What We Can Learn in Australia from Canada's Approach to Legal Marijuana

Canada the second country in the world to fully legalize the consumption and sale of marijuana.

Canada's approach to legal marijuana

Can Canada qualify as a guide for Australia’s Marijuana Policies?

An analysis of the Greens’ recent cannabis legalization proposal suggests that legalizing marijuana will produce up to $3.5 billion in public revenue. This amount will be the result of direct taxes, as well as other indirect revenue such as those generated from the influx of “marijuana tourists”.

However, legalization policies are facing staunch opposition from major parties as well as the Australian Medical Association (AMA). In 2013, only about a third of Australians supported the legalization of recreational marijuana. Today, a far much higher proportion, some 84 percent - support medical marijuana.

Although support for outright legalization was low in 2013, support has continued to increase over the years, and is predicted to hit over 50% by 2020. In addition, even in polls where support is low, those who outright oppose legalization and decriminalization of any kind are far fewer.


Australians views on cannabis legalization
Source

But on the other hand, there is an increasing consensus that punitive marijuana policies across the globe are ineffective. Scores of countries, as well as 33 states in the United States, have all turned the page on the era of punitive marijuana policies, legalizing the drug for recreational use. Further, even though only about a third of Australians support legalizing cannabis for recreational use, those who outright oppose it are far fewer..

These facts suggest the country is ripe for real discussions regarding cannabis legalization. If that is the case, then the timing is quite right given current legalization trends. With the similarities shared between Canada and Australia, it may be a great example of what cannabis legalization looks like, and a guide to how Australian policies on the topic should be tailored.



Canada: A good example?

Canada, a cultural match for Australia, is the second country in the world to fully legalize the consumption and sale of marijuana, and the largest at that. The top three publicly traded Canadian marijuana companies have an aggregate market cap of about $2.3 billion. And when it comes to safety concerns, especially for those who’re the most vulnerable to the negative effects of marijuana, there have been no signs of increased vulnerability from the legalization of the drug so far.

However, it’s still too early to come to conclusions about the effects of marijuana legalization policies on vulnerable groups, as well as in other respects. By waiting to gain more light on the long-term consequences of legalization in a country like Canada, Australia can enact much more effective policies.



Canada: An example of the impact of legalization on businesses and the economy

The Canadian government’s push for marijuana legalization were mainly driven by efforts to transform a black market that funds criminal organizations and puts Canadians in danger. The goal was a well-regulated and well-taxed sub-sector of the economy. By legalizing and re-channeling the revenues of a market that was already much more prosperous than many other sectors of the economy, the Canadian government also saw positives for the economy.

According to an estimate in the 2016 Doloitte report, the legalization of recreational marijuana will set up the industry for an annual revenue of $18 billion.

Since the legalization of the drug takes effect on the federal level in Canada, Canadian companies enjoy a more enabling regulatory environment than their counterparts in the United States and other parts of the world where legalization has merely been half-baked.

Legalization also empowers an enterprising spirit in Canadian cannabis companies by giving them access to capital for their innovative marijuana products. In the US, companies still need to look over their shoulders in instances where prohibitive federal laws may come into effect. They’re also faced with one of the highest tax rates among industries, and sourcing for capital from financial institutions can be debilitating.

But their counterparts in Canada continue to enjoy easy access to lending facilities and public markets. With easy access to adequate funding, Canadian marijuana companies are marching into the international markets as the most well-oiled machines, positioned to secure sizable shares in the medical cannabis markets in Europe and other parts of the globe. 


Cannabis business transactions
Source

Also, as the new law authorizes Canadians of legal age to grow up to four marijuana plants for personal use, the niche for home kits, self-help phone apps, and other cultivation accessories is expanding.



Canada faced the same public concerns Australia does

Canadians, like Australians, also questioned whether society will come off better or worse with cannabis legalization. The Liberal platform based their arguments on the idea that the policies in effect at the time (prior to legalization) do not protect the most vulnerable, nor prevent criminal elements from raking in huge profits from the trade. Instead, the Liberals continued, those policies supported criminal justice systems that entrap people in disadvantaged communities for “victimless crimes”.

But while Bill C-45 -- the Canadian legal cannabis bill that eventually became law -- was designed to address those issues, there were still some issues that became apparent by the day. These were legitimate concerns for Canada during the legalization process, and they also apply to legalization developments here in Australia.

One of the most pressing concerns for Canadians concerning the details of the new drug policy was the issuance of production licenses to only a handful of heavyweight players, many of who are global companies. Only about a third of the 54 licensed producers are publicly traded companies. This concentration of production permits in the hands of only a handful of producers -- which saddles only a handful of companies with the responsibility of servicing demands in the entire industry -- rules out the hordes of seasoned small-scale growers that have been the major suppliers from the equation, risking chronic shortages.

While the demand for cannabis is expected to reach at least 1.32 million pounds per year, the production capacity of the 54 licensing industry combined, comes in at only 20,000 pounds of dried marijuana per year.

As such, the illegal black market will continue to thrive from the excess demand which these licensed producers are facing. Hence, a significant portion of the market will still remain unregulated, with its attendant menaces.

The government is considering this negative offshoot and is currently putting measures in place to introduce more seasoned small players into the fold of licensed producers. Even the major players with licenses have openly welcomed the prospects of working with the smaller players to meet demands.



Other risks that must be considered prior to legalization

  • The risks of mental illnesses: The likelihood that marijuana legalization will increase the risks of mental illnesses such as psychosis is still a question.
  • The gateway theory of marijuana:Marijuana is often labeled a gateway drug by opponents of legalization who argue that marijuana can induce cravings for ‘harder drugs’ like methamphetamine or heroin. Some studies show that many addicted to hard drugs started from alcohol, and then moved on to cigarettes, and then marijuana. On the other hand, studies also show that majority of marijuana users do not move on to harder drugs, and there is no evidence to confirm that those who do actually do so because of marijuana.
  • Cannabis use in public spaces: The government of the Hague -- a marijuana haven -- rolled back the decriminalization of cannabis use in public places. The move to ban marijuana use in the city center, around train stations, and major shopping districts was prompted by growing public concerns over anti-social behavior of users, as well as other health and safety reasons. This follows a ruling by a judge a few years ago sanctioning the partial curtailing of drug sales in tourist and non-residential areas of the city.
  • Possible downsides of new regulation on the legal system: Key parts of new marijuana policies stipulate measures for law enforcement to keep the negative effects of legalization in check. However, these can lead to complexities which can bug down the legal system. The stricter penalties levied against illicit peddlers in new laws can still strain the justice system.
  • Collateral effects: Other risks include the increased risk of accidental child exposure, increase in teenage use, and drug driving.



Final Thoughts

While there are valid concerns behind the slow nature of cannabis legalization developments in Australia, there is wisdom in going in much later than others. Such a stance might help the country navigate uncharted territory. Remember, the most important yardstick to assess the end game is to determine if the new policies result in society becoming better than it was. Legalization bills should also be matched with the zeal to overturn any policy that has proved -- or is likely to prove -- to cause more harm than good.