Who consumes the most cannabis in Canada?

Small group of heavy users are responsible for two thirds of national consumption

Who consumes the most cannabis in Canada?

Since the national legalization of cannabis last year, Canada has become the largest country in the world with a legalized cannabis marketplace. Due to the controversial nature of this relatively new law, there has been a great deal of research on the role of cannabis in our society, which may shed light on the future of cannabis policy framework.

In a recent multi-institutional study, researchers, including U of T-affiliated scientists, aimed to find the largest cannabis consumption group by investigating the demographics of cannabis consumption in Canada, which has led to surprising findings.

Young males are the most likely users of cannabis

The researchers evaluated the distribution of cannabis consumption across Canada using data from Statistics Canada’s 2018 National Cannabis Survey. They found that a small group of heavy users were responsible for two thirds of all cannabis consumption in the country.

Of these heavy users, males were reported to consume more cannabis than females, and young males between 15–34 years old were “disproportionately represented” in this sub-group.

Based on previous demographic data, “It is not particularly surprising that we’re seeing this particular age group over-represented in the heaviest users,” said Dr. Russell Callaghan, a co-author associated with the Human Brain Laboratory at the Centre for Addiction and Mental Health.

Callaghan noted that one possible reason for this trend is that males of this age group are often prone to risk-taking behaviours associated with alcohol and drug use across the spectrum, including cannabis. However, there are a multitude of factors behind this finding.

Potential impact of the study on preventing cannabis-related harm

The study gives basic insights into potential policy-making strategies in recreational drug use and preventive measures for cannabis-related harm.

“Usually when we understand the population distributions of, let’s say, cannabis use or alcohol use, it will give us a sense of where the harms might be,” said Callaghan.

A small subset of alcohol users — the top 10 per cent — is responsible for more than half of alcohol consumption in the United States, according to the co-authors. However, Callaghan noted that most of the common harms from alcohol use occur from light to moderate usage, due to a larger segment of the population consuming it.

Similar research for cannabis is rather limited, and it is still unclear whether the heaviest cannabis users account for the most common cannabis-related harms. A next step for future researchers, according to Callaghan, would be to understand the relationship between the population distribution of cannabis use and harm reduction.

“If you understand what we’ve done in the alcohol field, then you will understand what I was looking for in the cannabis field,” Callaghan remarked.

By finding the relationship between the demographics of cannabis consumption and cannabis-related harm, similar to previous studies on alcohol, policymakers are now able to focus on specific groups in order to reduce the potential harms.

Callaghan noted that treatment, incentives, pricing, adjusting cannabis availability in stores, and store density could all be viable options in reducing potential harm from cannabis use, depending on the results of future research.

Cannabis hyperemesis: a rare case of severe side effects due to heavy cannabis usage

Chronic users may be at risk of severe nausea and vomiting

Cannabis hyperemesis: a rare case of severe side effects due to heavy cannabis usage

Cannabis has become readily accessible in Toronto, with five legal dispensaries. Students can pick up the goods with nothing but their ID and a short walk from UTSG.

Furthermore, cannabis use has become mainstream, both recreationally and medicinally. Patients have taken it for conditions including anxiety, headaches, insomnia, gastro-intestinal disorders, and chronic pain.

With this uptick in usage, Dr. Peter Wu, an internal medicine specialist, clinical pharmacologist, and toxicologist at Toronto General Hospital, urges users to be aware of the unwanted side effects of using cannabis, particularly the emergence of a condition called cannabinoid hyperemesis syndrome (CHS).

What is cannabinoid hyperemesis syndrome and how common is it?

CHS is a condition that presents severe, intractable nausea and vomiting, which can typically only be relieved with a hot shower, as Wu explained in an interview with The Varsity.

This syndrome is distinct from the phenomenon of ‘greening out’ from cannabis use, which is when a user feels nauseous and distressed from overconsumption of the drug.

