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Law Canada MJ News

Ontario considers allowing cannabis lounges and cafes

TORONTO -- Premier Doug Ford's government said it is considering allowing cannabis lounges and cafes as it moves toward an open market for pot in the province, and is asking the public to weigh in on the proposal.

The government said Monday it will consult on the possibility of so-called "consumption venues" as well as special occasion permits that would apply to outdoor festivals and concerts.

In a posting on its regulatory registry, which closes March 10, the government said it wants to hear from the public before committing to any direction, and gave no timeline to make changes.

"We are asking Ontarians to share their feedback as we explore certain expanded cannabis-related business opportunities as part of our responsible approach to protecting families and communities," Attorney General Doug Downey said in a statement. "What we hear from the public and expert groups will help to inform possible next steps."

The Progressive Conservative government has said its ultimate goal is an open cannabis market, but a supply shortage forced it to start with a limited lottery system for retail licences shortly after marijuana was legalized in 2018.

In December, the province announced it was doing away with the controversial lottery system that was criticized as a cumbersome process preventing the province from staying competitive.

The Alcohol and Gaming Commission of Ontario said it has received more than 700 applications for retail operator licences since the system was scrapped on Jan. 1.

Downey said allowing greater competition in the retail sector will help combat the black market.

"Ontario continues to take a responsible approach to cannabis retail sales across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market while keeping our kids and communities safe," he said Monday.

Robyn Rabinovich, a business strategy lead at strategy firm Hill+Knowlton who advises cannabis sector clients, said the proposal could legitimately help the Tories advance their goal of combating the black market by giving consumers another option to buy legal cannabis.

"There's a lot of opportunities for businesses like cafes and restaurants to start making steps into the cannabis industry," she said. "This could ensure it's done in a regulated and safe way."

Rabinovich said special occasion permits would give the government a chance to further regulate cannabis use in some public spaces and acknowledge the reality of post-legalization Ontario.

"If you're at a music festival and you look around, it's clear that cannabis is being consumed," she said. "If they were to organize it and regulate it, it may not be in the presence of minors or be causing any harm to others at the event."

Ontario's previous Liberal government was exploring the idea of cannabis consumption lounges in 2018, announcing consultations just months before it was defeated in the most recent provincial election.
 
Cannabis store robberies prompt retailers to remove legislated window coverings
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Jamal Ramadan, President and Owner of Bow Cannabis with his son Jim Ramadan, General Manager of the cannabis store in Calgary on Aug. 6, 2019. DARREN MAKOWICHUK/POSTMEDIA

A series of cannabis store robberies in Alberta has led some retailers to tear down window coverings initially erected to satisfy federal legislation.

Those visual obstructions were meant to adhere to the Cannabis Act to keep cannabis products and accessories out of the view of minors.

But retailer Nathan Mison said those window coverings compromise the safety of staff by making it easier for robbers to commit their crimes.

“We’ve made ourselves a target by making it so someone can come in, lock the door and take all the time they want robbing a store because no one can see in,” said Mison, spokesman for the Edmonton-based Fire and Flower Cannabis chain.

“Nobody should be in jeopardy at their work.”

One of the Fire and Flower stores in Edmonton was the site of an armed robbery about two weeks ago in which cannabis product was taken.

It’s one of several such heists in the province since a Cannamart store in Edmonton was held up and merchandise stolen in December, the first reported robbery of a cannabis retailer in Albertasince legalization took effect in October 2018.

Mison, chairman of the Alberta Cannabis Council, said he’s not aware of any Calgary stores being robbed.

But he said his chain’s six outlets in the city will be reviewed for removing or reducing window obstructions, a practice that’s met no resistance from federal or provincial regulators.

That’s because those retailers are taking pains to ensure merchandise and labelling remains obscured, such as by shifting or covering displays, using transparent window films and other means, said Mison.

“They completely understand as long as we’re adhering to the legislation,” he said, adding the layout of some stores may mean window coverings will remain.

Mison said the push for greater physical visibility for cannabis shops will be picked up nationally, partly because Fire and Flower has stores in four provinces and also due to robberies in other provinces.

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Nathan Mison of Fire and Flower Canabis Co. on the first day of legalized cannabis in Edmonton, Oct. 16, 2018.

Regulations governing the Alberta industry don’t actually call for the complete blackout of store windows, just an assurance minors can’t see cannabis or accessories, Alberta Gaming, Liquor and Cannabis spokeswoman Heather Holmen said in an email.

“AGLC is aware that some retailers who have chosen to utilize window coverings as part of their business design are concerned that the coverings create safety issues,” she said.

“Retailers do have other options to keep products out of sight of youth and still comply with legislation and policy.”

She said the AGLC is reviewing the issue with Health Canada and business owners to “find a solution that meets policy requirements while ensuring staff and consumer safety.”

The federal regulator echoed the AGLC, saying retailers have options in how they meet the legislation.

“Health Canada understands there are solutions retail stores may implement in order to restrict visibility of cannabis and related packaging and promotions in the store, without restricting full visibility into the store,” said spokeswoman Marie-Pier Burelle.

Jim Ramadan said when he opened his Bow Cannabis store last year, AGLC officials “were fanatical about having every inch of window covered.”

He said he’d like to remove some of the coverings on his store, adding the entire premise of obscuring them “is farcical.”

“You can’t see the cannabis anyway,” said Ramadan.

And he said blacking out storefronts furthers the stigma of the industry and the product it sells when one of the main reasons for legalization is to undermine the black market.

“You make it look mysterious and dark, it’s a bad thing,” said Ramadan.

Mison agreed.

“It entrenches the stereotype that this is something we have to cover up when we have a legal market selling a legal product,” he said.

Changes to that aspect, he said, can be viewed as part of a longer-term relaxation of regulations many in the business are hoping for or expect as the industry becomes more entrenched.

Many of those policies are considered a competitive burden by retailers who face a flourishing black market.

“We’re looking at things like lower excise taxes, packaging, marketing capabilities,” said Mison.
 
Winnipeg police intentionally damaged medical marijuana grow-op equipment, judge rules
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WPS must pay $3,514.30 to cover cost of replacing Patrick Walker's equipment

The Winnipeg Police Service must pay a man more than $3,500 for purposely damaging equipment used to grow weed in his home, ruled a judge from the Manitoba Court of Queen's Bench.

Patrick Walker, the claimant, was charged with producing cannabis marijuana and possession of marijuana for the purpose of trafficking, after the WPS executed a search warrant of his house in August 2016.

After the sentencing hearing, all of Walker's growing equipment seized by police was ordered to be returned to him. But most of it was damaged to the point where it was useless.

"It is obvious from the photographs [taken by Walker] that much of the damage was intentional," said Justice Douglas Abra in his decision, adding, however, that he did not believe the actions to be malicious.

Equipment is confiscated whenever someone pleads or is found guilty of producing marijuana. A level of care is needed when seizing the equipment, as it now becomes evidence, the judge explains.

"By intentionally damaging [Walker's] equipment, the members of WPS were effectively in breach of trust," Abra said.

"In treating the equipment … in the manner that they did, the members of WPS believed that the equipment was never going to be returned to the claimant."

The WPS now must pay $3,514.30 in damages to Walker, to cover the cost of replacing his equipment.

Walker made no 'attempt to hide' grow op
Walker was growing weed out of his residence on Bowman Avenue near the Chalmers area. He had a medical marijuana license that authorized him to do so, but it expired March 7, 2014 and had not been renewed, according to the court document.

Walker didn't renew his license because he believed he was eligible to grow, based on an injunction granted by the Federal Court on March 21, 2014, which allowed individuals authorized to grow weed under the Marihuana Medical Access Regulations to continue doing so.

This was not the case, and in March 2014 police applied for a search warrant of Walker's home.

Reasons for the warrant cited by police include "numerous" checks with Health Canada about the status of Walker's medical marijuana license, records from Manitoba Hydro saying the house consumed a high amount of power, reports from WPS officers dating back to 2007 saying weed was being grown at the home, and that officers "had no difficulty in smelling marijuana" when passing by there.


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Walker believed he did not have to renew his medical marijuana license, after the Federal Court granted an injunction regarding the growth of personal medical marijuana. (Steven Senne/Associated Press)


"Clearly the claimant was not making any attempt to hide the marijuana grow operation," Abra said.

Police executed the search warrant on Aug. 3, 2016 and at least five police officers were involved, according to the court document.

When dismantling the operation, police cut or sliced any electrical wires plugged into the walls, citing safety.

"Any equipment with electrical cords would be useless because the cords had been sliced into numerous pieces," Abra said, noting that the cords could have been unplugged instead.

"If the members of WPS were still concerned about safety, one cut of the plug at the receptacle and/or a cut at or near the piece of equipment itself would have been sufficient. The balance of the various cords should have remained intact."

