Why Canada’s Cannabis Legalization is Bound to be a Disappointment
It’s official: Canada has just legalized recreational cannabis. As just the second country to fully legalize cannabis (after Uruguay), Canada seems on the path to becoming a leader in the global cannabis industry—at least on the surface. However, there are several factors that will severely stifle Canada’s burgeoning cannabis market and, ultimately, prevent it from dominating the industry.
While Canada’s legalization was certainly historic, it’s important to remember that legalization isa process, not a single moment. It’ll take Canada months, if not years, to develop its cannabis industry enough to fully accommodate the new demand that legalization has brought. This includes opening thousands of stores across the country, not to mention finding effective ways to commercialize.
Commercializing cannabis in Canada is extremely difficult because the government heavily restricts branding. So Canadian cannabis brands have their hands tied when it comes to promoting themselves: packaging is highly regulated, while events and celebrity endorsements are banned. Without marketing, the Canadian cannabis market will have no leader—and no way to create one.
The Canadian government is also restricting the kinds of cannabis products that are sold, focusing primarily on flower (smokeable cannabis). While flower has its place in the market, the industry is now headed in a different direction. Edibles, cannabis concentrates, and vape juice are all emerging as alternatives to flower—and until Canada legalizes these products, it won’t be able to capitalize.
Canada hopes that legalizing cannabis will make it a dominant player in the global market as an exporter. However, its climate gives it a significant disadvantage against Latin American countries like Colombia and Costa Rica. With Canada’s low temperatures, cannabis production is chiefly indoors, increasing energy costs, while Latin American countries can grow cannabis outdoors year-round.
An even bigger cost to the Canadian cannabis industry is labor. Canada’s national healthcare system significantly increases wage requirements. Latin American countries, which don’t have such a system in place, are able to pay workers just a fraction of Canada’s wages. This combination of low labor costs and warm climates make Latin America a much more desirable exporter than Canada.
Canada may be a trailblazer for legalizing cannabis countrywide, but it’ll never be a powerhouse. The government’s restrictions, the logistics of establishing a cannabis market, and the country’s cold climate will all prevent Canada from realizing its full potential. As more countries begin to legalize recreational cannabis, there is no doubt that our neighbors up north will be lost in the shuffle.