“These reactions are unpredictable,” said Wu. “Having said that, there are some risk factors that [give us] a better sense of… who could get cannabis hyperemesis.”

Major factors include the consumption of large amounts of cannabis at once, as well as over a long period of time.

Patients with the syndrome are typically treated in the emergency room with intravenous fluids for rehydration, given anti-nausea medication, and checked for kidney function and blood pressure changes. These evaluations are critical, as severe vomiting can induce kidney failure from dehydration, explained Wu.

The most effective solution is for a patient to stop using cannabis.

New treatment options in development

Although the course of treatment for the syndrome typically consists of anti-nausea medication, some clinical trials are starting to identify novel treatment options. Capsaicin cream — made from a chemical found in chili peppers — is one of these.

Patients with the syndrome may find relief from applying capsaicin cream topically, explained Wu. The cream can activate receptors thought to be involved in the syndrome’s mechanism of action.

Currently, Wu receives approximately one patient referral per month with CHS from the emergency room. “[The prevalence is] hard to say — I think whatever number we have written in the literature is definitely an underestimation,” he said. “It’s impossible to know how many patients [who have] milder forms of [CHS] resolve it on their own.”

Cannabis hyperemesis syndrome is by no means an epidemic, but Wu emphasized that it is important that people be appropriately informed and aware of the risks and side effects of cannabis, similar to how we approach other prescription medications, such as antibiotics.

Most common antibiotics come with a list of side effects to watch out for, including those that warrant immediate medical attention.

One of the main challenges in treating CHS is that patients sometimes have a hard time believing that cannabis is the culprit. After all, many individuals use cannabis to treat nausea.

This can lead to a cycle in which a person suffering from CHS attempts to treat their nausea with more cannabis, ultimately only making their condition worse. Nausea and vomiting by themselves are very non-specific symptoms, so people often attribute them to causes, such as their cannabis use.

Cannabis is a beneficial drug for the treatment of a variety of medical conditions, from types of epilepsy to multiple sclerosis. However, it is important that the conversation surrounding cannabis includes a discussion of its potential side effects and unwarranted reactions.

As cannabis becomes mainstream in Canada, it is especially important for individuals to make informed decisions regarding their health and well-being.

How do I know if I have CHS and what should I do if so?

If you have severe nausea and vomiting after chronic ingestion of cannabis, and it is relieved by a hot shower or stopping use, then it may be CHS.

There is currently no single effective diagnostic test, and the syndrome is only diagnosed clinically.

According to a 2019 review paper of the syndrome in The BMJ, “The only long term effective therapy is cannabis cessation, with complete and permanent resolution of symptoms within the first two weeks after cannabis weaning.”

If you are experiencing extreme vomiting such that you cannot keep down any food or water, a hospital stay may be required for treatment, according to Cedars-Sinai Hospital.

Young long-term cannabis users may have higher levels of chronic stress biomarker

CAMH study links cannabis usage with biomarker, but not with symptoms of stress

Young long-term cannabis users may have higher levels of chronic stress biomarker

A landmark study conducted by researchers at the Centre for Addiction and Mental Health (CAMH) found elevated levels of a brain protein associated with chronic stress and anxiety in the brains of young long-term cannabis users.

Published on September 18 in the JAMA Psychiatry medical journal, this study was one of the first to use the Positron Emission Tomography (PET), an imaging technique, to study the association between cannabis and the neuro-immune function in the brain.

The brain protein that was studied is called a translocator protein, or TSPO. It is involved in immune functions and is associated with levels of stress and anxiety.

In an interview with The Varsity, Dr. Romina Mizrahi, the lead author of the study and Senior Scientist at the CAMH Research Imaging Centre, talked about the motivation behind the research.

“Young people use cannabis a lot and they usually think or perceive cannabis as harmless,” she said.

“I, as a scientist, I know that the brain develops and is still developing until the age of 25, so I wanted to understand how cannabis affects the developing brain.”