Among the seized equipment were also large slabs of sheet metal that used to be flat; police "grossly bent" the sheets to fit them into a transport vehicle, the court document said.

"The large sheets of metal did not have to be bent and cut the manner that they were. It rendered them useless," the judge said.

"Constable [S. R.] Worden testified that the sheets of metal were too large for the transport truck. If indeed that was the situation, they should have arranged for a larger truck."
 
Alberta was the shining green light for weed sales, yet legalization was a financial bust
While other provinces slugged along in legalization, Alberta seemed to be rolling in all kinds of green just fine

Alberta has been celebrated as the country’s fastest-growing cannabis market as the nascent industry continues to climb out of the shadows and into the mainstream.

The Sunshine Province led the nation in sales in the first year of legalization and it continues to outpace every province in retail operations. Currently, there are more than 400 cannabis retail stores in Alberta, compared to less than 40 in Ontario.

Alberta has also attracted significant investment from some of the country’s largest licensed producers, including Aurora, which moved to Medicine Hat in 2018 with plans to build the world’s largest cannabis greenhouse.

Aurora, which laid off 500 workers in February, has since slowed construction at that site. The operation was once touted as having the potential to bring 600 jobs to Gas Town, but Medicine Hat Mayor Ted Clugston told the National Post earlier this month that 100 jobs is a more likely scenario.

And now, with the budget tabled by the province’s United Conservative Party government on Thursday, the bright light in Canada’s cannabis sector has dimmed.

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Cheaper cannabis and fewer pot shops may help New Brunswick profit from cannabis. Lars Hagberg / AFP / Getty Images


Pot, it turns out, has been a money-losing proposition for the province.

Alberta is expecting to lose $26 million in the sector in the current fiscal year — and stay in the red for the next three years — as foundational investments in retail systems, administration and inventory continue to outpace revenue. In 2020-21, a loss of $36 million is expected.

Some relief is coming via a 20 per cent tax that will be applied to vaping products, including cannabis liquids. That tax is projected to raise $4 million in 2020-21, and rise to $8 million the following year. By 2022-23, the total cannabis tax revenue for the province is projected to be $84 million.

Those numbers are buoyed by the fact that the burgeoning industry is still finding its footing, and cannabis has fared better in Alberta than elsewhere in the country. Ontario lost $42 million in the first year of legalization. The province pinned those losses on supply issues and product shortages, though there is dispute about the accuracy of those reports.

To maintain their position as market leader, Alberta will need to continue to innovate and outpace the rest of the field. Edmonton could soon be the first city in the country to allow cannabis cafes, which would lead to more jobs, more businesses, more potential — a change the province would surely welcome.

This week Teck Resources also announced it was pulling the plug on its Frontier oil sand mining project, which was expected to bring $20 billion in investment to the province. Cannabis was once seen as an explosive opportunity to diversify the Albertan economy. The province will need to continue to be a leader on the file if those aspirations are to be realized.
 
Life after the lottery: Cannabis retailers share challenges faced since opening
Stress of trying to figure out a new industry is demanding for business owners

Lisa Bigioni was awoken last September in the middle of the night by a call from an alarm company that's been seared in her memory ever since.

The 1:30 a.m. alert was linked to her Niagara Falls, Ont. cannabis store, where two men had been caught on camera getting out of their car, smashing the shop window and then driving away. It was enough to send Bigioni, who had been fast asleep, scrambling to meet police at the store.

Luckily, no staff had been on site, but it was "terrifying" for Bigioni, who started wondering if this would become a routine part of the business.

"It was like uh-oh, is this what is going to happen now?" she recalled. "Is this what this kind of store brings?"

The window-smashing happened just four months after her store opened in June, but is part of an array of challenges cannabis retailers across the country have faced since first welcoming customers.

Between inventory levels, security and staffing, the stress of trying to figure out a new industry has been demanding for business owners.

Bigioni expected there would be challenges. Legalization, after all, thrust cannabis store ownership into the hands of hundreds of people across the country, many with limited business or pot store experience under their belts.

She had been working as a director at the University of Toronto when she won a licence to open one of Ontario's first 25 cannabis stores through a lottery held in Jan. 2019.

That prompted a move to Niagara Falls and a resignation from her job.

"I couldn't sustain doing both because it was that super stressful time," she said.

Getting the store ready, which she runs in partnership with B.C. cannabis firm Choom Cannabis Co., within a short window was the most tense time for Bigioni, but the months since haven't been without their struggles.

On top of the break-in and a few quibbles with their point-of-sale system, Bigioni said the store has been grappling with cannabis supply issues.

"Supply by and large is available, but not necessarily in the specific strains that people are looking for or have bought or want to buy consistently," she said. "There are strains that came out, were really popular, got really great reviews, and then they've been difficult to get since."

She finds that anything with a low price and a high quantity of tetrahydrocannabinol — the main psychoactive component in cannabis — is always in demand and sells out quickly.

But fluctuating THC content in different batches creates problems.

"One week something could be a high THC product at a low price and the next batch could come in at a 5 per cent lower THC, which doesn't necessarily meet what the customer's looking for," she said.

Supply of edibles a challenge
Over at the Nova Cannabis store in Toronto, supply is also a challenge — particularly when it comes to edibles.

"We thought we were going to have more selection than what we had," said Heather Conlon, the owner of a lock-and-safe business, who partnered with Edmonton-based licensed producer Alcanna Inc. for her store.

Consumers have been scooping up edibles so quickly that it has been hard to keep any on shelves and licensed producers are still in the process of increasing their output.

The OCS said they are shipping products out as quickly as possible and anticipate the supply of edibles will be become "much more steady" in the coming months as producers capacity expands.

Conlon's first edibles shipment from the Ontario Cannabis Store, the province's pot distributor, was mostly vapes, chocolates and cookies. The latter two were sold out within hours.

Nova's deliveries have recently begun to include teas, gummies, soft chews and mints, but even with more selection, products still sell out within a few days.

It's always a week until more arrives and when it does, there is not always enough to satiate consumers since licensed producers are still ramping up edibles production.

Shoppers aren't just clamouring for the treats available either. They're also constantly asking about other items cannabis brands have announced but have yet to ship.

"We're just mainly waiting now for beverages and topicals. Those are the main two things that people are still looking for," said Conlon.

She still counts herself lucky because her store hasn't faced vandalism like Bigioni's.

Some stores facing theft
Aleafia Health Inc. had a shipment of "packaged, finished" cannabis products stolen in late December from a truck the cannabis company had hired to deliver the items to provincial wholesale facilities.

YSS Corp., the Calgary-based business behind 17 cannabis stores in Alberta and Saskatchewan, was also targeted that month, said chief executive Theo Zunich.

"Two suspects entered the store and robbed the store at gunpoint," he said. "It was pretty quick and they did make out with cannabis and cash."

An employee at the Edmonton-Northwest Landing store was assaulted in the process.

The incident made the company think about safety more than it already did.

"We do daily huddles with all of the staff and reinforce certain aspects of various policies, so we definitely prioritize the staff-related ones in times when those rashes happen," he said.

The incidents have challenged YSS and made them think about how to abide by regulations.

In Alberta, cannabis and related accessories must be kept out of sight of minors.

Many have resorted to covering their windows completely to abide with regulations, but Zunich said stores can use other visual barriers or position products in other areas of their shop.

"It's incredibly difficult to do that though. Our frustration is you've made the packaging child-safe so is the window covering really necessary? I would argue let's remove the window coverings to make the store safer," he said.

"We are not there yet, but we are hopeful."
 
Step one in scrapping medical cannabis: confuse retailers for service providers

No matter how you slice it, recreational legalization has had a major—and largely negative—effect on Canadians who use cannabis for medical purposes, and it could be getting worse.

One of the first indications that the Cannabis Act was ignoring medical cannabis users was the government’s decision to include a federal excise tax on both recreational and medical cannabis products. And even before October 17, 2018, proponents of medical cannabis in Canada expressed concerns that the government’s promise to “revisit” the status of the program within five years was simply a gentle way of suggesting that the program could be scrapped entirely.

A number of recent reports have shown patients who acquire cannabis through the Access to Cannabis for Medical Purposes Regulations (ACMPR) are having trouble obtaining their medicine. There are growing concerns that legalization has caused licensed producers (LPs) operating in both streams to divert product from the medical to the recreational market.

Some patients have reported that product selection has changed, with items becoming more expensive and even disappearing from LP websites entirely. It’s understandable why this is problematic: imagine going to the pharmacy for your monthly refill and finding that the medications you’ve relied on for years are no longer in your budget—or, not available at all.

The continued closure of compassion clubs and unlicensed medicinal dispensaries by enforcement teams like British Columbia’s Community Safety Unit (CSU) has limited access further, particularly for those who aren’t able to obtain cannabis through the federal program.

On top of it all, the vast majority of health insurance plans do not cover the cost of medical cannabis, making price one of the biggest barriers to patients who want to use it.

