A key segment of Canada’s marijuana industry will remain banned for up to a year after the drug becomes legal for recreational use — making it harder for Justin Trudeau to kill off the black market.
Edibles, beverages, and pot for vaping are among products that will still be outlawed when the drug is legalized on Oct. 17. The government has said it wants more time to address the “unique risks” around that slice of the market, including quality control, dosage, portion sizes and packaging.
Until then, a vital part of the market will remain on hold, which could undermine the government’s stated goal of legalization — starving out illicit trade. Products from THC-infused lollipops to cookies and truffles are already available online in Canada and through dispensaries that aren’t sanctioned by the government.
“You either switch to what we provide, or you stick with the illicit market,” said Bruce Linton, chief executive officer of Canopy Growth Corp., Canada’s largest marijuana producer, said in a telephone interview.
Deloitte said in a June report there’s been an “explosion of interest” in edibles such as hard candies, beverages, ice cream and baked goods. Deloitte estimates that six out of 10 consumers will consume pot in this form, eventually becoming a key part of a legal cannabis market that is projected to reach about C$4.3 billion ($3.3 billion) in its first year.
The government has already been urged to make such products available more quickly to allow legal suppliers to compete with the “same diversity of products” available on the black market, according to a summary of consultations.
“We will have a consultation in the fall and we will adopt the regulations for edibles in 2019,” Mathieu Filion, a spokesman for Canada’s health minister, said in an email.
The government has chosen to initially legalize products that “won’t cause eyebrows to raise” and introduce others incrementally to be more effective against taking out the illicit market, Linton said. That will give companies like Canopy “breathing room” as it and others prepare products for the initial launch this fall, he said.
Last year, Corona beer seller Constellation Brands Inc. bought a minority stake in Canopy. Rivals such as The Green Organic Dutchman plan to develop a product-testing and manufacturing center to explore using cannabis in everything from iced teas, juices and sports drinks. Linton said he expects different products will be allowed as of “mid-2019.”
Edibles could account for about 10 percent of Canada’s market once the government allows for a broader range of products to be sold legally, Matt Bottomley, a Toronto-based analyst at Canaccord Genuity Corp, said in a phone interview.
“You’re not going to convert them into a legal customer or legal patient until you have the product classifications that will appeal to them,” he said. “Vape pens, edibles, beverages, things like that still need to be formulated in a version of this legislation.”
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