Dear Pot Lawyer,
What’s going on with Canada and legal weed?
Canada is almost there. When Justin Trudeau became prime minister in 2015, he created a task force to discuss a suitable process to legalize cannabis possession for all Canadian adults. The federal government passed related legislation in late 2017, and sales for recreational use should start on July 1 of this year. Like Oregon, there will be no limit on the number of licenses issued of any kind to any party, and there will be licenses for craft-scale producers as well as larger farms.
Canada is charting a nice course in my view. Instead of the piecemeal approach taken in the US, where legalization is happening over a long period of time in fits and starts, and only at the state level, Canada has decided to do it all at once. The government is also doing sensible things that would never happen in the US, like giving large amounts of money to hospitals and universities to study the effects of legalization. Hopefully, that leads to good policy in the long run.
Medical cannabis has been legal in Canada since 2001, and Canada already has large, vertically integrated cannabis companies (meaning, they own their entire supply chain, from seed to sale). This differs from your standard US-state model where medical cannabis is often run through co-ops, and where systems are built around caregivers and growers who are not supposed to make a profit. Many of the big Canadian cannabis companies, on the other hand, are publicly traded. None of them are very valuable, but you can buy their stock for pennies and it’s kind of fun.
Canada also has a big leg up on the US in terms of banking options for the industry. In the US, small businesses struggle even to establish basic merchant accounts when it comes to weed. Those accounts are expensive and you often need a license to apply. In Canada, though, big banks are up for cannabis action, and my Twitter feed is regularly alight with headlines like “[Giant Canadian Pot Business] Enlists [Giant Canadian Bank] to Lead [Especially Gigantic] Cannabis Equity Financing Round.” One cannot help but be impressed.
Of course, not everything has been breezy for Canadian weed. Several issues are still up for debate, including taxation of medical cannabis. Currently, the feds plan to levy a 10 percent excise tax on both medical and recreational users, and medical users currently pay provincial and federal sales tax, too. Going forward, the fear is that higher taxes will push more users into Canada’s robust unregulated market. Because Canada’s illicit pot industry is already bigger than its domestic beer market (truly!), and because taxing sick people is almost always a terrible idea, the tax concept seems problematic.
Hopefully, Canada can resolve the issue fairly, and dodge any other policy snags over the next few months. For now, let’s tip our hats: Canada is a few clicks ahead when it comes to cannabis.
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