2 years of cannabis legalization in Canada: what's worked and what hasn't

Tomorrow, Canada celebrates 2 years of cannabis legalization. While the feedback is still fresh, it gives us an idea of the evolution of a legal market after 95 years of prohibition and the black market. We had already done the exercise in 1st anniversary of cannabis legalization in Canada.

A legal market...

The first success of legalization is to have moved from a unique black-market model to a legal market whose aim is to compete with the former. Depending on the province, the legal market has more or less nibbled away at the illegal market's market share in the space of two years.

L’Ontario Cannabis Store, Ontario's only authorized online distributor and exclusive supplier to private stores, estimates to have taken over 25% of the cannabis market in Q1 2020. Quebec, through the Société Québécoise du Cannabis, believes has taken 50% from the market and expects 75% within 2 years. The province estimates that 150 tonnes of cannabis are consumed per year for a population of 8.5 million.

For the country as a whole, Statistics Canada considers that 50.5% of cannabis spending now goes to the legal market.

Access to legal cannabis has been accelerated by the deployment of cannabis stores: Alberta now has over 500, Ontario almost 200 and Quebec just 70. Services such as home delivery continue to be tested, as in Quebec, or deployed elsewhere.

Product price is also a major factor in the competitiveness of the legal market, which is now on a par with or even below the price of the illegal market. Only the overall quality of legal cannabis still leaves something to be desired, but this is improving with the arrival of micro-producers who produce crops in a more artisanal manner than the big producers.

Legalization 2.0, here meaning the arrival of cannabis-infused foods and cannabis concentrates has led to a number of innovations from licensed producers. Stores now offer chocolates, candies, tea, cookies or drinks, which are also pushing the cannabis market to transform in its forms of consumption.

Cannabis now contributes billions of dollars to the Canadian economy - C$5.4 billion last June, according to Statistics Canada - and is playing its part in an economic revival, particularly in rural and remote areas of Canada.

At the same time, regulation of the cannabis market has not led to an increase in consumption by young people, it even dropped, drug-related accidents or disturbed public order.

... still immature

However, there is still room for improvement in this nascent legal market.

The transition of former illegal players to the legal market is still imperfectly possible. This transition dynamic would not only offer these players opportunities based on their skills, but also encourage more and more customers to switch to the legal market.

The distribution of more micro-production licenses would also serve this purpose. In the early days of legalization, only large players with substantial capital could participate in the cannabis market. Micro-licensing makes it easier to enter the sector, and also meets the consumer's need to know who has produced the product, in the same way as with craft beers and other craft beers.

The sector's ecological impact is also an area for improvement. At consumer level black plastic packaging sold in cardboard boxes produce a lot of waste for a small amount of cannabis. While licensed producers are starting to use metal cans, a real transition needs to be made in-store.

On the production side, Canada has issued few standards for environmental sustainability practices. Cultivation operations thus have a significant ecological impact, notably through the production of CO2, water and electricity consumption and the creation of waste, with production scraps having to be destroyed rather than reused.

Another issue is social justice, diversity and equity in the cannabis industry, but also in Canadian society. Like some American states, which have launched major campaigns to erase criminal records for old offences that would no longer be criminal today, Canada has taken few concrete steps to both create a more diverse and inclusive industry and repair the damage caused by prohibition, particularly on the communities most affected.

Patient access to medical cannabis is also regularly criticized for being insufficient and representing too heavy a financial burden for patients.