The study’s design and results

Mizrahi and her co-authors conducted the study in Toronto. The participants included 24 long-term cannabis users, who met the criteria for Cannabis Use Disorder (CUD).

The study also consisted of 27 non-cannabis users, who acted as the control group to compare the protein levels in the brain.

Each participant underwent a scan with the PET imaging technique, which the researchers used to measure the subjects’ levels of TSPO.

The study found that long-term cannabis users had significantly higher levels of the biomarker associated with stress and anxiety compared to the non-users.

Limitations of the study

Mizrahi warns readers, however, that this experiment only studied the relationship between cannabis use and the biomarker associated with stress.

While she and her co-authors studied the biomarker’s levels, they did not examine the impact of its elevated levels on the subjects’ behaviour. The study therefore does not provide a direct link between long-term cannabis use and the symptoms of stress and anxiety.

“We cannot say that cannabis causes this increase in this protein or that it causes stress and anxiety,” said Mizrahi. “We know they are related, but we don’t know which comes first.”

However, Mizrahi spoke about the potential future research that aims to study causation. Such studies could also examine whether the biomarker’s levels would normalize after a period of abstinence for long-term cannabis users.

These findings could refine research and have major future implications regarding attitudes toward the consumption of cannabis for adolescents.

Effects of cannabis on the developing brain still unknown

Mizrahi still added that she would caution adolescents against using cannabis due to their developing brains.

“What I would tell them is that they should be careful when using cannabis because their brains are still developing until the age of 25,” she said. “Whether [the effects are] long-term or short-term, we need to study this moving forward.”

“But I would still caution them not to use cannabis. To use or to not use cannabis while the brain is developing… is an important decision [that adolescents] have to make.”

Weeding down the environmental cost of cannabis cultivation

How yeast could revolutionize an unsustainable industry

Weeding down the environmental cost of cannabis cultivation

Canada has the world’s largest market for recreational cannabis. Its legalization last year lit the path to a ‘higher,’ more liberal future, and was a bold move that came at an opportune time for science.

Cannabis-related research and education are flourishing in this political landscape — the demand for cannabis expertise is going through the roof, creating a space that begs for attention from researchers.

But cultivating cannabis for both research and recreation comes at a cost: it is both expensive to produce at industrial scales and damaging to our environment.

With the many trailblazing studies on cannabis underway, an especially creative finding detailing a new cultivation technique was published in February as a letter in Nature. Dr. Jay Keasling’s lab at UC Berkeley engineered yeast to produce pure cannabinoids like tetrahydrocannabinol (THC) and cannabidiol (CBD). This discovery motivates a reconsideration of current cannabis production policies and strategies.

The ecological and economic costs of cultivating cannabis

A recent CTV News article titled “Canada’s largest outdoor cannabis farm ready for growth” reports that prior to the farm’s opening, most legal cannabis had been cultivated in indoor facilities.

This should be a cause for concern. The financial cost of these methods of production is superseded only by the environmental costs. The cultivation of cannabis is not only water- and nutrient-intensive, but also usually requires land clearing, causes agrochemical pollution, and erodes soil. The unenlightened idea of an outdoor farm could cause severe ecological harm and environmental degradation. 

The production of one kilogram of processed cannabis releases 4600 kg of carbon dioxide emissions into the atmosphere. That is the amount of carbon dioxide produced by 3 million cars in the US.

An indoor facility is an even worse prospect. A 2012 study published by Dr. Evan Mills in Energy Policy, analyzed a four by four by eight-foot module of indoor cultivation. The results show that it would require 13,000 kilowatt-hours per year for utilities such as high-intensity lighting, ventilation, pre-heating the irrigation water, space heating, and air conditioning within the indoor facility. At this rate, Mills estimated the financial cost of growing cannabis from electricity alone to be $6 billion per year in the US.

