Government review finds flaws in marijuana legalization policy

In March, a panel of experts in Canada quietly released the first authoritative assessment of one of the country’s biggest recent public policy changes: the legalization of cannabis. In 2018, Canada became the first G-7 country to legalize the drug, launching a billion-dollar industry virtually overnight. (Many countries, such as the Netherlands, have decriminalized marijuana but have not made it fully legal.)

As a condition of the bill’s passage, Prime Minister Justin Trudeau’s Liberal government agreed to allow a panel of experts to conduct a formal review of the policy three years later. The government’s final report has arrived after a delay caused by the Covid-19 pandemic. The review shows that Canada’s tightly regulated but privatized cannabis market is deeply flawed. Experts found that legalization partially sacrificed public health to create a commercial market; yet many cannabis companies still struggle to turn a profit.

The Ottawa panel of experts is not alone in its conclusions. As more and more jurisdictions around the world flirt with the concept of legalizing cannabis, many are critical of Canada’s example.

Canada’s approach to legalizing marijuana has produced some achievements. The review found that adults have largely moved their purchases to the legal market and possession convictions have fallen by 95 percent. “If one of the goals was to reduce the burden on the criminal justice system, it has been a huge success,” said Akwasi Owusu-Bempah, a professor of sociology at the University of Toronto and co-author of the book Waiting to Inhale: Cannabis Legalization and the Fight for Racial Justice.

However, pardoning people already convicted of cannabis offenses was an “afterthought,” Owusu-Bempah said. The government created a program for convicted Canadians to apply for amnesty, but Owusu-Bempah described the process as “byzantine.” As a result, few pardons have been granted so far.

Overall, according to both Owusu-Bempah and the review, Canada’s legalization system has done little to address the inequities introduced by the criminalization of cannabis a century ago. They said many communities that have historically been over-policed under previous cannabis laws – including First Nations and Black Canadians – should be the first to benefit from the legal market. Instead, these groups face enormous obstacles to entering a legal market that has been dominated by large corporations.

Legalization shows that small and medium-sized producers do not benefit from legalization. Canadian law initially created two classes of licenses – a standard class and a “micro” license, which provided smaller growers with lower regulatory fees. However, the review found that companies in this second class struggle to make a profit; high excise taxes force producers to set low prices for their products, and regulatory fees are high.

Terri Blumes, CEO of small Alberta-based cannabis company Almanac Grow, said microlicenses also come with low production limits, making it difficult to find investors. Despite incurring regulatory fees that are tens of thousands of dollars higher, Blume, like many other small growers, opted to obtain a larger license. “Why would you invest in a facility where revenues would be limited based on license type?” he asked.

Meanwhile, since legalization, the price of cannabis has dropped due to overproduction by large companies. As a result, even these large producers are unable to satisfy investors, the review shows, leaving dozens of companies struggling to survive. “The economics of this have not been reconsidered,” Blumes said. “Unless something is done to ensure the sustainability of this industry in Canada, for businesses of all sizes, the pendulum will swing the other way,” back toward the black market.

Meanwhile, the impact of legalization on public health seems to be negligible or even negative. The rate of cannabis use among people under 25 in Canada was already among the highest in the world before legalization; it hasn’t dropped since then. The review also cited “increasing reports of poisoning among children” who unintentionally consume food products, suggesting that existing laws fail to prevent harm to minors.

A government report found that doctors are paid by the industry to prescribe certain brands of medical marijuana; warned that police devoted few resources to enforcing laws relating to the sale, marketing or prescribing of the product. All the while, the review said, cannabis products are becoming more potent, with most products sold now having THC content of more than 20 percent. Experts have advised the government to be “ready” to regulate some off-market products and pleaded with manufacturers to offer lighter products rather than urging buyers to consume more power.

These issues are directly linked to the commercialization of the cannabis market in Canada, according to Peter Selby, a senior scientist at the Toronto Center for Addiction and Mental Health who contributed to the report. “With (decriminalization), there is no increase in harm,” he said. “But as soon as you allowed commercialization, you started seeing it.”

This may be one reason why European regulators have turned against the Canadian model and toward a nonprofit cannabis distribution system, said Brendan Hughes, an expert at the European Monitoring Center for Drugs and Drug Addiction, who tracks changes in cannabis legislation around the world. . world for over 20 years.

In Malta and Germany, governments have chosen to limit sales to non-profit cannabis clubs that collectively invest in growing and processing cannabis, which can only be resold to members. Hughes noted that the system “effectively blocks” the growth of the billion-dollar international cannabis trade, which has attracted interest from large investors in the United States and Canada.

Instead, such European proposals and policies highlight their potential public health benefits by diverting cannabis consumers from the illicit market. Malta and Germany also appear to have paid more attention to pardoning people previously convicted of cannabis possession than Canada; Germany has granted full pardons to over 200,000 convictions. Hughes said references to potential tax revenue and job creation – a major part of the argument for legalization in Canada – have become less popular with European politicians as the Canadian experiment comes to an end.

Meanwhile, in European countries legalizing drugs, there is an emphasis on small-scale experiments before major policy changes. In the Netherlands, where cannabis is widely available on the tolerated black market, several cities have approved a pilot project to introduce legal, government-licensed cannabis as a competitive product for several years. In Switzerland, Hughes said, individual regions have the right to develop their own pilot projects – whether for medical licensing, cannabis clubs or private retail markets – as long as they collect data on public health outcomes.

Regardless of Canada’s setbacks, it appears the legal cannabis market is here to stay. Legalization remains generally popular: last year, an online poll found that 64 per cent of Canadians support the policy, although, interestingly, that support has dropped to less than half among Canadians aged 18 to 34.

And while the review’s warnings about child poisonings and calls for better enforcement sound like red meat in the Conservative campaign – especially ahead of next year’s expected general election – the Conservative Party of Canada has so far remained silent on the issue. Conservative leader Pierre Poilievre voted against legalization in 2017, but in 2019 the party reversed course. At last year’s party convention, a proposal to lower the excise tax on medical marijuana gained support but did not become party policy. (Poilievre’s donors are cannabis tycoons.)

Ultimately, Selby said, the review shouldn’t be taken as a sign that Canada’s policy is failing – just that it could use some long-overdue adjustments. “I think (legalization) really needs a more nuanced approach,” he said. “It’s not something that’s ready-made — you have to have the infrastructure behind it to monitor it and improve it.”

The same applies to Europe – regardless of what legalization framework countries choose. “It’s one big natural experiment,” Selby said. “We should all learn from each other.”