Only Government Can Foul Up a Sure Money-Maker, Cannabis

Commentary, Economy, Ian Madsen

Ever since the oft-delayed rollout of legal recreational cannabis sales in Canada on October 17th, there have been problems across this vast and highly regulated land.  The first is lack of product in nearly every province. The second is too few retail outlets for the products, notably in British Columbia (just two in the whole province as of today) and Ontario.  The third is ongoing, very slow review of retail and production applications. The fourth is inadequate quality control; some contaminated product, which also seems to have been illegally sourced, made it to a Winnipeg distributor. There may be others, including pricing or taxing the products too high, leaving the illegal market intact.

It was not supposed to be this way.  The Liberal Party adopted legalization as part of its platform many years ago, and it was part of what they ran on to election victory in 2015.  The various provincial governments were all aware that they would have to allow legal sales of recreational cannabis products when the new government took office in November of that year.  

Extensive consultations went on between Ottawa politicians and regulators and their provincial counterparts.  Handling the particulars of the legislation seems to have been done properly, if a little belatedly, and police departments and the RCMP were ready for sales in October.  The people missing in action appear to be at the provincial level. The result is that one of the aims of legalization, the drastic curtailment, if not outright elimination, of the black or grey market for cannabis products, has not occurred, and may not transpire for many months, if not years.

In some ways, growing pot is like growing wine grapevines:  it takes years before appreciable yield of usable product to sell to others.  While several major companies have arisen, and many paper fortunes made on the Toronto and Canadian Stock Exchanges thereby, these firms have still not produced enough ‘bud’ to slake demand, even at the small number of retail outlets extant thus far.  If the provincial authorities in BC, Ontario, and elsewhere had been on their game, instead of whatever it was they were doing then, they would have placed sufficient advance orders to meet the anticipated demand, which would have fostered higher production.  This is what happens in a normal, free market.

This demand was not mysterious in magnitude; unlicensed outlets across Canada gave major indications of the size of the market, as did police estimates.  Insufficient human resources were put into vetting of retail license applications, and overconfidence in the speed at which it would happen. This has put further life into the illegal drug trade, which was supposed to end.  Fat chance of that, now.

The handling of this major social, cultural, legal, regulatory and commercial change by federal and provincial governments does not engender much confidence about how they would deal with another major legalization issue:  controlled permitting of opioids in restrictive venues. The horrendous fatality toll of the fentanyl and heroin addiction epidemic has led to calls for the substances to be monitored and rationed out by medically supervised people who can ensure that dosages are not lethal and that they are standardized, with no adulterating substances.  While the nature and circumstances of this potentially positive reform are different from that of cannabis, it is a matter of concern that this new project be rolled out in a far better organized fashion. Many lives are at stake.