Those who work within the cannabis space might be more likely to recognize how problematic the conflation of medical and recreational use of cannabis is, because for the most part, we have first or second-hand experience with the plant’s therapeutic uses. We might use it ourselves, or have a family member or friend who relies on it. We might also have a better understanding of the legalities surrounding medical cannabis, and that being able to access it in all its forms is protected under the Canadian constitution.

But there are others who seem content to lump an epileptic who requires a daily, potent dose of cannabidiol (CBD) in with the weekend toker looking to smoke a joint, melt into the couch, and watch a movie. While there is obviously no issue with the latter, the former requires a different type of care and attention that can’t be provided in a strictly recreational retail setting. (This is particularly true of government stores, where any mention of the medical properties of cannabis is often strictly prohibited.)

The Canadian Association of Police Chiefs (CAPC) is another association that supports ending the separation between medical and recreational streams. In a discussion paper on legalization, the CAPC recommends “the merger of the medical marijuana regime with the legalized regime to provide consistency and assist in reducing opportunities for diversion”. What the CAPC doesn’t seem to realize is that, while such a move might provide more consistency for law enforcement, it would effectively remove any shred of consistency for patients who require a regular supply of the same products to treat their conditions. If patients are already speaking out about inconsistent access to the products that work best for them, how will they manage if they’re forced to compete with recreational consumers for the same products?

The Canadian Medical Association (CMA), too, has recommended the government scrap the two-tiered system, citing problems in other jurisdictions where similar approaches are in place in its 2018 submission to Health Canada: “Those… in Washington and Colorado have remarked on the challenges of having dual standards and regulations (e.g., purchase and possession quantities, taxation levels) and the contribution to the grey market.”

At a medical conference in Toronto in April 2018, CMA vice president Dr. Jeff Blackmer reiterated CMA’s position, saying, “Our view is really that now that the government is obviously intending to legalize this, once this is a substance that’s available to all Canadians, there’s really no need for physicians to continue to serve in that gatekeeper role.”

Without doctors and other service providers to help answer vital questions about medicinal use, ones that certainly cannot be answered at a recreational storefront, the CMA’s suggestion seems incredibly short-sighted. Both associations fail to realize that where compassion clubs, medicinal dispensaries, and LPs with medical brands provide a service to patients, retail stores and online purchasing do not. This is where patients, and arguably, consumers looking to learn more about the medicinal properties of cannabis, are continually failed.

Let’s be frank: the idea that we should simply send patients to recreational stores, where emphasis is more on decor than accurate information and product knowledge, is ludicrous. The other option for patients under the ACMPR is to cultivate their own cannabis, or have it done for them by a designated grower, but these patients, too, are facing opposition. Municipalities that have struggled to deal with grow operations have expressed fear that, in addition to patients who are authorized to grow large numbers of plants, the personal four-plant cultivation limit will lead to an increase in household hazards and potential theft. On their behalf, the Federation of Canadian Municipalities (FCM) has asked Health Canada to make stronger rules around residential cannabis cultivation.

“The use of residential premises for the cultivation of medical cannabis plants has caused major problems for Canadian municipalities over the past several decades,” writes the FCM in its municipal guide to legalization. “It has meant a significantly compromised housing stock, heavy demands on policing resources, local nuisance complaints, and erosion of the culture of compliance on which the effectiveness of local bylaws largely depends… many of these licences actually authorized cannabis production at a scale (hundreds of plants) that is simply inappropriate for a typical residential dwelling.” It is unclear what level of attention a federation tasked with representing municipalities has put into understanding patient needs, or the complex process of grower designation.

The FCM is eager to implement a system that would require any individual who wants to grow cannabis for personal use to obtain a compliance certificate from their municipality. For patients, this would be in addition to the arduous paperwork that comes with applying for a licence to grow under the ACMPR.

As we get closer to the day the government plans to reassess the status of the ACMPR, it’s vital that we continue to speak to the therapeutic qualities of this plant. We are witnessing the slow chipping away at a program that is used by nearly 400,000 Canadians, with thousands more obtaining cannabis for medical purposes through designated growers or other, less official streams. Politicians, industry groups, and associations might think that branding cannabis and making it available to consumers with credit cards and home addresses is enough for those who require it to treat their conditions, but it isn’t.

My hope, surely held by many others reading this, is that for the sake of patients who rely on cannabis, politicians aren’t pushed in the direction of eliminating the program. But I fear we’re already watching it happen. Doctors may be sending their patients to recreational stores, and municipalities may want to increase barriers to at-home cultivation, but a constitutionally protected right is a constitutionally protected right. Let’s just hope this doesn’t result in another long, drawn-out court battle.
 
Canada Post won’t deliver cannabis to your door during the COVID-19 crisis

Businesses and organizations across Canada and around the world are cutting back on services to help minimize the spread of the novel coronavirus (COVID-19). Perhaps you’re doing your part, too, by isolating yourself at home. Maybe you’ve even ordered a little something from your favourite online cannabis retailer to help pass the time, calm your nerves, or to stock up on your prescription.

If so, don’t slip into your pyjamas just yet.

Recently, Canada Post announced that it would no longer be delivering packages requiring person-to-person interaction at peoples’ homes, forcing some Canadians, including those waiting for the arrival of certain cannabis products—and potentially those with compromised immune systems—to make a trip to the post office to retrieve their shipment.

“To help minimize points of close contact in our communities, we will no longer be requesting signatures for any deliveries to the door,” explained Canada Post in a public statement on March 15. “This will eliminate the need for scanners and stylus pens to be passed back and forth during the delivery process of these items.”

Certain items that don’t require signatures or identification can be left at the doorstep in what Canada Post calls a “safe drop.”

But any items that need a signature or age verification, like all cannabis products, will automatically go to a nearby post office to be picked up in person and you’ll get a notice card at your door, even if you’re at home when they arrive.
 
Report: Ontario Dispensaries to Remain Open During Coronavirus-Related Business Shutdown

It seems marijuana stores in Canada's capital province of Ontario will remain open for now in the wake of the SARS-CoV-2 coronavirus pandemic. A report in BNN Bloomberg, citing a pair of sources "directly familiar with the matter," says that dispensaries will not fall under the category of "non-essential businesses" that are being shut down beginning just after midnight on Tuesday, March 24.

On Monday, Ontario Premier Doug Ford mandated the temporary shutdown, a measure that will last for 14 days. The ban could be extended, depending on how the situation with the coronavirus develops in the province.

According to the statement, a complete list of "essential" businesses will be published and disseminated on Tuesday. No mention was made of cannabis companies.

The Canadian cannabis industry has witnessed a notable increase in sales of the drug; it seems medical marijuana users are making sure they have enough product, while recreational users are buying more in order to cope with the isolation and other effects of the measures taken to combat the outbreak.
Although Ontario is the most populous Canadian province and home to the national capital, Ottawa, it has a relatively low number of dispensaries, at 50.

Despite that, a clutch of publicly traded cannabis companies are either headquartered in the province, operate stores there, or both. A high-profile example of the latter is Canopy Growth (NYSE:CGC). The company's headquarters are close to Ottawa, while Canopy Growth brands Tweed and Tokyo Smokeoperate dispensaries in various locations.
Canopy Growth, along with other marijuana stocks, had a good day despite the market's latest downturn on Monday. The shares rose by nearly 6%.
 
As COVID-19 spreads, Ontario moves to close all cannabis retail stores

Retailers caught off guard, closures expected to last at least two weeks

The Ontario Cannabis Store will, once again, have a monopoly in the province.

Brick-and-mortar cannabis shops will be removed from Ontario’s list of essential services, Doug Ford announced on Friday afternoon. The emergency order will go into effect Saturday night and will last for at least the next two weeks.

Ontario, which had just begun to ramp up its offerings of cannabis retail locations, including several stores opening across the province just this week, will now rely on the OCS for all legal weed.

Cannabis has become a highly sought-after item in the wake of the COVID-19 pandemic, with retailers across the country reporting a surge in purchases. According to Daffyd Roderick, the director of communications of the OCS, the provincial wholesaler is ready for what will likely be a large increase in traffic in the weeks ahead.

“OCS has taken a number of steps since the beginning of the pandemic to increase capacity to manage a larger volume of online orders,” Roderick told The GrowthOp in an emailed statement. Those steps include adding extra shifts at the distribution centre which will be operating 24/7 and expanding their direct-to-door shipping options.

“We’re committed to providing the best possible service despite the unique challenges of this situation,” Roderick said.

George Smitherman, the president and CEO of the Cannabis Council of Canada, told The GrowthOp he thought it might have been an oversight when he first read the revised list and saw that cannabis retail was omitted. He was expecting the province to move toward a click-and-collect model, not close retail entirely.

