On April 13, 2017, the Cannabis Act, Bill C-45, was introduced in Canada. Ontario took the lead on province-wide consultations and six months later on October 17, 2018, the act came into effect, legalizing and regulating cannabis use for adults in Canada for recreational purposes and opening up a new and exciting market to watch.
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The cannabis market is set to grow, to become a $9.2 billion industry in Canada and a $146.4 billion industry globally by 2025. As one of just two countries to legalize recreational cannabis, Canada is on the leading edge of the market in terms of vision, innovation and research and development, and the government is leading the charge as the new dealer on the block.

An impressive number of federally licensed Canadian cannabis producers are publicly traded and have raised over $2.4 billion on public markets in the first half of 2018 alone. In fact, there are a number of companies valued at more than $1 billion, with producers like Tilray, Aurora Cannabis and Canopy Growth Corp. at the forefront, valued at over $13 billion each.

Common household names like Shoppers Drug Mart are also getting in the mix. The pharmacy giant received Health Canada’s approval and is a licensed medical marijuana producer and can legally dispense medicinal cannabis to patients, proving that the retailer is committed to providing its customers with the medicine they need.

Each of these companies are making big moves and taking full advantage of the market that has been opening up right before their eyes since October 17. From multimillion dollar acquisitions to joint ventures with coffee shops like Second Cup and companies like Molson Coors Canada to develop non-alcoholic, cannabis-infused beverages, the opportunities are truly endless.

While the market is ripe with opportunity, since cannabis has been legalized, there have been a number of challenges and countless complaints that are clearly the result of under-anticipated demand and insufficient resources. On day one of legalization in Ontario, 100 000 orders were placed online at the Ontario Cannabis Store (OCS), with twelve percent of orders placed in the first hour; so far, the government isn’t getting a high score as a dealer. Missing orders, the inability to honour orders because of shortages of supply and shipping delays are calling into question the ability of the provincial and federal governments to support such an industry.

Less than a month after ocs.ca was launched, it reported a data breach that affected 4500 – or two percent – of its customers. As OCS is the only wholesale distributor for private retailers in Ontario, responsibility falls solely to the government. Medical marijuana has been legal since 2001 in Canada, and now those individuals are having a hard time filling their prescriptions because of the demand and resulting backlog caused by the recreational rollout. Paired with Canada Post’s rotating strikes, for some customers, it’s been a nightmare to simply access their medication. For others, it’s certainly a downer and may cause people to return to the illicit market for goods, which is still in operation in parallel to the government platform.

The Cannabis Act has been developed to restrict youth access to cannabis and deter and reduce criminal activity by imposing serious penalties. Two new criminal offenses have been introduced: giving or selling cannabis to youth or using youth to commit a cannabis-related offense. Other criminal penalties include illegal distribution and sale, possession over the limit, production that exceeds the personal cultivation limits, use of combustible solvents to process cannabis into concentrates, taking cannabis across borders and, of course, impaired driving.

The goal is to protect public health and safety through strict product quality control and compliance, while reducing the burden on the criminal justice system – though the court system is expected to see a spike in cases.

The increase in caseload will come not only from new challenges related to driving under the influence and challenges pertaining to intoxication as recently seen in Saskatchewan, but also from pardons for those who are currently jailed for possession. Again, it will take some time to work out the various issues that always arise from the institution of new legislation.

Adult Canadians are now allowed to possess, access and even grow a set limit of quality controlled, regulated, legal cannabis. Individuals can possess up to 30 grams that are purchased from a licensed provincial retailer. There are also provisions to grow your own cannabis, but rules can vary on a province by province basis.

This is true of the legal age of majority as well. Provinces can increase the age of majority but it cannot be set below 18. In Ontario, individuals 19 years of age and older can grow up to four plants from licensed seeds, whereas in Quebec, for comparison, the age of majority is currently 18 and you cannot cultivate your own plants.

In Ontario, individuals are allowed to make their own cannabis products such as edibles, but edibles as well as vape pens and other concentrated products cannot be sold legally until 2019, as it will require an entirely new regulatory and quality framework within which to operate.

The federal government intends on investing $46 million over five years in public education and awareness activities to ensure that the rules are understood. One thing that needs clarification is the division of responsibilities between the federal and provincial governments and how that will impact interprovincial travel.

The federal government is responsible for setting strict requirements, procedures and industry standards. This includes: the types of products that can be sold, the packaging and labelling requirements, restrictions on promotional material and advertising, as well as standard serving sizes, potency, prohibited ingredients and good manufacturing practices (GMP). The federal government will oversee and track the entire process from seed to sale, using a supply chain of licensed producers and distributors to prevent the diversion of product to the illicit market (which is still in full operation).

Licenses are issued by Health Canada and licensed producers are subject to regular compliance audits: introductory audits, pre-sales audits, and GMP audits; eventually, a framework will exist for edibles as well.

The provincial government, meanwhile, is tasked with licensing and overseeing the distribution and sale of cannabis, subject to federal conditions. As of right now, in Ontario, the only legal source for recreational cannabis is OCS and illegal operations continue to get shut down and arrests continue to take place.

Provinces have the power to lower the personal possession limit and can restrict where cannabis is consumed. Currently, in Ontario, it can be consumed anywhere tobacco can be, excluding vehicles. It is allowed in private residences and even apartment buildings, unless a lease states otherwise. This is opening up discussions pertaining to the nuisance of smells and even allergy-related concerns for tenants.

When Premier Doug Ford overturned the previous government’s decision to exclude private retailers, many illicit retail operations in Ontario closed in hopes of applying for the necessary license to be able to reopen legally as of April 19, 2019. Many of these operators spent years setting up the infrastructure upon which the legal market could operate and want to be active as legal operations now that they can. Licensed or not, retail establishments have emerged in cities across the country.

Legislation was tabled to cap the number of brick and mortar retailers slated to open in April, when licensed private retailers are set to open legally in Ontario. Municipalities have until January 22, 2019 to decide whether or not to ban pot shops within their boundaries. While some are leaning toward prohibition, many others recognize the benefits the market can provide.

From the resources and supplies required to grow the product and the expertise required to cultivate a product that meets quality and compliance requirements, to the distributors, retailers and everyone in between, a massive market is emerging and Canada is taking the lead and full advantage of the market potential that is still to be fully recognized.