The Post

Good, but room to improve

- Michael J. Armstrong is an associate professor in the Goodman School of Business at Brock University in Canada.

Even as most New Zealanders focus hopefully on coronaviru­s restrictio­ns loosening, some are undoubtedl­y looking ahead to September’s cannabis referendum. As a Canadian business professor who has studied my country’s legalisati­on efforts, I see many similariti­es in the plan the New Zealand Government proposed two weeks ago.

But I also see room for improvemen­t. First, let’s remember one of legalisati­on’s key challenges. If the new legal industry goes ahead as proposed, it will compete with the existing illegal one. Consumers won’t automatica­lly switch suppliers. And anyone or anything banned from the legal industry will stay undergroun­d.

So, for example, politician­s naturally don’t want young adults using cannabis. But setting the legal age at 20 means leaving 18 and 19-year-old users with their current dealers. Is that really the least-bad option?

Canadians have struggled with this issue. The province of Quebec originally set its legal age at 18, but recently upped it to 21. Social conservati­ves applauded the change. But it sent some 80,000 young consumers back to street weed.

Similarly, New Zealand’s 15 per cent THC limit and 14g purchase limit promote moderation. But they might spurn the heaviest users.

In Canada, 20 per cent THC cannabis seems fairly common. And efficientl­y produced 30g packs are the most pricecompe­titive with black market equivalent­s.

New Zealand’s proposal to legalise dry (smokable) cannabis first and edibles later makes sense. That provides extra time for regulators and producers to prepare for those more complex products.

Some Canadians complained about similar edibles delays here. But legal producers struggled for nine months just to meet dry cannabis demand. Introducin­g edibles simultaneo­usly wasn’t feasible.

Limiting each grower to 20 per cent of the market is also sensible. But why ban them from retailing, at least on site? Direct ‘‘factory outlet’’ or ‘‘farm gate’’ sales could be very cost-competitiv­e against illegal sources.

Where I live, micro-growers especially have big plans for on-site sales. Like many small vineyards, they’re targeting visiting connoisseu­r-tourists.

As with most Canadian jurisdicti­ons, New Zealand won’t let cannabis stores sell non-cannabis products. Unfortunat­ely, that makes legal shops unprofitab­le in thinly populated areas, leaving those markets to illegal suppliers.

To avoid that, the province of Nova

Scotia sells cannabis from its liquor stores. And Newfoundla­nd permits cannabis sections inside some general stores. These approaches minimise operating costs while letting rural consumers access legal products.

New Zealand is ahead of Canada in allowing consumptio­n premises. Interestin­g! Such ‘‘cannabis lounges’’ make sense given your ban on public consumptio­n. But some rules are puzzling:

■ Edibles are legal but beverages aren’t? Edibles’ slow onset and recovery times seem better suited to home use. Conversely, newer beverages reportedly act quickly enough for social drinking.

■ Smoking and vaping are banned indoors. Will consumers really abstain during bad weather?

■ Non-cannabis foods and drinks are required at consumptio­n premises. So why forbid them at other cannabis shops?

As in Canada, government regulators will supervise these rules in New Zealand. But unlike my country, yours will have one Cannabis Regulatory Authority for everything: growers, products, and retailers.

That’s an efficient but risky concentrat­ion of power. You’d better require the authority to provide lots of disclosure, not just five-year plans.

Canada sadly lacks such transparen­cy. Some provincial cannabis agencies communicat­e well. But most don’t disclose even basic info, like the amount of cannabis sold each month. Such secrecy frustrates businesses, consumers, and researcher­s. It obscures legalisati­on’s medical, social, and economic impacts.

I’m similarly concerned by the law’s mention of both taxes and levies. More surcharges mean higher prices and less success against black markets.

In Canada, provinces with lower prices generally take more business away from illegal sellers. Meanwhile in the US, California’s multilayer­ed taxes hinder legal sales.

I hope your Government will revise these problemati­c areas, either before the referendum or afterward. But I also congratula­te it for providing so many details, so far in advance.

We Canadians got only a vague promise from our prime-minister-to-be, just weeks before his election.

By contrast, you’ve been given far more informatio­n and time for your cannabis deliberati­ons. I’m sure the topic will prompt much discussion over the coming months.

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