Understanding Cannabis for Business Opportunities in Canada
The Current State of the Cannabis Industry in Canada
Before we talk about the many business opportunities for cannabis in Canada, it’s a good idea to understand the current landscape and what’s been accomplished up until the moment this post was written.
Let’s be clear—cannabis for medicinal purposes (with a prescription from a health practitioner, specifically a doctor) has been legal since 2001 in Canada. The first cannabis act legislation introduced to Canada was the Marijuana Medical Access Regulations (MMAR).
For a patient to get access to their medicinal marijuana, upon receipt of their prescription, which is sent to the distributor, who then arranges for it to be transported through Canada Post. Lift provides a comprehensive list of clinics in Canada with specific details about resources available.
Legal Cannabis Will Outsell Liquor By 2020 (CIBC)
Source: Business Insider
In recent years, the legalization of cannabis for recreational purposes has been a subject of great debate enticing the Canadian legal system, consumers and business opportunists looking to capitalize.
On April 13, 2017, the federal government released the proposed Cannabis Act (Bill C-45) to legalize recreational usage (i.e. production, distribution and sale of cannabis). On June 20th, 2018, Justin Trudeau announced that October 17, 2018 would be the official date enforcing the legalization of cannabis for recreational purposes. Additionally, consumers will be able to grow up to 3 plants at home effective Oct 17, 2018.
Understanding Cannabis—The Bread & Butter
It’s important to note that licensed cannabis will be referred to as either being wet or dry. If the product is a ‘wet product’, it essentially means that the cannabis is in cultivation (currently growing) whereas a ‘dry product’ is ready for distribution.
For cannabis that is wet (in cultivation), it is difficult to put valuation on it because it isn’t tangible yet is still very important to consider—it could effect the potential of how its sold or if a product recall is needed. On the other hand, when cannabis is dry (ready for distribution), putting a value on it is easier because it’s a tangible product.
On the other hand, when cannabis is dry (ready for distribution), putting a value on it is easier because it’s a tangible product.
Valuation on the product is necessary to help you determine what type of commercial insurance will be required to protect the product and your business. Discussions should also be had about intellectual property and how to protect the genetics from the mother plant, regardless whether its dry or not genetics of the mother plant.
Effective Oct 17, 2018, Canadians aged 18 years of age or older will be allowed to grow up to 4 cannabis plants. If you’re a landlord, the new legislation is now subject to your tenants. Recently, a Saskatchewan court ruled that the $175,000 damages were not the responsibility of the landlord’s insurance company after an explosion and fire results from the tenants attempt to produce cannabis resin. Exploring the appropriate commercial business insurance such a case may have protected this landlord. If you’re a landlord, you’ll definitely need to start researching business commercial coverage for drug-related damages to your property.
This story is a clear indication that the new legislation will be making a tremendous impact on all businesses in Canada.
FACTS ABOUT CANNABIS IN CANADA
- Canada became the first country to legalize cannabis use for medical marijuana in 2001.
- Canada will be the first G20 country to legalize cannabis for production, distribution, and consumption.
- Controlled access is an objective of the Cannabis Act.
- You must be 18 years of age or older to possess dried cannabis or equivalent in non-dried form (30 grams)
- You must be 18 years of age or older to share up to 30 grams with other adults.
- You must be 18 years of age or older to purchased dried or fresh cannabis and cannabis oil from a provincially-licensed retailer.
- You must be 18 years of age or older to grow up to 4 cannabis plants, up to a maximum heigh of 100cm, per residence for personal use from licensed seeds or seedlings.
Money Talks—Different Types of Cannabis Opportunities in Canada
There will be many business opportunities available (even leading up to) once the legalization of cannabis for recreational purposes is in effect. The wealth of opportunity for job opportunities will also add momentum in the space.
It’s important to note that ‘dispensaries’ or ‘compassion clubs’ are illegal in Canada. For patients who seek and have legal prescriptions to medicinal marijuana, they don’t actually pick the cannabis up directly from the clinic. Orders delivered by Canada Post, which at the moment is the only courier in Canada that can deliver directly to patients.
Cannabis is more than just for consumption. Introducing hemp, the non-psychoactive by-product from the cannabis plant is know for it’s fibre-producing agents (also called cannabis sativa). It can be used to produce products that are both for consumption (e.g. teas, edibles, medicine) and aren’t for consumption (e.g. clothing, stationary, infused oils, creams etc.).
An example of a legal cannabis retailer that sells clothing, consumption accessories and lifestyle products (e.g. candles, oils, stationary etc.) is Doja. They’re a licensed producer under the ACMPR.
