“It’s an octopus with many tentacles, and there are many unknowns,” he added, “I don’t think that when the federal government decided to legalize marijuana it thought through all of the implications.”

In a stinging editorial published on Monday, the Canadian Medical Association Journal called the government’s legalization plan an “uncontrolled experiment in which the profits of cannabis producers and tax revenues are squarely pitched against the health of Canadians.”

It called on the government to promise to change the law if it leads to increased marijuana use.

But the so-called “green rush” is already on, as licensed cannabis growers have been rushing for months to get a foothold in what is expected to be a $5 billion industry (6.5 billion Canadian dollars) by 2020, buttressed by the expected arrival of thousands of pot tourists from across the border in the United States.

In early trading on Wednesday, though, after several months of rising to dizzying multibillion-dollar heights for the biggest companies, Canada’s marijuana growers saw their stock prices fall. Many analysts said the value of legalization had long ago been worked into their prices by investors.

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The government’s stated rationale for legalizing cannabis is to tame an illegal trade estimated at 5.3 billion Canadian dollars in 2017 by Statistics Canada. But from Toronto to Winnipeg to Vancouver, hundreds of illegal shops have indicated that they have no intention of shutting down, and the black market supply chain remains deeply entrenched.

Chief Constable Adam Palmer of the Vancouver Police Department, who is also the president of the Canadian Association of Chiefs of Police, said this week that at a time of limited resources, policing marijuana would not suddenly become law enforcement’s primary concern.

“Fentanyl kills 11 Canadians a day,” he said, referring to the powerful synthetic opioid that is a public health scourge in some cities like Vancouver. “Marijuana does not.”

He added, “I don’t expect a big crackdown on day one.”

The reality of a market of 36 million people suddenly opening up has, not surprisingly, caused something of a business explosion north of the border even after the role of the government in the sale of legal pot is taken into account:

Millions of dollars worth of marijuana plants sat under lamps brighter than the noonday sun as employees of Canada’s largest cannabis business bustled about the 47 giant growing rooms of its factory, which once made Hershey bars.

Now it’s home to Tweed, whose parent company, Canopy Growth, was the first Canadian marijuana grower to debut on the New York Stock Exchange.

Valued at more than $10 billion, Canopy is worth even more than Bombardier, the Canadian manufacturer that is one of the world’s largest makers of planes and trains, offering a stark example of this nation’s new get-rich-quick hope — the marijuana industry.

On Oct. 17, Canada is set to become only the second country in the world and the first major economy to legalize marijuana for all uses. Companies are clamoring to join in what some are calling a green rush.

“It’s like Seagram’s back when Prohibition was in place and just about to end,” said Deborah Weinstein, a lawyer in Ottawa who handled Canopy’s move onto the Toronto Stock Exchange, with the stock symbol WEED. “But it’s more than that. This has never been an industry.”

On the same day that marijuana becomes legal, the government will announce a program to make it easier for Canadians convicted of possessing small amounts of marijuana to obtain a pardon, according to an official familiar with the plan.

The official, who spoke on the condition of anonymity, said that because several details must still be worked out, the program will not become active immediately. Pardons are to be available only for people convicted of possessing 30 grams of marijuana or less, the legal limit under the new system.

The law limits the products that can contain cannabis; edibles, for example, will not be legal until next year.

The legislation also heavily restricts advertising and is laden with bureaucratic rules, including licensing and inspection requirements for producers.

But companies are already lobbying for more permissive rules.

The fervor is a little reminiscent of the dot-com boom of the 1990s. The top 12 Canadian marijuana companies are now worth nearly 55 billion Canadian dollars, or $42 billion, and investors are snapping up the stock.

Profits, though, are a dream of the future. At Tweed, for example, sales last year from the medical marijuana business were just 77 million Canadian dollars. The company lost 70 million dollars.

Some investors may be sorry. Not every marijuana producer now taking stock markets by storm will profit and survive, many experts believe

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There is also an industry around the industry, already making money.

Businesses have sprung up to create the software that allows growers to track their plants and final products, as the government requires. Marijuana growers are also voracious consumers of supplies like fertilizers, as well as energy.

And greenhouse makers now have a customer base beyond tomato and green pepper farmers.

Beyond that, abandoned factories, like the one Tweed operates in, have suddenly become hot properties.

Even Canadian news organizations have joined in. In Toronto, The Globe and Mail has hired reporters and editors to produce “Cannabis Professional,” a daily newsletter that will cost 2,000 Canadian dollars a year for a subscription

The Ottawa Citizen, meanwhile, notes that Canada is being watched by other nations around the world:

Canada today begins what has been called a social experiment or a cultural revolution. Call it what you will, the reverberations are unknown.

