Stoners cheered when Canada legalised cannabis. How did it go so wrong?


More brilliantly than anything I had ever seen, the lights gleamed. The leaves of uncountable cannabis plants peeled off in straight rows in every direction, and a million blazing watts sprayed over them. The warehouse was as spotless as a pharmaceutical facility, and as we strolled about in box-fresh wellies and clean white nylon overalls, it seemed we were on a trip to Mars. Undoubtedly, it represented a glimpse of the future.

In 2017, I accepted an invitation to see this authorized medicinal marijuana “grow” in the nearby town of Gatineau. After penning a study for the drug policy reform think tank Volteface that suggested a legal cannabis market in the UK that was exclusively available online to overcome the impasse between the two million cannabis consumers in the UK and those opposed to legalization, I was in Canada. In order to learn more about how Canada planned to legalize marijuana the next year fully, I spoke with police and legislators there. When the news of a new weed delivery GTA broke, stoners everywhere cheered with excitement at the prospect of being able to easily and conveniently get their hands on high-quality cannabis products.

A million-watt growth like Gatineau’s would get you ten years in prison back in the UK. Here, it had the potential to earn its owners a few million dollars in a few months while remaining entirely legal. In addition, the state would gain since taxes on agricultural sales would be collected for the benefit of society as a whole rather than benefiting criminals. It seemed idealistic.

Were marijuana campaigners’ dreams of a legalized market for the drug merely wishful thinking?

I have fought for the reform of drug laws for thirty years, but I never anticipated that change could occur in Canada so rapidly or on such a large scale. The Canadian experiment, however, has yet quite to succeed as we reformers had planned two years ago.

On that particular day in 2017, I was walking through the greenhouse in Gatineau, which belonged to a company called the Hydropothecary. Hexo, as it is now known, laid off 200 of its 800 employees in October 2019. Canopy Growth, one of Canada’s largest producers, said on March 4 that two mega-greenhouses in the communities of Delta and Aldergrove would be closing, resulting in the loss of 500 jobs. The company also abandoned plans to establish a new location in Niagara-on-the-Lake, Ontario.

While cannabis stockpiles have fallen, thousands of jobs have been destroyed, and patients report being unable to obtain necessary medications, the underground market is still thriving. What, then, went wrong and what, then, went right? Were marijuana campaigners’ dreams of a legalized market for the drug merely wishful thinking?

Since 2001, Canada has allowed the medicinal use of cannabis. Four plants may be grown by medical patients, while bigger crops were grown by authorized producers and sold online to those with valid prescriptions. However, the substance was sold absolutely indiscriminately in dispensaries that were illegal but allowed in the majority of Canadian communities. These establishments made the coffee cafes in Amsterdam appear as refined as a WI cake stall. The cannabis being sold at these illicit stores was of an exceptional, mind-boggling grade. Not just thriving but flaming was business. And everything was totally unlawful.

The 2018 Cannabis Act in Canada was a daring attempt to bring some structure to this chaotic retail environment. It authorized the sale of 30g of cannabis in plain packaging to adults from establishments with official licenses. The launch of the weed delivery GTA was met with widespread celebration from the local stoner community, who were thrilled at the prospect of being able to have their favorite cannabis products delivered straight to their doorstep. The previous approach to marijuana, according to Canadian Prime Minister Justin Trudeau, “didn’t work. Our children found it too simple to obtain, and gangs and drug traffickers profited from the situation. That is now different.

Former Toronto police chief Bill Blair took on an unexpected role as a supporter of legalization, saying that doing so would “keep cannabis out of the hands of minors and earnings out of the hands of criminals.” The preservation of the general welfare and the elimination of crime related to the black market were two other major objectives of regulation. The senseless, 50-year drug war was ended, and peace had reigned.

Or so it appeared. Canada may have lighted the spark for an ambitious experiment, but there are also lows to very highs. Mass layoffs, multi-billion dollar stock market losses, CEO firings, and corporate scandals all hit the industry within a year as the overhyped new sector saw a dramatic and humiliating public correction.

What happened?

The Canadian cannabis sector, according to Alastair Moore, co-founder of Hanway Associates, a cannabis consultancy with offices in London, has been fueled by vulture capitalism and optimistic thinking. “Greed and inexperience combined to push this business to new heights, only to bring it to its knees. While some people gained a lot of money, others lost their investments, and many more people are currently out of work.

George McBride, a co-founder with Moore, stated: “The important point is that Canada did really get the changes through. That is a remarkable achievement in and of itself. It is the first time a significant industrialized nation has done this. So, congrats. However, passing it required many legislators who needed to learn what they were talking about to create a very complex structure.