The environmental costs are even more astounding — fossil fuels have caused carbon dioxide levels to be raised four times the atmospheric usual. At this rate, Mills estimated that the production of one kilogram of processed cannabis releases 4600 kg of carbon dioxide emissions into the atmosphere. That is the amount of carbon dioxide produced by 3 million cars in the US. The ecological horror entailed would cause both Greta Thunberg and anyone who understands climate change to have nightmares.

A sustainable alternative to indoor and outdoor cultivation of cannabis

The environmental burden of producing cannabis is too costly using the current methods of cultivation. It would be a great mistake on the industry’s part not to consider alternatives. One beneficial method that could help solve these problems is the procedure co-outlined by Keasling.

The new method is said to cover the deficits of current cannabis production methods. The researchers created an experimental setup that would be cost-efficient, environmentally safer, and enable direct synthesis of THC and CBD.

By developing a fermentation process using brewer’s yeast, the scientists have engineered a way to produce cannabinoids from a sugar called galactose. The process could help rein in the carbon footprint and financial cost of cannabis cultivation, as well as enable efficient production of specific cannabinoids normally found in trace amounts of plant-cultivated cannabis. 

It could be a great breakthrough for Canadian researchers studying cannabis to investigate the application of this new method, along with companies that sell products imbued with THC and CBD, such as cannabis-derived oils.

Sustainably cultivating cannabis can have medical applications

By developing a fermentation process using brewer’s yeast, the scientists have engineered a way to produce cannabinoids from a sugar called galactose.

The efficient synthesis of THC and CBD through the sustainable yeast-based method could be especially relevant in medicine due to the effects of the isolated compounds on patients.

According to a research review on effects of THC on cognition, the compound can reduce activity in major parts of the brain, including the prefrontal cortex. THC is thus generally linked to impairment of cognitive abilities, as well as psychotic symptoms and anxiety. On the other hand, CBD, which is an antagonist of the cannabinoid receptor, increases activation of other major parts of the brain, such as the prefrontal cortex and striatum.

The review further concludes that CBD reduces anxiety, thus opposing the effects of THC. When subjects are given a combination of equal amounts of THC and CBD, in comparison to pure THC, it was observed that CBD subdued the detrimental effects caused by THC. The risks associated with CBD products are therefore thought not to be associated with CBD itself, but other cannabinoids that can be found in the product.

Controlling the THC:CBD ratio in potential medications derived from cannabis could hold promise in medical research. Dr. Lakshmi Kotra, a senior scientist at the U of T-affiliated Krembil Research Institute, illustrated the example case of Sativex in an interview with The Varsity.

Sativex is a Canadian drug that has a 50:50 ratio of THC and CBD and is usually given to patients with multiple sclerosis. There is anecdotal evidence that suggests that smoking cannabis has better effects than Sativex.

Another example demonstrating the importance of controlling for specific ratios of THC and CBD stems from research on potential treatments for schizophrenia. The effects of potential cannabis-derived treatments have been shown to vary based on the THC:CBD ratio, highlighting the importance of its control.

While scientists can extract pure cannabinoids from cannabis plants, it’s an expensive and arguably arduous method that produces low yields. New approaches such as the yeast-based methods could offer more efficient ways of producing these medically relevant compounds.

The wider impact of sustainable cultivation

It may be a great breakthrough for Canadian cannabis-based companies to investigate such innovative, ecologically safe, and cost-effective methods, and would also allow the nation to set an example for the world with progressive legislation. It would be a great showcase of sustainable development and economics — a perfect way to lay down roots for a new industry that is bound to thrive in the coming years.

We are creating history with respect to cannabis legislation and distribution. With the nation-wide legalization of cannabis, along with Germany and New Zealand importing Canadian-grown cannabis, it becomes imperative to pay attention to current methods of growth, the sustainability of which should be equally considered for its ecological and financial costs.

