How Players are Jockeying for Position in Canada’s Nascent Pot Market

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The federal health department released its highly-anticipated task force report on marijuana this week, providing clues as to what Canada’s recreational cannabis laws will look like.

The report’s recommendations are not binding, but it does help to illuminate the path ahead for the entrepreneurs who have entered the fledgling marijuana market in recent years. That includes players operating at varying levels of legality, from the 36 licenced producers responsible for growing and supplying medical marijuana, to scores of dispensary owners currently operating illegally in a number of Canadian cities.

“Producers should be excited that about what this means for expanding their business,” says Trina Fraser, a lawyer with law firm BrazeauSeller who has counseled clients applying to be medical marijuana licenced producers. “We need to be able to produce [and sell] these products in such a way that competes with the illicit market,” she says, adding that she finds the report encouraging in that regard.

In terms of business opportunities in the market, the task force doesn’t explicitly state who will and will not be able to produce and sell cannabis. It does, however, suggest that production will likely continue to be regulated by the federal government, which requires all aspiring producers to go through a strict application process. The provinces and territories, meanwhile, will be responsible for retail and wholesale distribution, and will determine whether the distribution portion of the supply chain will be government-controlled or licenced to private sellers.

But the task force made clear the intention is to foster an industry where small-scale “craft” or “artisanal” producers are able to participate (including individuals who can grow a maximum of four plants for personal use) among larger players. It recommends taking steps to avoid “the development of monopolies or large conglomerates.”

While this wording is vague, it gives Mark Carnevale, co-owner of Bellwoods Dispensary in Toronto, hope that the dispensary model may be legitimized through legalization. The suggestion that marijuana will not be sold through existing government-run liquor retailers or any place where tobacco is sold likewise suggests that there’s some opportunity in retail storefronts.

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