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Cannabis License Experts

Cannabis License Experts

The Impact of Legalization on Canadian Markets

The legalization of cannabis across Canada does not just mean a change to law enforcement policies. With the legalization of recreational cannabis, the Canadian economy is poised to see unprecedented growth in various sectors. Often times, both supporters and critics of new legislation have strong opinions about how it will affect the nation going forward, particularly when it comes to economic growth, crime, government spending, and long-term stability. That’s why we want to take an unbiased look at how the Cannabis Act has impacted the Canadian economy thus far, and what experts predict for the future of the industry.

But first, it is important to know exactly what changed with the passing of the Cannabis Act. So, how did the laws change in Canada with the passing of Bill C-45? And what was the legal status of cannabis in Canada prior to the new legislation?

What Did the Cannabis Act Do?

In Canada, cannabis had been prohibited by law since 1923. However, in 2001, medical cannabis was legalized with provisions of the Marihuana Medical Access Regulations (MMAR) which provided Canadians with a licensing means to grow and possess their own cannabis for medical purposes. In 2013 the MMAR was replaced by the MMPR (Marihuana for Medical Purposes Regulations) which required doctors to prescribe medical cannabis which was then purchased through a Health Canada Licensed Producer. The MMPR did not allow for personal growing which led to court cases and protests. In 2016 the Access to Cannabis for Medical Purposes Regulations (ACMPR) replaced the MMPR and allowed for both personal growing and commercial purchases for medical purposes only.  The debate over recreational cannabis went on for over a decade before the House of Commons passed the Cannabis Act, legalizing recreational cannabis nationwide. Specifically, Bill C-45 outlined the following changes for Canadian citizens who are at least 18 or 19 years old, depending on the territory:

  • Citizens may purchase cannabis, cannabis oil, cannabis seeds, or cannabis plants from authorized retailers
  • Citizens may possess up to 30 grams of cannabis in a public setting
  • Citizens may consume cannabis in locations that have been designated by local authorities
  • Citizens may cultivate up to 4 cannabis plants per household for personal use
  • Citizens may share up to 30 grams of cannabis with other adults
  • Citizens may produce cannabis-containing products (edibles) at home for personal use

Businesses in Canada still need to apply for the proper licences in order to cultivate, produce, and/or package cannabis products. However, now businesses have the ability to sell and market cannabis for recreational use, and will soon be able to produce other products infused with cannabis.

So, with all of these changes to Canadian law, how will legal recreational cannabis affect the Canadian economy? And how have these changes already started to make an impact? Let’s take a look at some of the different effects cannabis legalization has had, and what the experts anticipate for the future of the Canadian economy.

The Stock Market

While cannabis stock prices have remained relatively stagnant in the wake of legalization, millions of dollars continue to pour into the cannabis sector. These stocks are especially popular among Millenials, as many young investors eagerly await positive economic effects of the Cannabis Act. At the moment, Aurora Cannabis (ACB) is one of the most popular stocks on the Robinhood trading app, with close to half a million individual investors. ETFs that invest heavily in licensed cannabis producers have also gained momentum, like the “MJ” fund, which has over $1 billion in assets and thousands of investors.

However, many experts are reticent to dive head-first into cannabis investments without first gauging their long-term growth potential. Though medical cannabis has been legal in Canada for nearly two decades, recreational cannabis is still very new, and stocks like Aurora Cannabis (ACB), Canopy Growth (CGC), and Aphria (APHA) are valued on speculation alone. Investors have yet to see exactly how cannabis producers and retailers will compete in the broader market, and whether or not demand will meet expectations.





Nonetheless, the uncertainty of cannabis legalization in the U.S. could help to bolster Canada’s foothold on the North American market. Since Canada is only the second country to legalize recreational cannabis nationwide, it stands to dominate the cannabis trade for the foreseeable future. U.S. politicians remain split, with the laws varying greatly between states. As U.S. cannabis producers struggle with inconsistent laws and geographically limited demand, Canadian producers can take advantage of a gap in the market.

Sales Numbers

Though many see cannabis legalization as a win for personal liberty, the world will largely judge the success of Canada’s new laws by the fiscal numbers. If people aren’t buying cannabis products as expected, critics of the Cannabis Act will surely see it as a failure. Since the law passed, cannabis sales have exceeded $71 million in Canada, though sales numbers remained relatively stagnant moving into 2019. 

Retail Cannabis Sales by Province

Thankfully, analysts predict that this lag in sales will be temporary. As more businesses attain cultivation and sales licenses, the supply will meet the growing demand. Additionally, the Cannabis Act includes a provision to allow businesses to produce and sell cannabis edibles starting in October of 2019. Experts predict that the expansion of cannabis-infused products will help boost sales and encourage more business owners to enter the cannabis market. The cannabis industry has also seen a 30% increase in jobs, from 2,400 in 2017, to an estimated 3,500 at the time of legalization.

Tax Revenue & Spending

Legalization has also been credited with increased tax revenue and decreased spending on crime deterrence. Regulations generally help cut down on the black market and illegal cannabis trade, which dropped almost 12% since the laws took effect. This, in turn, allowed the Canadian government to collect a great deal of revenue through cannabis sales. Currently, there is a flat, nationwide excise tax of $1 per gram of cannabis, or 10% of the retail price, whichever is higher. Provinces and territories also apply their own localized taxes to cannabis sales within their borders.

In addition, the decrease in demand for illegal cannabis sales has brought down crime across the board, though it is unclear how legalization will affect crime rates for the long-term. In any case, experts predict that the government will be able to free up funds that went toward cannabis-related crimes prior to legalization.

Accessibility 

Despite taxation and high demand, cannabis prices have remained very affordable for the average Canadian. It is estimated that 15% of all Canadians used cannabis within the first three months of legalization, and this was thanks in part to its accessibility across different provinces and low prices. Depending on the location, consumers reported prices between $6 and $13 per gram, with the highest prices recorded in the Northwest Territories.

Consumers in Canada can purchase cannabis via online retailers and traditional brick-and-mortar stores, though the regulatory agencies and online platforms vary by province. In some locations, physical locations and online shops are run by municipal bodies, while others are maintained as private businesses. In any case, it has never been easier for Canadians to access cannabis, and as more businesses obtain the necessary licenses, accessibility will only improve.

Obtaining a Cannabis License 

The supply of licensed cannabis producers is still catching up to the demand for cannabis products, so there has never been a better time to obtain a cannabis licence in Canada. However, since the laws are still relatively new, and there will surely be changes in the future, many businesses will require assistance to navigate Canada’s cannabis regulations. Thankfully, the professionals at Cannabis License Experts are here to help. For more information on obtaining a cannabis license in Canada, consult the Cannabis License Experts website today!

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