“When we read the list and there was no reference to cannabis retail, but the status quo for beer, wine and liquor — I was left puzzled,” he said. “I’m still operating with a tiny bit of hope that the government could see that the essential nature of cannabis is well established and that there is an appropriate opportunity for cannabis retail to operate in a fashion which is abiding our best instincts around keeping our people safe.”

Jaclynn Pehota, special advisor to the Association of Canadian Cannabis Retailers was also surprised by the announcement.

“I was a little bit taken aback,” she said. “I was assuming that there would be mitigating measures put in place prior to the actual closure of the stores.” She points to click-and-collect as one possible option, as long as there is an option to pay ahead of time, or using the private sector to offer delivery and increased shipping.

Some retailers, like Friendly Stranger, which has plans to open six stores in the province this year, had already moved to a click-and-collect model. They made the change two weeks ago, while also increasing their cleaning and sterilizing measures.

“While we respect that the government is trying to limit the amount of interactions between people, we are disheartened with their decision to close retail cannabis shops in Ontario,” James Jesty, president of the Friendly Stranger Holdings Corp., told The GrowthOp.

“We have not only been following the rules, but going above and beyond to ensure consumer and staff safety. Cannabis is essential to many Canadians and they should be able to have the option to support their local cannabis retailers, should they choose. With this decision, we feel that this will redirect people back to the legacy market and unregulated cannabis.”

Smitherman agrees. He encourages retailers to remind the province that one of the measures that underscores legalization is the effort to move customers out of the legacy market and into the legal framework.

“We’re trying to build market share here from sources of cannabis that are not going to be abiding by any public policy health regulations,” he says, before highlighting that products on the illicit market, while readily available, are not regulated.

“The cannabis consumer has ready alternatives that are not offering the same kind of quality-tested product that our legalized framework is so we have a big public policy imperative which needs to be kept in consideration.”
 
As COVID-19 spreads, Ontario moves to close all cannabis retail stores

Retailers caught off guard, closures expected to last at least two weeks

The Ontario Cannabis Store will, once again, have a monopoly in the province.

Brick-and-mortar cannabis shops will be removed from Ontario’s list of essential services, Doug Ford announced on Friday afternoon. The emergency order will go into effect Saturday night and will last for at least the next two weeks.

Ontario, which had just begun to ramp up its offerings of cannabis retail locations, including several stores opening across the province just this week, will now rely on the OCS for all legal weed.

Cannabis has become a highly sought-after item in the wake of the COVID-19 pandemic, with retailers across the country reporting a surge in purchases. According to Daffyd Roderick, the director of communications of the OCS, the provincial wholesaler is ready for what will likely be a large increase in traffic in the weeks ahead.

“OCS has taken a number of steps since the beginning of the pandemic to increase capacity to manage a larger volume of online orders,” Roderick told The GrowthOp in an emailed statement. Those steps include adding extra shifts at the distribution centre which will be operating 24/7 and expanding their direct-to-door shipping options.

“We’re committed to providing the best possible service despite the unique challenges of this situation,” Roderick said.

George Smitherman, the president and CEO of the Cannabis Council of Canada, told The GrowthOp he thought it might have been an oversight when he first read the revised list and saw that cannabis retail was omitted. He was expecting the province to move toward a click-and-collect model, not close retail entirely.

“When we read the list and there was no reference to cannabis retail, but the status quo for beer, wine and liquor — I was left puzzled,” he said. “I’m still operating with a tiny bit of hope that the government could see that the essential nature of cannabis is well established and that there is an appropriate opportunity for cannabis retail to operate in a fashion which is abiding our best instincts around keeping our people safe.”

Jaclynn Pehota, special advisor to the Association of Canadian Cannabis Retailers was also surprised by the announcement.

“I was a little bit taken aback,” she said. “I was assuming that there would be mitigating measures put in place prior to the actual closure of the stores.” She points to click-and-collect as one possible option, as long as there is an option to pay ahead of time, or using the private sector to offer delivery and increased shipping.

Some retailers, like Friendly Stranger, which has plans to open six stores in the province this year, had already moved to a click-and-collect model. They made the change two weeks ago, while also increasing their cleaning and sterilizing measures.

“While we respect that the government is trying to limit the amount of interactions between people, we are disheartened with their decision to close retail cannabis shops in Ontario,” James Jesty, president of the Friendly Stranger Holdings Corp., told The GrowthOp.

“We have not only been following the rules, but going above and beyond to ensure consumer and staff safety. Cannabis is essential to many Canadians and they should be able to have the option to support their local cannabis retailers, should they choose. With this decision, we feel that this will redirect people back to the legacy market and unregulated cannabis.”

Smitherman agrees. He encourages retailers to remind the province that one of the measures that underscores legalization is the effort to move customers out of the legacy market and into the legal framework.

“We’re trying to build market share here from sources of cannabis that are not going to be abiding by any public policy health regulations,” he says, before highlighting that products on the illicit market, while readily available, are not regulated.

“The cannabis consumer has ready alternatives that are not offering the same kind of quality-tested product that our legalized framework is so we have a big public policy imperative which needs to be kept in consideration.”
If they did that here in MD with the MMJ shops, there would be riots. But, we aren't polite like Canadians! haha joking...LOL
 
Police Shut Down Illegal ‘Dr. Kush’ Cannabis Delivery Service
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Winnipeg police display some items seized from the Dr. Kush Company in Sargent Park at a media briefing on Friday, April 17, 2020. (WPS / FACEBOOK)

Winnipeg police have shut down an illegal cannabis dispensary and delivery service in the city.

Known as the Dr. Kush Company, the online service operated out of a warehouse in the Sargent Park neighbourhood and utilized delivery drivers for its product.

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A screenshot of the Dr. Kush website. Winnipeg police raided the illegal cannabis operation on Wednesday. (THEDRKUSHCOMPANY.COM)


Police say they confirmed with Health Canada and the Manitoba Liquor and Gaming and Cannabis Authority that the operation was not licenced.

According to police, the drivers used insulated bags labelled from commonly known restaurant delivery services to conceal their deliveries.

Police raided the business on Wednesday, seizing:

  • $192,350 in prepacked cannabis
  • $15,760 in vaping oil
  • $14,400 in prepackaged shatter
  • $8,000 in computers and tablets used to facilitate online orders and deliveries
  • 10,000 units of custom packaging material

A 43-year-old Winnipeg man faces charges under the Cannabis Act, as well as possession of proceeds from crime.

Two suspects remain outstanding as part of the investigation.

A message on the company’s website, which was still active as of Friday afternoon, said, “The Dr. Kush Company is a registered business operating as a courier service for cannabis products in the province of British Columbia, Saskatchewan and Manitoba. We were established in 2014 by a co-op of ACMPR license holders in anticipation for recreational cannabis legalization. We source all our products from qualified legal growers throughout the provinces.”

The company also claimed to have plans for a future retail location.

Police continue to investigate.
 
Canada tried to decriminalize cannabis 17 years ago. This is how it all came together before falling apart

Here’s how political in-fighting, the sponsorship scandal and pressure from the U.S. conspired to bring down Canada's first attempt at decriminalizing marijuana

Martin Cauchon stood in the House of Commons and took a breath. It was the spring of 2003 and as the Minister of Justice and Attorney General of Canada, Cauchon was about to introduce Bill C-38, a piece of legislation that would decriminalize the possession of marijuana.

Prime Minister Jean Chrétien was relying on Cauchon to lead the file. The minister was outspoken in his belief that the punishment for cannabis possession was disproportionate to the offence and that the law was being applied selectively. He would argue that 100,000 Canadians were daily cannabis consumers, and the idea that their lives could be upended for its use, rerouting their education and employment and their ability to cross the border, was lunacy. Under C-38, possession of 15 grams or less would result in a ticket rather than a criminal record.

It was a historic moment, with roots that traced back to the 1972 Le Dain Commission, which recommended cannabis be treated similarly to alcohol, allowing for possession and personal cultivation. However, it didn’t arrive quite as expected.

“You could hear a fly going around, it was so silent,” Cauchon says.

The battle begins

The silence didn’t last long. When question period began, Stephen Harper, then the Leader of the Opposition, Canadian Alliance, was first at-bat. He grilled Cauchon about what message the bill would send to Canada’s youth. Batting second, Jason Kenney, Alliance critic for Canada–United States relations, took a different approach. He wanted to know why, in a phone call with U.S. President George W. Bush the day before, Cauchon had discussed the Montreal Expos rather than the U.S. ban on Canadian beef.

Cauchon wasn’t done answering for C-38, though. In trying to please everyone, it seemed — at first, anyway — that he had pleased no one at all. Not only were prohibitionist arguments raised, but Cauchon faced criticism from those who said the bill was merely a halfway measure with an arbitrary 15-gram limit and a ban on home growing. As limited as it may have been, C-38 would still be a historical piece of legislation, provided the Liberals could garner enough support to get it across the finish line.

