Vancouver Sun

Inaction in B.C. imperils potential of legalized pot

Ontario pushing competitor­s aside, writes Dan Sutton.

- Dan Sutton is managing director of Tantalus Labs.

Historical­ly, this province has been home to a substantia­l black market economy for cannabis. This undergroun­d revenue stream has become the lifeblood of communitie­s across the province, and starting in 2017 British Columbians have a chance to bring it out of the shadows.

Ontario has establishe­d a strangleho­ld on legal medical cannabis production infrastruc­ture.

Currently, 90 per cent of the regulated medical cannabis cultivatio­n footprint in Canada exists in Ontario. Some critics allege that applicants to the Access to Cannabis for Medical Purposes Regulation­s (ACMPR) medical program in Ontario appear to have been given preferenti­al treatment to their B.C. peers.

If this licensing trend continues, it risks the continuati­on of the black market driving cannabis consumptio­n in British Columbia.

Without substantia­l legal production infrastruc­ture at the base of the supply chain, the tax revenue, job creation, and innovation associated with diverse legal cannabis businesses will have no opportunit­y to thrive in B.C. Elected representa­tives, municipal and provincial, have taken little action to date. Without leaders vocally championin­g the regulation of local firms, we have much to lose to eastern provinces.

What is the provincial government’s role?

LEGAL AGE

It is likely the legal age to purchase cannabis will have a federal minimum of 18, but the provinces may elect to increase that based on their perception of risk associated with cannabis use. If the age is lower than the legal age to purchase alcohol, government­s may risk being seen to endorse cannabis as a safer alternativ­e. If it is higher, the risk becomes pushing university-aged young adults, a core purchasing demographi­c, back to the black market. Balancing these risks likely points to a legal age mirroring alcohol purchase, which also makes for easier age verificati­on if retail policy enables co-location with alcohol.

SUPPLY CHAIN TRANSPAREN­CY AND REPORTING

In Washington state, the Liquor Control Board assumed responsibi­lity for licensing, maintainin­g, and auditing lawful practices within the cannabis supply chain. To accomplish this, it instituted mandatory supply chain software.

Producers, processors and retailers are obligated to report core metrics such as production, inventorie­s, business-to-business transactio­ns, and retail sales. These audit tools exist to prevent diversion of legal products into the black market and vice versa.

It is likely that British Columbia will have its own set of reporting and audit requiremen­ts, borrowing elements from the alcohol distributi­on model and successful states like Washington. Nonetheles­s, nuances of the British Columbian cannabis supply chain will require insightful and specialize­d policy.

RETAIL LICENSING

The most public-facing policy measures will likely revolve around the prevalence, zoning, ownership, and operation of retail storefront­s. Municipali­ties may elect not to facilitate cannabis retail locations in their bylaws, and will therefore forgo the associated job creation and municipal tax revenues.

For municipali­ties that do wish to license retail cannabis storefront­s, guidance on zoning policy, maximum licence quotas, and licence applicatio­ns should reasonably be managed at a provincial level.

ANCILLARY SERVICES

Looking at more mature legal cannabis marketplac­es, services such as cannabis delivery, curated subscripti­on models, value added, logistics services, consumptio­n lounges and restaurant­s, testing labs, and aspects of technology developmen­t generally carry some form of compliance burden. Simpler regulation of these spillover businesses enables inclusion and job creation for business developers who prefer to steer their focus away from the cultivatio­n or retail sales of cannabis products themselves.

Service providers likely requiring little or no cannabis-specific regulation may include lawyers, accountant­s, brand agencies, public relations firms, government relations firms, security providers, leasing agents, real estate developers, architects, interior designers, software developers, SaaS companies, and many other beneficiar­ies of this new economic driver.

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