Canada should assist authorized hashish sector compete with the illicit market

The federal authorities’s ongoing assessment of the Hashish Act emphasizes defending public well being — however specialists and trade insiders say it additionally has to discover a option to increase the authorized marijuana trade and assist it compete with the illicit market.

The act, which legalized leisure marijuana in Canada in 2018, got here with a requirement that the federal authorities assessment it three years after it grew to become regulation.

After a delay, the federal government began the assessment in September 2022. It’s being led by a panel of five experts with a mixture of backgrounds in well being, regulation and public coverage. The panel is anticipated to report its ultimate conclusions and recommendation to the federal authorities by spring 2024.

“The work of the professional panel will deal with the continued and rising wants of Canadians whereas defending their well being and security. By means of this convenient, inclusive and evidence-driven assessment, we are going to strengthen the Act in order that it meets the wants of all Canadians whereas persevering with to displace the illicit market,” federal Well being Minister Jean-Yves Duclos said in a news release.

However the Hashish Council of Canada (C3), which represents hashish companies nationally, says some marijuana guidelines and rules meant to guard public well being are hurting the authorized market’s skill to push out the unlawful market.

In its submission to the federal government as part of the review, C3 referred to as for broad modifications to the Hashish Act. They embrace reducing the excise tax on hashish merchandise, lowering the variety of restrictions on bundle labelling and promoting, and ending taxation of medical hashish.

“Now we have a regulatory system that does not make a variety of sense, that frankly prohibits the power of authorized hashish producers to compete with illicit market merchandise,” Pierre Killeen, C3’s vice-president of legislative and regulatory affairs, instructed CBC Information.

Within the federal authorities’s most recent survey on cannabis, 48 per cent of respondents mentioned they all the time get their hashish from a authorized, licensed supply.

“If we need to obtain the targets of legalization, we want a financially sustainable hashish trade,” Killeen mentioned. “We’re authorities’s companions on this endeavour, though we’ve got by no means actually been handled by any stage of presidency as a accomplice on this endeavour.”

Hashish shops recorded gross sales of slightly below $3.8 billion throughout Canada between January and October of 2022, according to Statistics Canada’s latest data. Shops offered roughly the identical quantity in all of 2021.

Killeen mentioned many hashish companies might be pressured to shut if the federal authorities does not make modifications to marijuana legal guidelines — and he isn’t optimistic it should.

“Your finest indicator of the longer term is the previous. So if you happen to have a look at the Authorities of Canada and the provincial governments’ method to the financial challenges dealing with the hashish trade, there is not any observe file of success,” he mentioned.

“So I feel … at this stage within the journey, we’re pessimistic in regards to the prospects of the Hashish Act assessment leading to any measures that deal with the urgent and speedy monetary disaster dealing with hashish licence holders.”

Michael Armstrong, a professor of operations analysis at Brock College who research the hashish trade, agrees that the federal authorities is unlikely to make among the greater modifications C3 needs.

“On a few of these asks, I feel [C3 is] going to get a tough no, as a result of they’re going to contradict the general public well being, public security targets of the federal authorities,” he mentioned.

“Have in mind, the federal authorities’s balancing act is they need the authorized market to be engaging sufficient to convey all the prevailing customers over from the illicit market, however they do not need it to be so engaging that it brings in a number of new customers.”

Health Canada recently announced a rise to the quantity of cannabis-infused drinks one can legally possess.

Armstrong mentioned that is the kind of smaller adjustment the Hashish Act assessment is prone to produce.

He added that C3’s request for much less restrictive packaging and labelling guidelines is truthful.

“I feel it might be completely cheap to let the trade put a bit of blurb, like a paragraph, saying, ‘Hey, that is what this product is meant for,'” he mentioned.

The standard excise tax on dry hashish flower is $1 per gram besides in Manitoba, the place a $0.75 per gram further hashish responsibility just isn’t utilized. Hashish shoppers additionally pay gross sales taxes on the product and, relying on the province, could need to pay a mark-up from monopoly retailers such because the Ontario Hashish Retailer. The Ontario authorities recently reported it made $520 million from marijuana gross sales final yr.

Brad Poulos, a lecturer at Toronto Metropolitan College’s Ted Rogers Faculty of Administration, mentioned the federal government has set the excise tax too excessive to permit the authorized hashish trade to compete with tax-free unlawful product — and it ought to take into account reducing it.

“When it is time to do away with that illicit market, once you do away with prohibition, you recognize what you do not do? You do not tax [cannabis] like loopy,” Poulos mentioned.

Poulos added he’d additionally prefer to see the federal government eradicate taxes on medical hashish.

“There’s just one medication in Canada that will get taxed in any respect, and that is hashish,” he mentioned.

“So what this says to me is that the federal government doesn’t really take into account hashish to be medication.”

It is one in every of many modifications Don Davies, the NDP well being critic and member of Parliament for Vancouver Kingsway, needs to see come out of the Hashish Act assessment.

“Plenty of the reputable authorized hashish sector is hampered by extreme guidelines and rules which are, I feel, inhibiting it from reaching its full potential and really serving to to facilitate a variety of the black market that is nonetheless there,” Davies mentioned.

“In my hometown of Vancouver, the storefront home windows of hashish shops need to be shaded in. You possibly can’t look in. That is not the case for a liquor retailer … Extra importantly, the labelling on merchandise just isn’t actually telling the shoppers what they need and have to know.”

The Conservative Get together didn’t reply to CBC’s request for touch upon the Hashish Act assessment.

Kun Karunaker, CEO and co-founder of the Toronto-based hashish manufacturing firm Strains Restricted, agrees that regulation of the trade is extreme. Karunaker’s enterprise holds 4 cannabis-related licenses and lately utilized for a fifth.

However Karunaker provides Well being Canada credit score for reaching out to him and his firm for suggestions on hashish legal guidelines — one thing he mentioned the provincial authorities in Ontario hasn’t completed as usually.

“I am not going to bash Well being Canada the place proper now they’re really listening extra to individuals like us, they usually’re having these conversations of the place they’ll get higher and the place they’ll enhance,” he mentioned.

Karunaker mentioned he’d like federal authorities officers to go to his facility to allow them to see what working a hashish enterprise is like.