“When people were looking at me in those days they thought I was really crazy — at least when I looked at people from the opposition,” Cauchon says. “And even within my own caucus, it was very difficult.”

The hand-wringing had begun shortly after the 2002 Throne Speech when the Chrétien government included among its objectives “the possibility of the decriminalization of marijuana possession.”

That line, as unassured as it was, became instant news fodder, with many discussions veering into worries about how our Southern neighbours might react. The 54,000-member Canadian Professional Police Association wrote a strongly worded letter, fearing the government was on the wrong path. Mothers Against Drunk Driving lobbied against the effort, citing inadequate testing measures to determine if drivers were stoned behind the wheel.

The issue was divisive enough to split an arm of the Liberal majority. Brenda Chamberlain, a Liberal MP from Guelph, was one of the party’s most vocal critics. She urged the Prime Minister to reconsider and often spoke to the media about the message this legislation would send to kids. It was a different time, when admitting to inhaling was still cause for controversy.

On that front, Chrétien denied ever partaking. He joked that once decriminalized, he would have a puff in retirement. “I will have my money for my fine and a joint on the other hand,” he said. Cauchon was more direct. “Of course I tried it before,” he told inquiring reporters. “Obviously.”

Burlington MP Paddy Torsney, who chaired a House committee on the bill, also faced that question. When a reporter asked her in the lead up to Father’s Day, she came clean but then forgot to tell her parents. When she arrived at their home that Sunday, her mother opened the door with a question. “Really?”

Weed will bring us together

As unintended as it might have been, questions from the media on marijuana use, which every member of the committee received, seemed to pull the disparate politicians closer together. Weed was leading to the discovery of common ground. “We really had an amazing collaboration across party lines,” says Torsney, now a permanent observer to the United Nations.

The committee travelled the country together, even visiting Amsterdam and Switzerland. The vice-chair was Abbotsford MP and Reform Party member Randy White, who missed a few meetings after falling off a roof. The sessions continued in his absence, with committee members doing their best impression of what he might have had to say. “We had such a good connection between all of us,” Torsney says. “If one of the members wasn’t there, someone else would step in.”

Torsney recalls White speaking up for an absent Libby Davies, the NDP MP for Vancouver East, and vice versa. “Randy would be like, ‘Okay, so if Libby were here’ — and they were diametrically opposed in their views. ‘She’d ask something like this, let’s get it on the record.’ And then, you know, if Randy wasn’t there, it would be the same deal.”

“He and I were on the opposite ends of the spectrum,” Davies says. “I was pro-legalization and he was, you know, anti-harm reduction even in its most mild form. But it was actually a very good committee.”

The differences in opinion came to a head when it was time to author the report. “We had a bizarre, conflicting, ridiculous list of recommendations from everybody,” Torsney recalls. “It was really hard to reconcile all those things.”

Line by line, they worked through the report, trying to find balance in the language. “We just kept going around the table and we could start to see our positions evolve. We all agreed that we wanted to do this.”

In the end, they would come together to support decriminalization, with an amendment to allow personal cultivation. They went so far as to encourage the government to move quickly on the file.

For the sake of momentum

The 600-page committee report from the Senate went even further. They recommended legalization, with licenced production and sales. The Senate argued a regulated system would allow for more effective targeting of the illicit market. It would also create a pipeline of regulated products for medical consumers.

Senator Pierre Claude Nolin, a prominent Conservative, chaired that committee, and to the surprise of many, fully supported legalization. “Canadians should be allowed to choose whether to consume or not,” the senator, who died in 2015, said in a news conference after the report was published. “Scientific evidence overwhelmingly indicates that cannabis is substantially less harmful than alcohol and should be treated not as a criminal issue but as a social and public health issue.”

“He was actually an amazing guy and very forward-thinking,” Davies says of Nolin. “He was a true blue conservative, but he was also more of a civil libertarian and his stance on drug policy was very good. He recognized that prohibition was not only costly economically, but it was actually harmful.”

The push for legalization garnered further political support after Canada’s Auditor General, Sheila Fraser, published a report revealing the exorbitant cost of enforcing cannabis prohibition.

“She did this amazing report on the efficacy and value of criminalization of people on using drugs,” Davis says. “And she pointed out that Canada’s approach was mostly reliant on enforcement or a justice approach. This was an audit. It’s not, you know, some policy wonk, it’s actually a financial audit, and she threw into serious question the efficacy and value and effectiveness of the justice approach to drug enforcement.”

With support from House and Senate committees alongside, what Davies calls, “a very groundbreaking report” from the Auditor General, momentum was on Cauchon’s side. Nevertheless, the Attorney General still had his doubts: “It was difficult, there were a lot of people opposed, some in my own caucus. But you know, as a minister, you do what you believe is right.”

Despite Cauchon’s skepticism, the bill seemed on its way to becoming part of the nation’s history. There was still at least one hurdle to overcome, however — the White House.

The White House and The God Squad team up

John Walters was the director of the White House Office of National Drug Control Policy (ONDCP), where he served in George W. Bush’s cabinet for eight years. The “chief scientist” in that office was David Murray. Together, Murray and Walters travelled north to counter the growing decriminalization movement.

It wasn’t their first visit to Canada. Walters attended the University of Toronto, while Murray has family roots in Alberta that date back to the late 1800s. “I went to Vancouver and Ottawa a couple of times in my capacity as a representative of the office,” Murray says. “Vancouver was Amsterdam, even in those days,” he says. “There was an awful lot of commercial dope that was being moved around. And B.C. bud was probably the highest potency around at that time other than maybe UK Skunk.”

Murray says the U.S. was concerned about conditions worsening along the border, “as opposed to just B.C. running rampant.”

“We were familiar with a pretty intense criminal organization moving high potency B.C. bud into the U.S. and proceeds going the other way. It was pretty nasty business,” Murray says. “So we were very concerned as to what the future would look like, particularly the kind of cross border traffic that might affect what is one of the best commercial relationships in the world. We saw deterioration as a possibility if Canada were to capitulate and decriminalize at the federal level.”

The ONDCP argued that Canada was a signatory to international treaties around drug policy, and decriminalization would be a violation of those commitments. At the time, 12 U.S. states had already decriminalized minor cannabis offences, though federal law still maintained the illegality of the plant.

“We were pleading with them not to blow a hole in the global capacity to monitor and protect the public health consequences of illicit drugs,” Murray says. “And that was an appeal that we made to them.”

Ottawa countered this argument by saying that under Bill C-38, any amount of cannabis was still illegal and subject to penalty, therefore meeting Canada’s obligations to those conventions. The director of the United Nations Office on Drugs and Crime agreed, stating that C-38 complied with the main conventions, but the ardent U.S. opposition was enough to cast further doubt on what was already a precarious piece of legislation.

Davies says there was a small but significant portion of the Liberal party that ran with the U.S. opposition. “We used to call them the God Squad,” she remembers. “These are the same folks who were generally opposed to same-sex marriage, which was happening around the same time, and anything to do with drug policy reform. And so they became very vocal, and they really picked up the narrative from the drug czar in the U.S.”

Walters, Davies says, kept at it. “He kept threatening Canada, that if Canada went with the bill it was going to cause all kinds of problems at the border, and that the U.S. would have to retaliate and it could affect trade and — blah, blah, blah. It was absolute drivel and nonsense in my opinion. But unfortunately, there were people that kind of took hold of that.”

Cauchon, who had previously been the Minister of National Revenue before becoming the Minister of Justice, had a good working relationship with his counterparts in the U.S. He had worked closely alongside them on the Smart Border initiative that Bush and Chrétien had agreed to. That experience, combined with the fact that a dozen U.S. states had already decriminalized cannabis, was enough for Cauchon to believe he could convince the U.S. to come around. He maintains that the border situation was overblown.

Walters and Murray were being quoted in the media every week, he says, criticizing the bill and the government’s approach. Cauchon says that when he raised the bill in a meeting with John Ashcroft, then the US Attorney General, Ashcroft’s reaction was that it was “no big deal.”

“Canada is a sovereign country,” Cauchon says. “We do whatever we want for our jurisdictions. And that’s it. Period. “

But Canada wouldn’t get a chance to see the U.S. reaction.

A different sort of scandal

As winter approached a scandal nearly a decade in the making was erupting in Ottawa. In November 2003, Chrétien prorogued parliament. The Liberals said the pause was necessary to allow incoming PM Paul Martin time to set his agenda, while everyone else said Chrétien was avoiding the Auditor General’s report on the sponsorship scandal, which found that more than $100 million had been forked over to advertisers and communications companies with Liberal ties.

With parliament suspended, the bill lost momentum. When Martin’s minority government took over, in the shadow of the still-unfolding scandal, decriminalization was not high on the priority list.

“To the best of my recollection, Paul’s team was not very much on side with that,” Cauchon says. The sponsorship scandal would push Martin out of power, ending a 12-year Liberal reign and setting the groundwork for a decade of Stephen Harper and the Conservatives.

