Regulatory unknowns could make or break Alberta’s pot industry

Supply-chain details among particulars to be fleshed out, says Michael Armstrong.

Welcome to cannabis month! Parliament is finalizing its legalization bill, and the provinces are announcing their own plans. Alberta introduced its legislation Thursday. It’s largely supportive of its fledgling cannabis supply chain, from production to wholesale to retail.

Alberta is wisely leaving cannabis production to licensed firms, like other provinces. It will also let consumers grow their own, unlike Quebec. That may help discourage black-market production.

By contrast, the province will monopolize wholesaling via its Alberta Gaming and Liquor Commission (AGLC). Other provinces are likewise using their liquor agencies.

This centralized approach gives government direct control of cannabis distribution. That could help exclude black-market products and support tax collection.

Hopefully, AGLC will be open to growers from any province. Interprovincial free trade would help Canadian firms gain scale and compete abroad. For example, Alberta-based Aurora Cannabis plans to export to Europe.

Openness would also let cannabis avoid alcohol’s constitutional challenges over provincial trade barriers.

Alberta should take advantage of this centralization to implement regular cannabis product testing. This would give legal products a marketing advantage over illegal ones.

Cannabis needs such quality control. Investigative journalists have repeatedly uncovered pesticides and mould contamination in black-market products. Even legal Canadian medical cannabis suffered recalls this year.

A U.S. study earlier this month reported inconsistencies in medical cannabis purchased online there. Almost 70 per cent had significantly different cannabidiol levels than their labels claimed.

Retail is where the provinces diverge. Alberta’s NDP, like Manitoba’s Conservatives, are liberal enough to let the private sector operate retail stores. AGLC will only handle online sales.

This contrasts with Liberal governments in Ontario, Quebec, and New Brunswick. They’re conservatively using public-sector retailers. Liquor agency subsidiaries will handle sales.

Each approach has advantages. Public-sector retailing should be better at consumer education and harm reduction. And increase government revenues.

But private sector retailers will likely respond better to customer preferences, increasing consumer (and voter) satisfaction.

Alberta’s cannabis retailers should also be more convenient than those out east. Ontario plans on 150 stores, only one per 95 thousand people. They’ll be about as (in-)convenient as your nearest Walmart.

Quebec is starting with just 15 outlets, one per half-million people. Cannabis stores there will be as scarce as Costco.

Those may be enough for planned shopping trips, but not for last-minute buyers seeking instant gratification. The black market will have an advantage in those provinces.

Alberta is being stricter about product lines. Many provinces are banning alcohol and tobacco from cannabis outlets. Alberta will limit stores to selling cannabisrelated products. This could slow the spread of cannabis use.

But such specialization limits stores’ revenue sources. In the long term, this will restrict the number of economically viable stores, and therefore shopping convenience.

Value-added processing is where the cannabis supply chain remains undefined. Currently, producers mostly sell what drug firms consider raw material: dried plants. Consumers smoke them and hope for the desired effect.

Contrast that with pain relievers. Some headache sufferers may still brew willow bark tea for its salicylic acid. But most of us take purified acetylsalicylic acid (ASA) pills, like Aspirin.

Edible cannabis products, like brownies, should be the first step here. Cannabis-infused beverages may follow. We should later see purified pills that contain precise concentrations of active ingredients. They would provide consumers with more reliable results.

Alberta’s cannabis supply chain is a work-in-progress. Businesses and consumers can still lobby for improvements in the laws and supporting regulations. The details could determine whether the provincial industry blooms or gets stunted.