As the first major economy in the world is on the brink of legalising cannabis, is Canada ready for the drug to be commodified and sold as a named brand?
For many, Canada’s Prime Minister Justin Trudeau can do no wrong. Telegenic, young and liberal-minded, he’s delivering on an election promise that will cement his reputation with young voters and baby-boomers alike: the legalisation of cannabis.
In some ways, cannabis legalisation is one of those issues like same-sex marriage, or decriminalised abortion, that speaks to a sense of social progress. Certainly in Canada, it finds widespread acceptance; 68 per cent of the public are in favour of legalisation, according to Canadian pollsters Forum Research.
It will become operative next July: a move that makes Canada the first industrialised country to properly bring legal cannabis to market. And some cannabis entrepreneurs now think the country could allow the burgeoning industry to fully mature.
“We think Canada will be pivotal,” says Troy Dayton, CEO of the Arcview Group, which has provided investor services and market research in the cannabis industry since 2010. “Investors are very excited about Canada.”
Arcview, which thinks the legal cannabis market will be worth $10.2bn (£6.2bn) by 2018, is now betting on Canada to consolidate the gains made by the US – particularly Colorado, currently the most sophisticated cannabis market in the world. But while cannabis is legal (to a lesser or greater extent) in 29 states, the US cannabis industry is held back by a lack of federal backing.
“Canada is the tenth largest economy in the world, and the first major economy to legalise cannabis,” says Dayton. “There’s no state-federal conflict as there is in the US. We’re very excited about it, and so is the Canadian Government.”
As well they might, for a bonanza is expected. A 2016 Deloitte report estimated the potential worth of the legal Canadian marijuana market to C$22.6bn (about £13.72bn) a year, building on the country’s already established medical marijuana market. The 3.5 million Canadians who are estimated to use cannabis are expected to respond favourably to next summer’s gift – and businesses are circling.
“A lot of expertise has built up in Colorado, which is itching to go abroad without the constraints,” adds Dayton. “Canada will lap the US and be an incredible powerhouse.”
Other social gains are expected. It will have a big export market, knock-ons for tourism – Denver is a thriving model with specialist hotels like Bud & Breakfast – and it’ll add jobs and reduce crime, as Canadians switch from an illegal to a regulated market.
Moreover – and this is where Governments start to listen – there’ll be a big tax take. Canada’s starting tax is $1 per gram on cannabis. One estimate is that Colorado has pulled in $506m since retail sales began in 2014, which will be exceeded in Canada – although Trudeau is initially likely to bring on a low tax regime to keep criminal elements out.