Health & Beauty
Cannabinoid (CBD) infused topicals are still not legal for purchase in Canada. They are however quite popular as an alternative to consumption for medicinal purposes. You’ll find that many medicine alternative and naturopathic clinics and retailers will start to offer these in-store.
Food & Entertainment
Menus infused with cannabis will be popping left, right and centre in the country once the legislation for recreational usage kicks in. Many cooks are preparing for this by testing and trying methods of preparation sorcery. Matt Salvesen, a former cook at WVRST and Sweet Jesus in Toronto has been doing this to prepare.
What about edibles? Marijuana edibles will not be legally sold to the public until July 2019. Many retailers have started researching alternatives to the traditional cookie or brownie edible treat. One of the reasons is that once the legalization hits, the demand for edibles may be saturated for a short period in the beginning and will likely dwindle as the demand for legal edibles drops.
One example of an alternative that many retailers has been very interested in is beverages. Licensed producers have shared their intrigue and interest in getting exclusive deals for cannabis beverage options.
In an interview with Canopy Growth’s CEO Bruce Linton during CNBC’s MAD MONEY, the topic of cannabis driving a new generation of beverage appreciation was discussed. Linton talks about the opportunities that will be surfacing once the legalization of cannabis for recreational use kicks into place.
“No, we’re talking about going into a bar and having a tweed and tonic. And it is something like a category creator just like: What’s a Red Bull? A Red Bull is a Red Bull. What is a tweed and tonic? It is its own stand-alone…”
– Bruce Linton, CEO of Canopy Growth Corporation
Nearly 40% of Canadians would try edibles if they were available in restaurants, according to a Dalhousie University survey.
Get Smart—Staying Protected Throughout Your Cannabis Business Journey
Protecting All of the Moving Parts In Your Business
To produce/manufacture and distribute legal cannabis for medicinal purpioses in Canada, you’ll be required to have the license. You can apply through the Government of Canada by using this form.
Regardless of the stage you are in, equipment is going to be used to transport the cannabis, create a new cannabis product or package the cannabis. You’ll need to look add protection to this equipment—commercial property insurance is the appropriate protection you’ll need to look to.
Another important part of the business are the staff and employees who help your business thrive. In the case where a
Legal expense insurance is another protection that you should consider. In the case where there is a dispute with an employee who is no longer with the company,
Research & Development (R&D) is the isolation and extraction stage where cannabis when cannabis is cultivated and grown. During this stage, you’ll want to consider the appropriate commercial insurance. For example, you would want to consider intellectual property insurance as it is intended to protect your company from any intellectual property infringement. Of course, you’d also want to consider commercial general liability insurance (also referred to as CGL or liability insurance). It’s the backbone of any insurance policy.
Educating the public about recreation cannabis for consumption is going to be important, so businesses who will have a marketing platform will require protection as well. Liability insurance is the type of protection you’ll need to protect you from any lawsuits or risks pertaining to content you publish online.
The legalization of cannabis for recreational use has spurred great interest for investors and venture capitalists from south of the border. For those who have taken serious interest in bringing much of that opportunity back south, they have followed through by purchasing Directors and Officers insurance.
Quebec is the province with the cheapest cannabis, which goes for an average of $5.88 per gram while the most expensive is in the Northwest Territories, which goes for $11.46 a gram. The national average is $6.83 per gram.
A List of Resources With
- Cannabis Stats Hub – Statistics Canada
- The Cannabis Act (Canada)
- Access to Cannabis for Medicine Purposes Regulations (ACMPR)
- Improving the Licensing of Cannabis for Medical Purposes in Canada
- Legalizing and strictly regulating cannabis: the facts
- Cannabis in Canada
- Cannabis provincial guidelines (Lift Co.)
- Patient Guide (Lift Co.)
- List of Licensed Producers in Canada (Lift Co.)
- Authorized licensed producers of Cannabis for Medical Purposes
Content & Media
- Life Co. Magazine
- Van der Pop—one of North America’s most recognized female-focused cannabis brands.
Health + Wellness
- Hiku—an umbrella of Cannabis Brands in Canada
- Doja Life—a Cannabis lifestyle brand out of British Columbia’s Okanagan Valley
- Tokyo Smoke—A network of immersive experiences and design-first retail spaces that sell cannabis products (e.g. coffee, accessories, and design products).
- Maïtri—Quebec’s leading cannabis lifestyle brand
- News, laws, regulations, guidelines and other resources for Canada’s legal cannabis market (Leafly)
- Cannabis (The Globe & Mail)
- Huffington Post
- Financial Post — Cannabis section
- National Post — Cannabis section
Stats and Insights