“Business of Cannabis Conference” explores industry trajectory

Ryerson event presents industry leaders’ assessment of current trends

“Business of Cannabis Conference” explores industry trajectory

The Ryerson Commerce and Government Association (RCGA) hosted a conference on November 17 highlighting business leaders in the cannabis industry. The speakers represented many aspects of the burgeoning cannabis industry, including licensed producers, venture capitalists, and marketing consultation executives.

Presenters included representatives from the venture capital fund and business accelerator Leaf Forward, investment firm and licensed producer INDIVA, the Ted Rogers School of Management, and marketing consultants Elite Digital Team.

In an interview with The Varsity, Eesha Arshad, President of the RCGA, said, “I think that the more students know about [recreational consumption], it will be beneficial to them… The uses are so wide, and I think it is so important for us to accept it with open arms.” Arshad added that a greater understanding of cannabis’ uses, in addition to the process of destigmatizing its use, were key reasons in deciding to host the conference.

The conference’s keynote speaker, Alex Blumenstein, is the CEO of Leaf Forward, a launch pad for entrepreneurs in the cannabis industry. In its first year of operation, Leaf Forward has raised $1.2 million and invests $50,000 for every startup in its accelerator program.

Other speakers included Indiva President and CEO Niel Marotta and Ryerson instructor Brad Poulos, who is the academic coordinator of CZEN 420: The Business of Cannabis.

The all-day event was informative for those interested — or invested — in the progression of the cannabis industry in Canada. In terms of investment and employment opportunities, the main takeaway from the event was that it may be too late for ‘wannabe’ cultivators to enter an already highly competitive market.

Furthermore, Ontario is on the brink of a boom in processed cannabis products. The speakers predicted a major international shift in the cannabis market away from flower cultivation and toward processed products such as distillates and CBD-infused edibles.

The current state and trajectory of the recreational market was thoroughly examined by speakers and panelists. However, there was a noticeable lack of information regarding the future of the pharmaceutical cannabis industry in Canada.

In an email to The Varsity, Tiffany Lauren, CEO of cannabis education group Canbis, wrote, “I was disappointed there wasn’t any panel or speaker addressing the huge therapeutic potential of medical cannabis… [and how it] can help counter the opioid crisis in Canada.”

U of T alumni poised for new wave of sector growth with first cannabis business accelerator

Brett Chang, Taylor Scollon raised $1.2 million for Leaf Forward so far

U of T alumni poised for new wave of sector growth with first cannabis business accelerator

In 2013, the Canadian government created the first conditions for a commercial medical cannabis industry — and Brett Chang and Taylor Scollon were finishing up their degrees at U of T. Over five years later, the country finds itself on the precipice of legalizing the drug for recreational use, and the pair find themselves embedded deep in the world of Canadian cannabis startups.

Leaf Forward touts itself as “Canada’s first and leading cannabis business accelerator.” The company has raised $1.2 million in investment capital so far and will pour its first $250,000 into five early-stage cannabis startups next month, hoping to ride the second wave of major growth in the sector.

Leaf Forward is part venture capital fund and part business accelerator, founded in 2017 by Chang, Scollon, and Alex Blumenstein. Eager to get involved in the cannabis industry around the time of Justin Trudeau’s election, Leaf Forward began by hosting monthly meetups that brought the likes of Aphria (TSE:APH) CEO Vic Neufield together with people interested in getting more involved in the evolving world of Canadian cannabis. “We built a community around that,” Chang said, “and through that we got to know entrepreneurs in the space and industry leaders in the space, and we just connected the dots.”

Alongside hosting meetups — there have been 21 so far across five Canadian cities — Leaf Forward also offers four-day intensive ‘bootcamps’ marketed to equip entrepreneurs with skills to propel their cannabis startups. Forty-five cannabis companies have completed the bootcamp program, but the main thrust of Leaf Forward is its highly competitive business accelerator driven by venture capital.

The accelerator program involves both a big boost of seed funding as well as participation in an intensive, three-month program. Companies in the accelerator have access to Leaf Forward’s wide industry network, including outlets for future funding rounds and licensed spaces for research and development. The accelerator program also grants access to Leaf Forward’s industry partners, which include law and accounting firms on hand to help startups solidify their plans for expansion and ensure stable long-term growth.

