When Can Canada Finally Welcome Adult-Use Cannabis?

By J.J. McCoy, Senior Managing Editor for New Frontier Data

After long debate, a fair amount of drama, and a mandate to fulfill Prime Minister Justin Trudeau’s popular campaign promise, Canada’s Senate on June 7 approved Bill C-45, better known as the Cannabis Act.

Expected to be signed into law, the Cannabis Act will make Canada the world’s first developed nation to legalize adult-use cannabis, and open a market worth $6 billion or more in added annual sales for the legal cannabis industry (five years ago, Uruguay became the first country to legalize adult-use cannabis).

As detailed in The Canada Cannabis Report: Industry Outlook 2018, New Frontier Data expects the total addressable market for annual consumer sales in Canada (i.e., the sum of the country’s illicit, medical, and adult-use demand) to be worth CAD$8.6 billion (USD$6.56 billion) in 2018, growing to CAD$9.2 billion (USD$7.02 billion) by 2025. Combined, the Canadian medical and adult-use markets will rival that of California – which boasts the sixth-largest overall economy internationally.

With one absentee, the vote 14 months after passage in the House of Commons was an overwhelming 56-30. With the Senate’s decision viewed as the bill’s last major hurdle, sales are now expected likely to begin in September or October.

That said, there remain significant details yet to be worked out. The Senate added more than 40 new amendments to the Cannabis Act beyond the version passed by the House of Commons more than a year ago. Much of the debate pitted competing visions of how to protect children and promote the public’s general health. Proponents decried how prohibition had failed to prevent usage while sustaining the illicit market and burdening the justice system. Opponents floated a raft of perceived negative health and social outcomes, particularly for youths.

Potential sticking points now include affording provinces the right to ban growing cannabis at home (Bill C-45 would allow people to legally grow up to four plants, which both Quebec and Manitoba would prohibit), banning brand-promotion and company advertising on merchandise and non-cannabis items (industry stakeholders say that branding is key to their ability to compete against the illicit market, and that any overreach of the promotional ban could impact things like storefronts and signage), and giving Parliament eventual power to vote whether to introduce edibles and vaporizers, etc.

Another controversial amendment would force cannabis companies to reveal the names of any investors owning more than 5% of the businesses. While it was intended to prevent money laundering or bad actors from being invested in the legal industry, several senators suggested that such disclosure could violate privacy laws and open the Cannabis Act itself to legal challenges.

While Trudeau originally pledged for the nationwide market to open on July 1, Canadian regulators say that it will at least take between 8-12 weeks after his final signature for the provinces and territories to roll out their respective programs with infrastructure in place and the supply chain fully connected between cultivators and retail dispensaries.

At any rate, the vote has set the stage for the emergence of a regulated industry which the Canadian Imperial Bank of Commerce last month predicted could exceed the size of the spirits market by 2020.

J.J. McCoy

J.J. McCoy is Senior Managing Editor for New Frontier Data. A former staff writer for The Washington Post, he is a career journalist having covered emerging technologies among industries including aviation, satellites, transportation, law enforcement, the Smart Grid and professional sports. He has reported from the White House, the U.S. Senate, three continents and counting.