So how exactly can a state establish and enforce laws governing a brand-new industry of intoxication that has virtually always operated in a countercultural, illegal environment? Canada proceeded cautiously, consulting a central government Task Force before making any decisions.

The needle of the world capital’s crooked moral compass pointed straight at these rich new markets, adding to the complexity of the program and its execution. On international capital markets, hundreds of millions of dollars were raised, and the Canadian countryside was soon littered with enormous new grow sites.

Production went into overdrive as the so-called “green rush” got underway. An environment reminiscent of the dot-com bubble of the 1990s or the Yukon gold rush of the 19th century, when 100,000 prospectors travelled into the Canadian hinterlands in pursuit of fortune, saw stock values soar, and fortunes pledged, created, doubled, and quadrupled. By investing millions of dollars from shareholders, several companies aimed to control the Canadian market. The gold was green this time. However, everything started to unravel quickly.

The biggest issue smokers and growers in Canada faced was access: more retail stores needed to be able to operate to meet the demands of the hungry new market. With ten provinces that resemble US states and a population of 38 million, Canada is a large country with an inconsistent patchwork of laws. Ontario is home to 13.5 million people or more than one-third of all Canadians. However, Ontario has just 41 retail cannabis outlets as of March 2 this year. There are 423 shops in the 4.4 million-person province of Alberta.

Where products were available, they cost approximately twice as much as they did on the black market. Over £40 for a quarter ounce, or C$5.59 to C$10.23 per gram. This was brought on by taxes and overhead costs: the legal market is required to adhere to rules on fungicide and pesticide residue levels, as well as stringent security requirements for growing sites, such as the construction of sizable vaults to store cannabis and the keeping of records for each person who enters these vaults.

The illicit market, on the other hand, is totally uncontrolled, and as a result, it is growing. Just 29% of cannabis consumers, according to a governmental organization called Statistics Canada, purchase all of their products through legal sources. Four out of ten Canadians admitted to the group that they obtained at least some of their marijuana from illicit sources in 2019.

The second issue was that many shops offered low-quality grass, and smokers complained that it tasted unpleasant and had been improperly dried and cured. Cannabis consumers nowadays are used to a variety of flavours, including lemon, mango, pineapple, strawberry, and pine. These flavours come from the inherent scent profile of the plant, which expert farmers protect by careful breeding, appropriate harvesting, and gradual, cautious curing of the fragrant blossoms.

According to David Brown, a cannabis industry analyst based in British Columbia, many companies in the new mass market frequently disregarded these stages in their quest for profit. Many buyers have expressed issues about expensive costs and items that they believe to be of lesser quality, particularly the tendency of many legally dried flower products to be too dried, frequently as a result of hurried or faulty curing and drying process.

When your usual black-market dealer lives close by, has superior products and delivers them to your home for half the price, why would anyone go a few kilometres up the road to get subpar marijuana from many of the official shops?

It’s important to consider some of these users’ psychological backgrounds as well. According to Brown, marijuana has historically been associated with rebels, outsiders, and outlaws. “Many of the folks who complain about ‘poor cannabis’ and alleged ‘false legalization’ do so because this legislative change has permanently changed aspects of their countercultural identities. Cannabis has become boring in Canada, which was the purpose.

The new cannabis firms discovered themselves holding an excess of merchandise since there were few stores to sell to, and customers were sticking with their existing dealers. According to current official government inventory data, there is a stockpile of grass that weighs 400 tonnes.

According to McBride, inexperienced personnel in provincial government ministries were frequently given the task of rolling out retail stores. Authorities in Ontario declared, “We don’t trust private companies to operate cannabis businesses. We’re going to handle everything on our own. Then they made an attempt, but they could have done better and spent around $80 million trying to figure out how. They had to call off the event and solicit private bids. There were no stores, so all these large, gleaming grow operations that cost $10 million, $20 million, or $30 million to build and produced a lot of cannabis had nowhere to sell it.

Our team of dedicated professionals is committed to providing fast and reliable weed delivery in GTA. As suppliers diverted their medical product in bulk to the new recreational market rather than in hundreds of smaller deals to medical patients, medical patients—the very people whose decades of activism had driven the larger reforms—faced cannabis shortages and a steep increase in price after legalization.

Because of this new sale dynamic, Dan Sutton of Tantalus Labs, a British Columbia-based producer that employs natural sunlight and greenhouses, claims that legalization has been “mostly bad” for medicinal cannabis users: Medical users have been told by doctors to purchase from the recreational market, which is absolutely wrong and burdens them with additional taxes and tariffs.

