Deregulate cannabis three more ways

If we’re serious about a legal Canadian cannabis industry that delivers innovative, safe, high-quality products while helping eliminate the illicit cannabis market in Canada, it’s time to rethink some of the restrictions put in place at the time of legalization. As the industry matures, we are learning that some of these well-intentioned requirements are actually barriers to long-term success.

Three areas in particular that need attention are excise taxation, packaging restrictions and consumer education. Let’s take them one at a time.

In 2016, taxation of cannabis products was a key recommendation of the Task Force on Cannabis Legalization and regulation. At the time, the goal was to “establish an approach to tax and price that balances health protection with the goal of reducing the illicit market.” The task force also called for “a flexible system that can adapt tax and price approaches to changes within the marketplace.”

Now, five years on, the excise tax applied to cannabis products is a significant barrier to effectively combating the illicit market. As product prices have come down on a per gram basis, and larger-volume “stock-keeping units” gain traction, the excise tax is becoming a disproportionate portion of the cost to consumers.

The tax is calculated as either $1 per gram or 10 per cent of the selling price for dried flower, whichever is higher, and is assessed on the wholesale price to retailers. The average selling price of dried cannabis had declined dramatically since the Cannabis Act came into force in October 2018 and in some cases the $1 per gram is now 40-50 per cent of the price that retailers pay and almost 30 per cent of the selling price consumers are paying.

States like Oregon made significant tax reductions when they saw the impact over-taxation was having on efforts to eliminate the illicit market. unfortunately, more than two years after the Cannabis Act came into force, Ottawa is not yet considering a review of our tax regime.

As for packaging restrictions: current regulations require dried cannabis flower be sold in child-resistant containers. This is a holdover from the launch of the Marihuana for Medical Purposes regulations (MMPR) in 2014, when licensed producers were first approved. The requirements create significant cost and packaging challenges for the product with no discernible benefit.

What would certainly be dangerous for children to ingest is THC, the principal psychoactive ingredient in cannabis. The fact is, the majority of THC in dried flower is THCA, the acidic form of THC. THCA is inactive and needs to be burned or heated — e.g., in a vaporizer or through baking — to be converted to THC. As a result, there is no associated health risk related to ingesting dried cannabis, even though many people continue to believe this to be the case.

There is no question that edibles, beverages, oils and all concentrates need to be sold in child-resistant containers to prevent accidental consumption by young children. but this requirement for dried flower to be protected in this way is outdated and has led to excessive packaging and unnecessary additional costs for the industry — costs that are ultimately passed along to the consumer. dried cannabis flower represents approximately 70 per cent of all cannabis products sold in Canada today, the largest category by far.

Finally, continuing to educate consumers remains both a clear priority and one of our most challenging obstacles. The current rules hamper licensed producers’ ability to provide basic information about product attributes either on the package or on any ancillary materials. Consequently, there is little to no ability to explain that not all products are the same, and why that matters to cannabis consumers.

At the moment, we can’t say anything about, for example: the potentially faster onset of our dried-powder product versus traditional edibles and beverages; or the effects of a whole plant extract vape pen which mimics smoking an Indica (sedating) or Sativa (activating) dried cannabis flower versus a distillate pen which only has THC; or even the basic difference between the effects of an Indica or a Sativa (different varieties of cannabis). but these are important considerations that will significantly affect a consumer’s experience. Imagine if wine labels weren’t allowed to say anything about a bottle’s contents except that it contains 12 per cent alcohol and is made from fermented grapes. Offering licensed producers the opportunity to differentiate themselves and their products would mean Canadians could make more informed consumer choices. As our products and markets mature, so too should our approach to educating our customers.

The guidelines governing the marketing of cannabis in Canada must reflect a commitment to public health and responsible communication but also to our ongoing efforts to effectively counter this country’s illicit cannabis market.