They went a different direction with cannabis.

“Our safe streets and healthy communities are increasingly under threat of gun, gang and drug violence,” the Conservative government said in their first Speech from the Throne. “This Government will tackle crime.” The Conservatives scrapped the bill and doubled down on cannabis enforcement, imposing mandatory minimums for some offences.

That was then. This is now

Little more than a decade later, however, Canada achieved legalization, and while there are still glaring issues to resolve — cannabis amnesty foremost among them — Cauchon says it’s remarkable how far the country has come.

As chairman at 48North Cannabis Corporation, Cauchon says he looks back on C-38 fondly, but that Canada, at that time, was not ready for legalization. “I don’t think society as a whole was really there,” he says. “C-38 was finding a way to look for better pieces of legislation that we could enforce, starting with sending a proper message and eventually leading to where we are today.”

Nevertheless, he’s proud of what has been achieved since: “We’ve evolved a lot. I’m glad to see that it’s normalized and there wasn’t an earthquake the day after,” he says. “Today, quite frankly, it’s no big deal. Society has evolved in the right direction.”

There is one other point of pride for Cauchon and almost everyone that The GrowthOp spoke with for this story: The committees that worked on the bill did so together, across party lines.

That, Cauchon says, is the beauty of Canadian democracy. “You can have very, very difficult debates in Canada,” he says. “But once it’s over, once we move forward together, we don’t look back. We keep going together.”
 
Critics call them 'kickbacks': Pot producers paying millions in fees to cannabis clinics for patient-customers

What just three years ago was a controversial, but sporadic, practice seems to have become a routine part of the pot business

Some in the industry call them “referral fees,” others “educational grants.” To at least one bioethicist, they are simply kickbacks.

Licensed producers of medical cannabis are paying millions of dollars to cannabis clinics across the country in exchange for patients who register their marijuana prescriptions with the companies, corporate documents and interviews reveal.

What just three years ago was a controversial, but sporadic, practice seems to have become a routine part of the pot business, where medicine and commerce are increasingly intertwined.

For some clinics, in fact, payments from licensed producers (LPs) represent the bulk of their income.

“LP revenue provides the highest margin of all the company’s revenue streams,” says a document filed with regulators by Sunniva Inc., which owns both Natural Health Services (NHS) clinics and a pot producer.

When someone files their prescription with a producer, that company usually pays the clinic 15 to 20 per cent of the cost of each dose of cannabis the patient buys over time, report insiders.

The operators say those payments enable the facilities to offer intensive counselling that would otherwise have to be paid for by patients. And the fact they have contracts with multiple producers, they say, means the fees do not encourage favouritism toward any one firm.

But health-policy and medical-ethics experts argue the payments still make it near-impossible for health professionals to put the patient’s interests first.

“These are kickbacks. Let’s be blunt — that’s what they are,” said Bryn Williams-Jones, a University of Montreal bioethics professor who has trained doctors on conflict of interest for years. “Regardless of whether the physician thinks they’re independent, they’re no longer independent.”

Legalization of marijuana for recreational use has, in some ways, made access to the drug as easy as buying a bottle of Chardonnay. But many Canadians still seem to want a health professional’s help getting marijuana treatment, and the medical cannabis system remains popular, say industry representatives.

Specialty clinics assess patients and issue “authorizations” for marijuana, then often help the patient register that prescription with a particular producer, typically one of those contracted with the facility.

The then-CEO of Tilray, a major B.C.-based cannabis company, complained in 2015 about clinics and doctors who were starting to demand referral fees, saying it “taints the whole industry,” and pulling out of a trade group in protest. No one at the firm, under different leadership today, was available to comment, a spokeswoman said.

But other companies’ executives say the payments are now standard practice, and help fund the care clinics provide, including appointments that can last as much as an hour.

“There’s rent and there’s staffing and payroll and insurance, and all the other things that go into running the business,” said Barry Fishman, CEO of Vivo Cannabis, which owns two clinic chains. “There needs to be a way to have a sustainable business … and it doesn’t appear the governments are providing adequate funding.”

In one corporate filing, Vivo says that it receives “educational grants” from producers, but stresses that its patient educators are not informed about the contracts with those companies, and make objective recommendations.

Clinics do receive income from the fees that some provinces, though not all, pay their doctors, but the largest chunk of revenue comes from producer payments, said Fishman.

Based on the few companies that report the transactions to regulators, the money can add up.

All but $100,000 of the $1.2 million in revenue earned by the Canada House chain of cannabis clinics in the three months ending July 31 came from producer fees, the company reported.

From the other side, medical-patient referral payments accounted for about half the $3.5 million in sales and marketing costs over a three-month period for pot producer MedReleaf, parent company Aurora Cannabis indicates in a recent report.

Aurora also owns the CanvasRx chain of clinics, and says in another document the clinics’ revenues jumped by $1.8 million in the 2018 fiscal year thanks to a surge in producer fees.

Sunniva Inc. reports that its gross profit margin (before operating expenses, interest payments and taxes) soared by $2.4 million in the six months ended June 30, primarily due to increases in producer revenues at its NHS cannabis clinics.

But just because clinics receive those payments, doesn’t mean the health professionals who work in them are anything but impartial, said Jordan Sinclair, a vice president of Canopy Growth, one of Canada’s biggest cannabis firms.

“There is still a doctor who has to make an assessment of the patient,” he said. “He has to demonstrate you have an actual need for the medicine.”

Willams-Jones is not convinced. Clinics say their doctors and nurse practitioners do not personally receive referral fees, but their employers’ financial relationship with producers is still a powerful force, the bioethicist says.

Clinics need to fund their services somehow, but doing it with a slice of sales of the product they prescribe should not be the answer, echoed Marc-Andre Gagnon, a health-policy professor at Carleton University.

“You have this clear conflict of interest in place: the more you prescribe, the more you get,” he said. “In principle, this is simply unacceptable.”
 
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Ontario leads Canada with 96% deficiency in cannabis stores, researcher estimates

Ontario has roughly 4% of the legal cannabis points of sale it needs to put it on par with markets that are successfully extinguishing illicit channels.

And Quebec is not doing much better, according to a researcher.

A shortage of points of sale for adult-use cannabis in Canada’s two largest markets was cited in January 2019 as one of the industry’s biggest pending issues – a hurdle that remains far from being cleared.

Last week, CIBC Capital Markets, the investment banking subsidiary of the Canadian Imperial Bank of Commerce, trimmed almost a billion dollars off its 2020 forecast for cannabis sales in Canada, in part because of issues stemming from the slow rollout of stores.

Chris Damas, editor of Ontario-based BCMI Cannabis Report, estimates that Ontario would need an additional 1,400 points of sale to reach the one-per-10,000-people mark observed in Colorado and Alberta.

Ontario, which has pledged to ramp up new store authorizations this year, started accepting open-market applications on Jan. 6.

As of April 29, Ontario authorized almost five dozen stores.

Quebec is not faring much better than its neighbor.

Damas estimates that Quebec’s cannabis point of sale deficiency at 95% – meaning it is roughly 800 stores shy.

Alberta’s 449 points of sale exceed what the province needs, Damas said.

More than 180 stores have opened in British Columbia, making it 65% deficient in points of sale. B.C. needs 507 points of sale to bring its store count to one per 10,000 people.

Saskatchewan, which recently started accepting cannabis store applications for small communities, could use about 70 more points of sale.

“The headwinds are receding and I see some tailwinds,” Damas said, who sees store counts improving through this and next year.

Damas forecasts 2020 adult-use sales in Canada will reach of CA$2.1 billion ($1.5 billion).

“Pretty much every province except Alberta needs more stores in some form,” Brock University business professor Michael Armstrong said. “Stores absolutely do matter.”

But whether that is one point of sale per 10,000 people or something else depends on many factors, he said, including the regulatory parameters established in each jurisdiction, applicable taxes and the breadth of products retailers are able to sell.

“If they can only sell cannabis, then the number they can support is going to be smaller,” he said.

Ontario’s liquor store model provides applicable comparisons for cannabis policy.

The province has 660 liquor stores in communities that can support stand-alone points of sale, plus another 400 smaller points of sale inside other properties, such as grocery and convenience stores.

“If governments would allow (cannabis) stores to sell other things, at least in rural areas, then that would support much greater store numbers,” Armstrong said.

“That would allow legal products to reach a much wider market in areas that are more sparsely populated.

“Stores are definitely important in making the legal product accessible and the legal industry successful.”
 
The illicit market has a competitive advantage over Ontario retail stores. And numbers reflect this once again
More stores, more cracking down on illicit shops and lower prices could help right the course

The snail-like pace of cannabis retail rollout in Canada’s largest province is just one reason the country as a whole has been unable to stub out the fiery illicit market and realize higher sales.

