Article by Terry Reith, CBC News
The modern-day prospectors in Canada’s new cannabis market are working hard and cutting deals as the final eight months tick down to the day when recreational marijuana is fully legalized.
Like the gold miners who trekked to the Yukon 120 years ago, today’s fortune hunters are forging into the unknown. Some will get rich, some won’t make it, and a few will leave their mark for generations.
The motherlode is an industry valued at $23 billion, according to research from accounting firm Deloitte. That includes growing and retail sales, transportation, security, edibles, taxes, and tourism.
Canadians could also be at the forefront of a growing global business, exporting not only cannabis and its derivatives, but also the technology to grow it.
Pot sales already rake in billions and employ an untold number of people. But that’s the black market, an illegal racket enriching criminal organizations. Corporate Canada is plotting its takeover and the new bosses have business degrees, corner offices and expensive suits.
They face the daunting task of turning a big business that’s operated outside the law into a legitimate legal enterprise. A big part of it is navigating through new federal regulations, laws and bylaws that are still in formation.
The first big test for these cannabis entrepreneurs is whether they can draw the nation’s estimated five million existing consumers away from the underground market.
“Just like any other competitor entering a new market, the incumbents aren’t going to give up easily,” says Kyle Murray, vice dean of the University of Alberta’s school of business.
Eliminating the black market
Most provinces have not firmed up precisely how they’ll sell pot to the public. Only Ontario and New Brunswick have announced a retail framework. In both cases, it will be government-owned stores like provincial liquor outlets.
That’s a big mistake, according to Greg McLeish, an analyst with Mackie Research Capital Corporation, an investment firm. He argues government-run retail outlets will actually help the black market thrive.
“These guys have been growing for a long time,” he says, noting that price and convenience will be key in determining where people buy their weed.
McLeish also points out that it makes more sense to absorb people from the existing underground cannabis culture into the legalized system.