Five companies will start off the first accelerator cohort in November, followed by another eight to 10 businesses in March and 10 to 12 more later in the spring. The goal is to have 20 to 25 companies with a capital base of $3 million — of which $1 million will be used for initial investment and $2 million reserved for follow-on funding.

Funding early-stage startups

The companies in the first cohort include businesses focused on alternative consumption — edible forms of cannabis to be regulated within the next year — as well as a company using a cannabis extract, cannabidiol, in sports beverages, and another startup focused on creating a superior filtration system to minimize odours for licensed producers.

Licensed producers, such as Canopy Growth (TSE:WEED) and Aurora Cannabis (TSE:ACB), enjoyed extremely high growth within the last year that many analysts say will plateau. Whereas cannabis itself will be treated as a commodity post-legalization, the brands and technology that take advantage of it are poised for growth in a new, emerging sector.  Making an analogy to the beer industry, Chang said that “you don’t make money off the hops for beer — you make money off of the brand.”

Leaf Forward uses a ‘2 and 20’ private equity fee structure, whereby two per cent of the capital it raises goes towards its own operational costs — the fund management fee — and it keeps 20 per cent of the carried interest as a performance fee — with a twist. “The fund size that we’re raising is so small that that cannot fund all the different expenses associated with what an accelerator needs,” Chang said. Leaf Forward will invest $50,000 for every startup in its accelerator program, of which $35,000 will go directly to the company as seed funding and $15,000 will be kept as a service fee to offset the cost of the program itself. This model is common amongst business accelerators.

The fund term is 10 years, with a minimum investment of $50,000. The majority of Leaf Forward’s clients are high net worth individuals and family offices in Toronto. The Canadian cannabis venture capital fund, Green Acre Capital, has invested $500,000 in the accelerator. 

As a private equity fund, Leaf Forward generates returns from liquidity events — the acquisition of the startup by another company or an initial public offering. In an industry poised for consolidation, the acquisition of startups by large licensed producers is a very real possibility.

“But that doesn’t mean there is any less opportunity for entrepreneurs,” Chang says. “Trends will appear that weren’t expected by the big players but were taken advantage of by smaller companies and entrepreneurs, and that’s the cycle of the market.”

From U of T to the cannabis industry

Canada’s progress towards cannabis legalization has been slow but marching for years. The path that brought Chang from U of T to Leaf Forward — with stops in politics and tech along the way, including a public affairs gig at Uber he left two months ago — has been more winding. “I think my entire career has been very difficult to predict,” Chang said. “My parents wanted me to go to law school.”

The decision to dive into the industry was a clear one for Chang, who calls the chance to get involved in an emerging market that was previously an illegal one “a once in a lifetime opportunity” akin to being involved in the alcohol industry after Prohibition.

Chang studied history and political science while at U of T, and, along with co-founder Scollon, was heavily involved in student politics.

“We were running campaigns against the UTSU or the administration at that time, and we were always looking for new and innovative ways to get our message out,” Chang said. “When you’re starting a political campaign it’s no different than starting a business in many ways. There were a lot of transferable skills we developed at U of T.”

After university, Chang worked briefly in politics before moving to a sales job in tech. After that, he and Scollon co-founded a digital public affairs firm with a third partner before they launched a private bus service that allowed citizens to serve transit-starved areas of Toronto. The venture, Line Six, got them on The Globe and Mail’s list of “Ten Torontonians who got things done in 2014,” and helped Chang into a job with Uber.

Scollon previously worked in digital marketing for both Justin Trudeau and Kathleen Wynne’s campaigns. Blumenstein, Leaf Forward’s CEO and the third co-founder, worked in regulated industry, including a stint with a licensed cannabis producer, before the move to Leaf Forward. All three of them are full time at the company now.