Retail stores accounted for about $200 million of Ontario Cannabis Store (OCS) total recreational sales, which amounted to just shy of $300 million in 2019, chief commercial officer Cheri Mara told the Toronto Star. “I wouldn’t be honest with you if I said we were happy with that number… when our mandate is to eradicate the illicit market,” Mara said, noting the estimated Ontario market is $2.9 billion.

Prior to the pandemic, Canadian provinces all had stagnated sales in February, with Quebec actually reporting a month-to-month decline. Even in retail standout Alberta, the recent provincial budget noted weed will lose $26 million this fiscal year and not be profitable for three years.

Whatever the province, it seems as though the illicit market has been blamed for the lack of growth in legal cannabis. As a result, improvement in retail sales is not expected absent enhanced efforts to shut down illegal operations.

And this doesn’t look like it’s going to change anytime soon. Any comparison between legal and illegal is really no comparison at all.

With no regulatory oversight costs and greater product variety, coupled with lowballing prices and slow legal retail rollout, illegal players could be around for some time, Omar Khan, national cannabis sector lead at Hill+Knowlton Strategies, suggested to Global News.

Khan touches on an interesting point that has to be considered when we think about cannabis sales in this country. The regulations surrounding legalization put so many obstacles in the way of the legal weed retailer that the illicit market receives an unfathomable competitive advantage.

An oft-cited point in this argument is Ontario’s limited retail selection. The Alcohol and Gaming Commission of Ontario website shows just 58 cannabis retail locations are authorized to open. (It is not clear if all are actually open.) That compares to 454 in Alberta.

With 700-plus legal cannabis retail locations across Canada, Ontario and Quebec — two-thirds of the potential consumer market — “remain woefully under-stored,” Mitchell Osak, national leader of MNP’s Cannabis Consulting Practice, wrote in his March Canadian Cannabis Market Update.

“If it’s not convenient for consumers to access the product through the legal system, why would they ever leave the legacy illicit market?” Khan asked.

Based on price quotes using the StatsCannabis crowdsourcing application, figures from Statistics Canada show the average price of cannabis in the illicit market for the fourth quarter of 2019 was $5.73 a gram, a bit more than half of the $10.30 average price of legal weed.

Lower prices are another tool that experts believe can help combat illicit shops and allow legal retail to reach its sales potential. To reduce the gap between legal and illegal weed prices, a redoubling of efforts is needed, Osak suggested, adding that consumption of legal recreational cannabis “could drop as consumers tighten their purse strings.”

Several Canadian licensed producers have introduced lower-cost brands — including Hexo, Zenabis and Aurora — to appeal to deal-seekers. OCS, for its part, has reduced prices on more than 240 products, Mara told The GrowthOp last month.

The real hurdle to clear, though, is provincial wholesale markups. Brock University professor Michael Armstrong has said Quebec’s average markup was 23 per cent compared to Ontario’s 77 per cent. That difference “reflected Quebec’s prioritizing shutting down the illicit market and Ontario’s hope to derive revenue from cannabis sales.”

Khan would likely agree. Legal prices, driven up by taxes, have been a factor in helping keep the black market “as rampant as ever,” he said.
 
Cannabis may be legal, but one northern Ontario town wants to pass a law against smelly pot plants

One northern Ontario town is looking for a way to make smelly cannabis plants illegal.

West Nipissing council wants to draft a bylaw to regulate the odour from plants that citizens can legally grow themselves.

Councillor Lise Senecal put the issue on the table after getting complaints from several residents in Sturgeon Falls.

"I didn't even have to get out. I just rolled down my window," she says of going to check out the skunk-like stink.

"It's a very strong smell. I could have gotten a buzz."

She says the right to enjoy your own property is a "basic right" and wants to see cannabis smell listed as a nuisance in a town bylaw, similar to what the City of Hamilton has already passed.

"I'm a firm believer that everyone has their rights. I mean, I have the right to drink beer, but I don't have the right to throw the can of beer at the neighbour or make party at all times of day or night," says Senecal, who would like to see the restriction apply only in residential areas.

West Nipissing councillor Jeremy Seguin is worried this adds to the town's "conservative" approach to legal weed. It is one of the few municipalities in northeastern Ontario where smoking a joint on the sidewalk is illegal, but smoking tobacco is not.

"It's something that was demonized for so many years and legally it switched over, but I don't think psychologically everyone was ready for the switchover," he says.

Seguin says it's very tricky for a municipality to regulate smells and compares unpleasant cannabis odours with those coming from the farm fields that surround his home village of Verner.

"So there's a definite smell that goes on there and it's yearly. Nobody complains about it, because that's part and parcel," he says.

"If you're living in Verner, you know this is going to happen, you know you're going to get the smell and it's an acceptable nuisance."

West Nipissing council is expected to debate the proposed bylaw at a meeting in early June.
 
Witset writes its own cannabis law
First Nation says it is their constitutional right to govern cultivation and sale of marijuana

The Interior News has learned a new cannabis shop scheduled to open soon in Witset — with a cultivation plant to follow — will operate outside federal and provincial regulatory frameworks.

“The Witset First Nation has an inherent and constitutionally protected right to self-government over their people, their economy and their land,” said Trevor Morrison, CEO of the Kyah Development Corporation in an email. “The Witset First Nation takes the position that this encompasses a right to exclusively govern cannabis-related activities from seed to sale on their reserve land and this right is protected by section 35 of the Constitution Act, 1982.”

Recently, Witset became the seventh First Nation to partner with Indigenous Bloom, a cooperative of First Nations and Indigenous peoples involved in the cultivation and retailing of medicinal and recreational hemp and cannabis products in B.C.

In an email the B.C. Ministry of the Attorney General (AG) confirmed existing Indigenous Bloom operations are unregulated as far as the Province is concerned.

“Indigenous Bloom does not have a licence to produce cannabis from the federal government and it does not have access to legal cannabis from licensed producers, so its product is unregulated,” the ministry said.

“No Indigenous Bloom stores are currently licensed by the province to sell non-medical cannabis.”

Indigenous Bloom was already operating on the Kwaw-Kwaw-A-Pilt First Nation (Chilliwack) when cannabis became legal for recreational use on Oct. 17, 2018. Kwaw-Kwaw-A-Pilt quickly wrote its own cannabis law to replace Canada’s Cannabis Act, as many First Nations across the country have done, including Witset.

In fact, the Witset Indigenous Bloom operation will become part of a growing First Nations on-reserve cannabis cultivation and retailing network that currently numbers more than 160 across the country.

Morrison said Witset passed its Witset First Nation Cannabis Control Law (CCL) on April 22 and that it was designed to meet or exceed federal and provincial standards.

“The Cannabis Law was designed to protect the Witset First Nation’s members and anyone else involved in the cultivation, sale, possession or consumption of cannabis on reserve land, and the law includes explicit protections in respect of sales to minors and the credibility of a person applying for cannabis cultivation and retail permits,” he wrote.


Darwin Douglas, a Cheam First Nation councillor, who helped Kwaw-Kwaw-A-Pilt partner with Indigenous Bloom, explained that many First Nations are taking the stance that pot production, distribution and sales are protected under the provisions of self-determination and self-governance under the Constitution and UNDRIP.

Under the deal struck between the federal government and provinces, marijuana distribution was technically established as a provincial responsibility and excise tax revenues were divided among the provinces (75 per cent) and Canada (25 per cent).

“The Province doesn’t have jurisdiction over First Nations lands,” Douglas said, “which is why some of the First Nations locally have enacted their own cannabis laws.”

While the AG’s office made it clear Indigenous Bloom operations on reserves fall outside federal and provincial regulations, the Province appears to be treading lightly on the issue.

Enforcement of B.C.’s Cannabis Control and Licensing Act (CCLA) falls on the Community Safety Unit (CSU). The CSU has shut down numerous unlicenced dispensaries in the province, but so far on-reserve outlets have been largely unaffected.

“The CSU works with Indigenous communities in consideration of their local needs and interests when carrying-out compliance and enforcement activities,” the Ministry of the AG said. “It is acknowledged that needs and interests may vary from community to community.”

A jurisdictional showdown was perhaps inevitable after the government ignored a warning in a report by the Senate Standing Committee on Aboriginal Affairs that First Nations may have jurisdiction over the production, distribution and sale of cannabis.

The government responded to Senate concerns over jurisdiction by saying the Cannabis Act is a general application law, like the Criminal Code that applies to all Canadians including Indigenous Peoples and that Indigenous cannabis cultivators and sellers would have to obtain the appropriate federal and provincial licences.

It said FN communities could deal with issues of local control in the same way municipalities have been given control over if and where dispensaries and production facilities can be located in their communities. It said concerns about revenue generation for First Nations governments could be solved through adoption of the First Nations General Services Tax agreement or through property taxes.

Skeena-Bulkley Valley MP Taylor Bachrach said the government failed to properly consult First Nations, which he said, may be why the feds are also treading very lightly on the issue.