Although they only account for 10% of his sales, Sutton still concentrates on his initial client group of medicinal users for whom he designed his low-impact, sunlit grow. He claims that “many licensed manufacturers no longer do.” Some people have just stopped investing in their medical platforms. For example, patients with multiple sclerosis may have a significant disability, car accidents, and even death if they are unable to obtain their medication. “Those licensed producers have blood on their hands since they ceased meeting the requirements of those users,” he claims.

Canadian customers’ reaction to the failing new markets, according to Paul North, director of communications at Volteface, which hired me to write the paper, is understandable: “You must provide the illegitimate market with a better experience. This is not simple when it comes to cannabis. Dealers can give you a great bargain and bring a product right to your house with no limits on marketing. The majority of people find that using cannabis is calming, trouble-free, and pleasurable. The experience of using the drug must match that of purchasing it, and until it does, the black market will exist.

Money walks while hype speaks. The initial exhilaration in the cannabis stock market has mostly given way to paranoia. In the past year, the value of all cannabis equities has fallen by an average of 50% throughout Canada and the US. The largest casualty was Aurora Cannabis, whose shares dropped from US$12.83 in March 2019 to US$2 today. Tilray, another cannabis goliath, too had an 80% drop in share price, from around US$81 to US$16 in only one year. Canopy Growth’s share price dropped by 54% in 2019, while Aphria lost 60% of its paper value. Small-scale retail investors—often young professionals investing through smartphone apps—have lost a lot of money as a result of the new industry’s lack of financing. None of this implies that Canada’s foreign policy has been unsuccessful. It is much superior to the cannabis sector in the UK, where illegally kidnapped youngsters have been discovered working as enslaved people to cultivate marijuana for gangsters in dilapidated houses.

It is unfair to assess the project’s performance so quickly, believes Steve Rolles of the UK-based drug law reform organization Transform. “The deployment phase is still in progress. They are still in the process of moving from an illegal to a legally permitted economy. The establishment of new market equilibrium, the emergence of new societal norms, and the resolution of early-stage issues will all take some time.

Large, gleaming grow facilities that cost $20 million or $30 million to construct produced a lot of cannabis, but there was nowhere to sell it.
In the UK, the question of how to effectively establish a legal cannabis economy is one that is particularly urgent right now as we slowly but surely develop a market for therapeutic usage. Within five years, I firmly believe that cannabis will be permitted for adult use in the UK. And it all comes back to the greenhouse in Gatineau that I went to in 2017.

On that journey, I was joined by two Tory party insiders: Danny Kruger, the son of TV chef Prue Leith, who authored David Cameron’s “hug a hoodie” speech, and Blair Gibbs, a former police advisor to Boris Johnson when he was mayor. During that journey, both guys underwent a kind of Damascene conversion about how they felt about cannabis laws. We do not need to outlaw everything wrong, Kruger wrote in the Spectator a few days after his return. After all, alcohol was never banned throughout the Victorian era. They restricted it, taxed it, and hedged it with a disapproving society. Cannabis prohibition should be replaced with the traditional Victorian virtue of temperance.

In August 2019, Blair Gibbs accepted a position in the prime minister’s office after relocating to Canada in 2017 to work as a cannabis consultant. In 2019 Kruger was parachuted into the safe Tory seat of Devizes to run for MP in the most recent election, and he also serves as Johnson’s advisor. Both men are now in the very centre of the British government.

It will be interesting to see if their pro-weed stance holds up under the harsh spotlight of Whitehall orthodoxy. In contrast to their rapidly nationalizing Labour party colleagues, the economic libertarians of the Tory party in 2020 are undeniably far more pro-cannabis. After all, the types of individuals who support the Tories—land and property owners, as well as the banks that will finance the new industry—can make many billions of pounds.

What happens if this substance is just legalized?

Other than Canada, no one else has really actually posed this question. In my opinion, we have known for a long time that all drug laws are ineffective, irrational, unjustified, unscientific, and unproductive, and they often have the exact opposite effects of what is intended. However, it turns out that legalizing cannabis in Canada has created just as many problems as it has resolved, ironically and with a delightfully stoned logic.

The Canadian example shows that legalizing cannabis does not immediately result in some great societal cure. No promised land exists. But we must always maintain this fundamental fact: It is no longer legal to produce, consume, or smoke some flowers in Canada. Whatever the stock market indexes may indicate, that is a significant, fundamental move in the right direction.

Despite the whims of the market and the gradual decline of the illicit market, analyst Andrew Brown is nonetheless proud of his nation for taking this risky step into the unknown. “Canadian legalization is far from flawless. We have only recently made a substance that has been forbidden for almost a century lawful; he points out. “This is a process, not a destination,” the statement reads. “Canada is able to provide a reasonable way ahead that other nations may feel confident in pursuing, even refining and improving upon.”

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