On the whole, October 17 doesn’t materially mean much to Leaf Forward and its startups, which are focused solely on ancillary products and alternative consumption. Though mere days before legalization, the eager anticipation of what will come for Canadian cannabis is palpable in people like Chang, who thinks that people generally underestimate the macroeconomic impact the industry will have, including “thousands and thousands” of potential jobs.

“What wine is for France,” Chang said, “cannabis will be for Canada.”

Opinion: How Ontario can overcome its expected weed shortage

Rigid rules, lagging licensing may hinder legal Toronto toking

Opinion: How Ontario can overcome its expected weed shortage

With cannabis legalization set for October 17, Ontarians over the age of 19 will soon be able to purchase cannabis online for recreational use through the Ontario Cannabis Store (OCS). However, you’ll want to submit your order early, because industry leaders and researchers alike are predicting that a product shortage will occur within the first year following legalization. 

Health Canada’s most recent estimations place demand for recreational cannabis at upward of 900,000 kilograms, but according to a recent report co-authored by the University of Waterloo and the CD Howe Institute, supply will only total 210,000 kilograms — 23 per cent of demand. 

Based on the total annual production capacity of the 13 cannabis cultivator companies listed on the Canadian Marijuana Index, that amount is closer to 230,000 kilograms, and that’s assuming each company will yield their maximum estimated outputs. The discrepancy between these output projections is negligible, and, regardless, comes far short of the predicted demand. However, each company has considerable expansion plans that should greatly increase its production capacities over the next couple of years, and the government expects supply to eventually overtake demand. 

To remedy the expected shortage, the average consumer is then expected to continue procuring recreational cannabis on the black market, meaning that the government will have objectively failed its mission of snuffing out illegal producers and distributors with legalization. However, there are a few ways in which the province could curtail the severity of the shortage.

In order to help meet the demand, industry leaders argue that Health Canada should streamline the process of licensing producers. The current application process is complicated and arduous — over half of all applications for medical cannabis licences have been returned as incomplete — and its slow rate of licensing producers has been identified as the main culprit behind the supply shortage. 

Health Canada should also approve the sale and regulation of edibles and cannabis derivatives. The province has heretofore stalled the regulation of these forms of cannabis post-legalization, citing a lack of data regarding how cannabis impacts human health when ingested. Critics including MP Don Davies have said that no more meaningful data is expected to arise in the next year, and it’s commonly understood that edibles likely have less of a negative health impact than cannabis smoke. Expediting the approval of edibles and derivatives would effectively help fill the demand, as they are estimated to account for 50 per cent of the total dollar value of pot sales once legalized. 

Another option is amending the Cannabis Act, which bans the import of cannabis for recreational purposes, but not for medicinal purposes. Theoretically, to circumvent a shortage, the sector could devote all domestic cannabis production to recreational products, while exclusively importing all cannabis products and derivatives that are intended for medicinal purposes. This would require a massive systemic shift that may not be feasible on short notice.

Alternatively, the province could move forward with implementing a private retail model and allow the import of cannabis products that are produced by Canadian companies in other countries. While importing recreational cannabis products is banned under the Cannabis Act, licensed Canadian producers could argue that they are simply outsourcing the production of cannabis, as opposed to engaging in trade with international companies. 

However, this raises the question of how a larger industry trend toward outsourcing may affect the economic integrity of smaller domestic producers, and whether or not it defeats the purpose of the domestic production clause. 

The news of a forthcoming legal cannabis shortage may not be too concerning for the average Torontonian toker, as the prevalence of privately-owned dispensaries has made recreational cannabis relatively accessible. Last month, legislation was tabled to move forward with a private retail model by April 1, 2019, but what will happen to your friendly local dispensary in the meantime? Toronto has a robust community of cannabis dispensaries, most of which presumably intend to continue operating business-as-usual post-legalization, so the average Toronto consumer won’t immediately feel the effects of a legal shortage. 

