The Future of the Marijuana Industry Comes Into Focus

Article by Andrea Hill, The Globe and Mail

Comprehensive. Compassionate. Courageous.

The highly anticipated Final Report of the federal government’s Task Force on legalization of cannabis that was released this week is all of these things. The report is simply advice to the government, and none of its recommendations may ultimately be enacted. However, it is a valuable bellwether of public opinion and does a great job of compiling the important matters that any future legislation must address. If implemented, its recommendations could shake up the industry, leading to increased specialization by licensed producers who can currently do it all, more officially licensed roles for other types of businesses that must currently play a reactive role in the cannabis economy, and more opportunities for brand-new industry subsectors.

Keenly aware that it is mapping out new terrain that has been legally out of bounds for the entire lives of most Canadians, the Task Force had the courage to point out how ineffective prohibition of cannabis has been, and the compassion to consider the interests of society’s more vulnerable members in making its recommendations. Key to the cannabis business community, the report also provides a clearer direction for the country’s nascent marijuana industry while giving rise to interesting new possibilities for producers, distributors and retailers.

Some elements of the report should come as no surprise, such as the acknowledgment of vast popular support for commercial production being left in the hands of the private sector, and praise for licensed producers and their good production practices as overseen by Health Canada. Although the report contemplates a “diverse” marketplace that includes “small producers,” the concept of the licensed producer (in some form) is virtually taken for granted as the dominant means of production under a recreational cannabis regime. Investors seemed to concur, as share prices of some publicly listed licensed producers spiked after the report was released.

The report suggests cannabis retail outlets not be co-located with sellers of alcohol or tobacco, and therefore that cannabis should not be sold through liquor stores. The task force did not take a position on whether cannabis should be sold through private-enterprise storefronts or government monopolies. This would likely be left to the provinces to decide. However, the recommendation that some form of retail sales of cannabis be permitted, if enacted, could lead to the fragmentation of the producer’s licence as production is separated from distribution and sale.

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