The legalization of pot has been massively complex and the societal, economic and political effects will take time to show themselves.

It may well be that the country isn’t ready for legalization. The issue over drug-impaired driving has not been satisfactorily resolved; there are fears a shortage of legal cannabis will boost the black market; different regulations in various provinces will lead to confusion, and Canadians still face the prospect of being banned from the U.S. if they admit to pot use.

And despite cannabis becoming legal today, the nation is still split on the matter: while 52 per cent are in favour of the new law, according to a Forum poll, 41 per cent are opposed.

Meanwhile, many in the medical community remain adamantly against it.

This week, an editorial in the Canadian Medical Association Journal warned that Canada was launching “a national, uncontrolled experiment in which the profits of cannabis producers and tax revenues are squarely pitched against the health of Canadians.”

The CMAJ pointed out that Health Canada said that sales of the drug would cause a problem in nearly 1 in 3 adult users and an addiction in close to 1 in 10, with higher risks for youth.

“Canadians are entering this new reality,” Dr. F. Gigi Osler, the association’s president told The New York Times. “One of our messages continues to be: Just because it’s legal, doesn’t mean it’s safe.”

And just because it’s legal doesn’t mean it will be available.

Already there are worries about a shortage of cannabis in the early months of legalization and a lack of retail outlets, leading to a possible boom in the illicit marijuana trade the law is designed to thwart.

The provinces, tasked with regulating the distribution and sale of cannabis, are adopting a range of differing approaches. Want to grow your own pot? Fine in most parts of the country (with a limit of four plants per household) but don’t try it in Quebec or Manitoba where do-it-yourself pot production is banned.

Vic Neufeld, chief executive of Aphria Inc., one of the top producers, said he expected shortages of pot to occur for two or three months until production increased and there was a better understanding of consumer demand.

“It’s like trying to merge a five-lane highway into a one-lane country road,” he said. “It’s tough to get everything through the bottleneck on a timely basis.”

With legalization now taking effect, this fulfills a promise that Prime Minister Justin Trudeau’s party made during the 2015 General Election. In April of last year, Trudeau’s party put forward its draft of a legalization bill with the goal that legalization would be a reality by the middle of this year. In June of this year, the Canadian Senate and House of Commons approved a bill sponsored by Trudeau’s government that would accomplish legalization, and the date was set for the new law to take effect yesterday. The new law isn’t complete legalization, of course. There will still be limits on the amount of marijuana that Canadians will be allowed to possess in public and the individual provinces and territories will also be free to set their own laws regarding the regulation and sale of pot. Additionally, cannabis edibles, which are generally legal here in the United States in the states where marijuana is legal, will not be fully legal in Canada for another year and, of course, marijuana sales will be strictly regulated and taxed just as it is in most of the states where it is legal here. Finally, it’s unclear whether Americans or other traveling to Canada will be able to purchase marijuana, although one can be sure that border authorities charged with inspecting vehicles headed back into the United States will likely be on the lookout for people trying to bring some of that Canadian marijuana back home to the U.S.

The meaning of this change in the legal status of cannabis in Canada should not be underestimated. Once it takes effect, it will mean that the entire 5,525-mile border between the United States and Canada will be a gateway to an area where marijuana use is perfectly legal. Adding to this the ten states and District of Columbia where marijuana is currently legal in the United States, and we seem to be coming very close to what could be a political tipping point for legal marijuana. It should also be noted that, with the exception of Idaho, every American state that shares a border with Canada has either legalized marijuana or at least legalized it for medicinal purposes. It also means that marijuana use will be legal along the Pacific coast from Alaska all the way down to the U.S. border with Mexico. Additionally, this is all happening at the same time that polling indicates that support for marijuana legalization continues to rise. Earlier this month, for example, a new poll reported that nearly two-thirds of Americans support legalization. That number will likely increase in coming months as New Jersey’s legislature is moving forward on a legalization bill and two states will vote on referenda that would legalize pot while several others will be voting on proposals that would either legalize it for medical purposes or expand existing laws that have legalized it for that purpose.

As it stands some analysts are expecting that, at least initially, there will be supply problems in some parts of the country, which isn’t surprising considering that, with the exception of California, this is the biggest single market to legalize marijuana so far. For that reason, it would be worthwhile for the United States to watch how our neighbors to the north deal with this and to plan accordingly to make sure that similar things don’t happen in the United States as we move forward with legalization. On the whole, though, this is a positive development and Canada is to be applauded for taking the right step forward.