Inaction in B.C. imperils potential of legalized pot
Ontario pushing competitors aside, writes Dan Sutton.
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.