In three weeks, adult consumption of cannabis for recreational purposes will become legal in Canada. The economic impact of legalization and related public policy issues were explored at our 2018 AGM and Convention by a panel of representatives from cannabis companies and industry experts, including Deloitte, Fire & Flower, HEXO Corp., Hiku Brands, Hill+Knowlton Strategies and The Cronos Group.
Deloitte has reported that the total market potential of cannabis in Canada could be as high as $22.6 billion per year when considering production, distribution, paraphernalia, tourism and business taxes. As the industry ramps up for legalization on October 17, our panellists highlighted that municipalities across Canada have seen significant new business investment in their communities. Provinces, such as New Brunswick, have embraced the sector as an economic development tool that is creating hundreds of new jobs. In many communities, local businesses are anticipating higher foot traffic because of cannabis stores, which will help revitalize malls and main streets. Additionally, it was noted that communities can expect better public safety and public health outcomes by having legally regulated businesses serving cannabis consumers instead of the illegal market.
The discussion also highlighted that on the eve of recreational legalization, the cannabis sector is facing a heavy regulatory burden from all levels of government that may undermine legitimate businesses’ ability to compete with the illegal market. The challenges facing the industry include different and difficult retail rules between provinces, overly strict education and marketing rules from Health Canada and costly new regulatory user fees proposed by Health Canada.
Panel members confirmed the important role chambers can play in supporting the development of this sector. Like more mature sectors, cannabis companies will need effective advocacy to help maintain a competitive public policy environment. Industry representatives indicated their interest in working with the chamber network to shape the development of this sector in a way that grows our economy, generates new employment and reduces the effects of the illegal market.
For more information on the economics of the cannabis industry, read our latest edition of 5 Minutes for Business. A video recording of the panel discussion will be available shortly.
To read Deloitte’s report, Recreational Marijuana – Insights and opportunities, click here.