Canadian cannabis industry still facing challenges 5 years after legalization: experts

Five years after cannabis was legalized in Canada, experts say the industry is still facing many challenges.

Competition from the illicit market, stringent national regulations and taxation are hurting the industry’s potential growth, they say.

The industry is slowly crawling toward profitability.

“Only about 20 per cent of cannabis producers are actually cash-flow positive,” according to George Smitherman, the president and CEO of the Cannabis Council of Canada.

Cannabis was legalized for recreational use in Canada on Oct. 17, 2018.

In the five years since, pot companies say they have been constrained by the strength of the illicit market, and packaging and tax rules they find too restrictive.

And cannabis advocates decry some provincial bans on homegrown non-medical cannabis.

Smitherman says the entire sector needs reform.

“At the moment, our cannabis edibles products are subjected to a limit of 10 milligrams of THC,” he said. “For non-consumers of cannabis, that’s a fairly low number. What the effect of that is, that important edibles category has largely been conceded to the illicit market.”

In legalizing marijuana, Prime Minister Justin Trudeau vowed to have people turn away from the illicit market. Data from Statistics Canada appear to show that’s indeed what happened.

In 2018, 22 per cent of Canadians said they used legal ways to obtain pot. As of earlier this year, 70 per cent of cannabis users in Canada said they purchased legal marijuana.

In Quebec five years ago, there were 12 SQDCs – the province’s official cannabis retailers. There are now close to 100 locations.

WATCH: What is the future of the cannabis industry in Canada?

Experts believe 2018’s Cannabis Act has opened the door for the legalization of other substances.

“I think it does provide a model going forward to more significant drug policy reform beyond cannabis,” said Andy Hathaway, an associate professor of sociology and anthropology at the University of Guelph.

“If the sky hasn’t fallen for Canada’s justice system in terms of law and order with the legalization of cannabis, maybe that does provide some sense of what might happen with larger decriminalization within the country.”

—With files from Edward Djan in Winnipeg and The Canadian Press

Top Stories

Top Stories

Most Watched Today