Legalization definitively signifies the illegality of existing dispensaries, which have thus far arguably operated within a legal grey area. With the Toronto Police Department’s documented vendetta against local cannabis dispensaries, legalization may herald the beginning of a string of police raids, reminiscent of Project Claudia in the wake of Prime Minister Trudeau’s election. 

We won’t know how the market will play out for another year. Until then, consumers shouldn’t concern themselves over a potential pot-pocalypse and can continue to support small cannabis businesses while the government sorts itself out. 

Cannabis dispensaries weigh financial pros, cons of legalization

As legalization looms, Toronto’s black market vendors receive ultimatum

Cannabis dispensaries weigh financial pros, cons of legalization

Ontario’s dispensaries were given an ultimatum of sorts when the provincial government announced cannabis legalization. The provincial government announced that its policy measures regarding private selling and distribution of cannabis would allow private businesses to operate legally beginning on April 1 — on the condition that they shut down all operations by the October 17 legalization date.

Vic Fedeli, Ontario’s Finance Minister, has reiterated a zero-tolerance policy regarding dispensaries that continue to operate illegally past the legalization date. Many dispensaries and shops familiar to Toronto residents face the existential question of shutting down and losing almost six months of business, or continuing to operate illegally — presumably under increased police scrutiny — and jeopardizing their future earnings and prospects as legal entities. 

Sea of Green and High Society, two notable Toronto dispensaries, have opted for the former, with the objective of reopening legally in April. While they may lament lost business — some dispensaries make almost $40,000 a day in sales — many dispensary owners are wary of continuing to operate illegally. The legalization transition has been a long-awaited process and legal privatization has many businesses taking the path of least resistance and accepting all of the impending policy changes. 

The more burning question that has come in light of the recent closure of dispensaries is how these changes will affect the market and culture. Will the growing supply saturate earnings? Will its ubiquity rob stoner culture of its exclusivity and stigma? 

From a policy perspective, the closure of dispensaries seems to be a move to gauge demand by funnelling sales to the government’s Ontario Cannabis Store, which will be the only legal source of recreational cannabis until April. 

While there is optimism in the stock of large marijuana producers, such as Canopy Growth Corporation (TSE:WEED) and Aurora Cannabis (TSE:ACB), uncertainty is still evident in price fluctuations. As eager as investors are to bet big on cannabis, small setbacks have seen stocks tumble more than 30 per cent, as was the case with Aurora in August, only to recover and supersede previous peaks in a matter of days. Perhaps the provincial government will use the consolidated demand it generates from its online retailer to project the cannabis market’s cap and the tax earnings they can expect to collect from this newly created legal market.

From a cultural perspective, the largest shift seems to be the transformation of cannabis from drug to commodity. While this may just be a government catching up to a culture that has long been normalized in Toronto, privatization on a larger provincial scale has serious implications for communities. Anticipating this shift, the provincial government has given cities until January the right to opt out of allowing private retailers from operating.  

The shift from drug to commodity has also seen a shift in the language being used to frame the issue. Some note that cannabis is being viewed increasingly in monetary terms and as a potential entrepreneurial venture. April is set to be hectic, as existing and new dispensaries begin capitalizing on the new market, but some insiders believe that they will overcorrect and stabilize soon after. 

That’s not to say we shouldn’t anticipate exciting developments. A larger market opens the door for innovation in the alternative consumption sphere. Dispensaries such as CAFÉ already distribute edibles, such as cannabis-infused chocolates and gummies. Constellation Brands (NYSE:STZ), an international beer, wine, and spirits producer, recently invested in Canopy Growth and Second Cup (TSE:SCU) has shown interest in pursuing a distribution licence. Cannabis-infused beverages, pastries, or even cosmetics represent merely the tip of the iceberg.

In any case, it remains to be seen whether privatization will result in a suitable structure for adequate distribution. The Ontario government has bought itself time and drawn a line in the sand for dispensaries wishing to operate legally.