It’s hard to think about a more significant date in the long history of cannabis prohibition than October 17th, 2018. Today, Canada becomes the first G7 country in the world to federally legalise cannabis consumption.
Cannabis gets greenlight in Canada
Cannabis is now available to all adults over the age of 18/19 (depending on the province) and will be regulated much in the same way as alcohol. Canada is also set to become the largest country in the world to legalise recreational cannabis use, following Uruguay's lead in 2017.
The new law follows a 2015 campaign pledge from Prime Minister, Justin Trudeau, to legalise all uses of the plant in order to restrict access of the drug to youth, reduce the burden of cannabis laws on the justice system, and undercut the black market.
Much like the advent of Dutch medical cannabis in 1992 and the decriminalisation of all drugs by Portugal in 2001, the Canadian commitment to a regulated cannabis industry has been noticed worldwide. But whereas the former reforms were focused on health care and policing, the latter has highlighted the potential economic power of regulated cannabis, with the recreational market expected to be worth at least C$6.5 billion by 2020.
As federal sales begin to tick over, we look at three major impacts that the legislation will bring to the global cannabis community.
Influence: Canada establishes global blueprint
Cannabis legalisation has become a ubiquitous topic in the run-up to October 17th but Canada has, in fact, had a favourable approach to cannabis policy since medical use was legalised way back in 2001. Many international markets have observed the success of the medical program and have followed suit - recreating the legislative and administrative processes of the Canadian market. Malta, Croatia and Greece are just a few examples of countries that have cited the success of the Canadian approach to cannabis.
Monopoly: Canadian Conglomerates
Canadian cannabis companies have grown at a blistering pace with seven companies - CannTrust, Hexo, Cronos, Aphria, Aurora, Canopy and Tilray - boasting market caps exceeding C$1 billion.
The market value is growing at an unprecedented rate and we can expect the stock value growth of these companies to stabilise as a result. However, Canadian cannabis companies have well and truly established themselves as international market leaders.
International cannabis markets are beginning to open up, particularly in Europe, Australia, and Latin America. Many of these governments have relied on imports from the Canadian giants to meet rising patient demand but as the economic value becomes apparent, national authorities are increasingly keen to establish a domestic cannabis supply. To do so, the stringent regulation requires market entrants to have both knowledge and experience in cannabis production - giving a clear upper hand to the Canadian cannabis companies. Expect these firms to expand internationally via acquisitions, mergers and joint ventures.
Data: Key to Change
As we’ve discussed in our international cannabis reports, the lack of data in the industry has proven a stubborn barrier to cannabis legalisation. Data collected in the wake of October 17th will provide quantitative answers to core questions in the international cannabis community.
The federal collection of cannabis sales, both in terms of medical use and recreational use, will provide much-needed clarification for future markets. We will be able to quantify the split between the two markets on the largest dataset recorded. We can tangibly record product sales, preferences, purchasing methods, market growth and consumption more accurately than ever before.
While leaps have been made in the scientific understanding of endocannabinoids, the science behind market evaluation and analysis has remained soft and speculative. The accumulation of federal data from a G7 country will provide the most impactful study on the international cannabis market to date.
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