“It does seem like there is a fairly major grey area in the federal regulatory approach when it comes to cannabis on reserves,” he said. “In my view, the federal government should have worked this out before it passed the Cannabis Act.

Bachrach said concerns have also been raised to him regarding the safety of unregulated cannabis products.

Morrison took exception to any suggestion products made or sold on the reserve will be of anything but the highest standard.

“The Witset First Nation will take all steps under its Cannabis Law to ensure that the quality of cannabis cultivated, packaged, processed and sold on its reserve land meet or exceed federal and provincial standards,” Morrison said.

Indigenous Bloom also insists their standards are as high or higher than those in the federal regulations.

“As a company, we pride ourselves on regulatory compliance and products standards,” the company’s website states. “Using state-of-the-art equipment and high-end production facilities, we ensure to meet or exceed all Health Canada standards and guidelines.”

Bachrach believes uniform standards are important, but should not be reached unilaterally.

“There was a lot of frustration on the part of First Nations who didn’t feel consulted and at the same time we have this real situation where we have the potential for real divergent standards on- and off-reserve,” he said.

“It seems to me it would be better to have consistent standards across the board, but to get there, there have to be concerted conversations between the federal government and First Nations.”
 
Craft cannabis growers seek role in COVID recovery

A newly-incorporated craft cannabis co-operative is putting forward a plan to make small-scale, independent cannabis businesses part of B.C.’s post-pandemic economic recovery.

When it announced its incorporation in late April, the BC Craft Farmer Co-Op (BCCFC) said one of its first initiatives would be to draft an economic development proposal for the provincial and federal governments to “outline how the co-op can support B.C.’s economic recovery post-COVID 19 by creating thousands of jobs and diverting profits from the illicit market.”

Joel Podersky of Roberts Creek is a member of the co-op’s interim board and part of the committee putting together the proposal. He’s also one of the co-founders of the Cascadia Agricultural Cooperative Association, which was involved in a series of consultations in 2019 about how to support the craft cannabis sector.

Podersky said with governments starting to look at how to give a boost to the economy after the pandemic there’s an opportunity to move ahead with some of that support.

The executive summary of the BCCFC plan provided to Coast Reporter notes that with the potential for a steep decline in the province’s GDP, “500,000 B.C. jobs may be at risk – many in rural communities.”

The proposal calls for regulatory changes and the establishment of a “business development partnership.”

The co-op plan says many B.C. craft cannabis farmers and processors have not been applying under Health Canada’s micro-producer program “for many well-established reasons” related to the way the regulations were drawn up.

“At the moment the regulatory landscape is extremely prohibitive [for craft producers],” Podersky said. “It encourages predatory business practices, it favours large corporations intentionally.”

The BCCFC is calling for the rapid transition of around 30 per cent of the existing cannabis producers licensed to grow under the medical marijuana regulations to the wider legal market on a 12-month temporary basis in time for this summer’s growing season.

While that’s happening, the co-op said, the provincial and federal governments should “reset” the micro-cultivation regulations and have changes in place by the end of the year.

“Transforming just 30 per cent of B.C.’s 6,500 small, licensed cannabis growers into the recreational marketplace with the current production and processing limits will result in close to $3 billion in direct economic impact and over 20,000 jobs across B.C.,” the proposal says.

“By definition, the jobs associated with this plan are ‘shovel-ready’ this summer. All federal, provincial and local government needs to do is have an open mind, be innovative and let these people grow.”

Podersky said the model for a business development partnership could look like a scaled-up version of the Cannabis Business Transition Initiative launched late last year by Community Futures Central Kootenay, with $675,000 from the provincial government.

When the Kootenay initiative was launched, Andrea Wilkey, the executive director of Community Futures Central Kootenay, said it would “help ensure that local entrepreneurs have the support they need to navigate the complex regulatory system and create a sustainable cannabis business.”

“It's such an easy template… There’s nothing standing in the way of doing that all over the province,” said Podersky.

“My ideal is for the project to finance all the resources that growers and processors need to get their licences and remain compliant,” he said. Those would include professional resources for developing an evidence package for licence application, a pool of professionals for quality control, “and anything else you need to have available to those growers to satisfy the government's regulatory requirements, as well as remain compliant going forward.”

The other aspect of business development would be getting access to markets.

“The [current] regulations make access to markets very restrictive for micro cultivators who are not allowed to sell directly in the market, neither are micro nurseries,” Podersky said.

Podersky said the co-op hasn’t yet had a response to its proposal from the province or the federal government.

But the BCCFC, which will hold its first annual general meeting in late August, is also laying the groundwork for community engagement over the summer involving local governments and the Union of BC Municipalities, regional and local economic development agencies, universities and colleges, and others.
 
Faulty THC dosages turning up in legal cannabis: Health Canada

Health Canada has been flagging legal cannabis products containing incorrect amounts of THC content — up to five times more of the ingredient than advertised.

Since recreational legalization took effect in October 2018, the federal agency has ordered 15 recalls of products due to labelling errors in the actual levels of THC and CBD present.

In one instance, a package of pre-rolled cannabis cigarettes was determined to have five times the THC content posted.
Other instances had THC levels below that listed.

“The (federal) cannabis regulations require licence holders to investigate complaints received about the quality of cannabis and, if necessary, to take corrective measures,” Health Canada spokeswoman Tammy Jarbeau said in an email.

“In the cases where THC or CBD content was improperly labelled, federal licence holders have chosen to voluntarily recall their product.”

Most of those recalls were of dried flower, though some involved cannabis oil.

One recall from February 2019 said caps that were supposed to contain non-psychoactive CBD oil “may contain THC sativa caps.”

But the federal regulator said it’s generally satisfied with the industry performance.

“Generally, the cannabis industry has a high overall compliance rate with the Cannabis Act and its regulations, and any packaging or labelling errors related to THC or CBD content have been limited relative to overall industry sales,” Jarbeau said.

Even so, a spokesperson for Alberta-based licensed producer Aurora Cannabis said Health Canada has recently ordered changes to product labelling related to potency.

One Calgary chocolatier who’s preparing to market cannabis edibles said regulators have told him of THC level errors in such products.

It’s something Todd Pringle said he’s determined to avoid by incorporating his own testing system at his production facility in the city’s northeast, while other producers contract out that task.

“It’s something I never, ever want to see come up because it’ll turn people off edibles and be a black mark on the industry,” said Pringle, CEO of Wabi Sabi Brands.

He said the company first tests the potency of the cannabis oil it infuses into its chocolate, then screens its sweets twice more, using a $120,000 device.

The key to that is proper mixing, which can be a challenge to the viscosity of cannabis oil, said Pringle.

“Whether it’s THC or CBD, that stability is really hard to achieve,” he said.

Health Canada says its regulations generally allow for a 15 per cent variability in THC or CBD levels — either above or below the labelled amount.

But that can rise to 25 per cent for lower THC content products.

Canadian producers had the advantage of learning from U.S. counterparts that went before them in states such as Colorado, which embraced legalization in 2014, said Denver-based cannabis industry consultant Dan Rowland.

“In the old days, you could shop around for a test until you got the result you needed,” said Rowland, who’s worked with Canadian producers and retailers.
“Our margins of error, of what was acceptable, was huge.”

That’s since evolved considerably in the U.S. and was never the case in Canada, which has been governed by more stringent national regulations, he said.
For one, Canada’s limit of 10 mg of THC for edible packages is far lower than those in the States.

Any recalls or production-labelling errors in Canada, said Rowland, “are par for the course for a relatively immature market.”

Maintaining proper THC and CBD levels in cannabis-infused products and beverages, he said, is proving a challenge.

“It’s why with the drinks you’re seeing lots of (marketing) delays,” said Rowland.

Jarbeau said it’s up to licensed producers to rectify quality complaints from the public but that “any followup actions to complaints will be consistent with Health Canada’s compliance and enforcement policies and procedures.”
 
Cannabis was legalized 20 months ago. But it appears to be business as usual for Vancouver's illegal pot shops

16 unlicensed retailers continue to operate, city says, frustrating those who took costly legal route

It took the owners of ARCannabis more than 18 months to become a fully licensed marijuana dispensary in Vancouver.

Tonny Dinh and Joe Le first applied when the process opened in the city prior to the legalization of marijuana in Canada on Oct. 18, 2018.

Finally, after seemingly endless paperwork, applications and background checks, the shop officially opened in April this year.

But that's not the path all shops have taken. Many have forgone the legal route yet continue to operate within city limits, much to the dismay of business owners who have chosen the legitimate process.

The City of Vancouver says 16 cannabis retailers are still operating unlicensed storefronts, while 24 are fully licensed.

"It does frustrate us," says Dinh.

"They're able to provide better marketing tools because there are less restrictions and less regulations [they have to follow.]

Le adds they are also "competing with the black market."

Unregulated market

For a cannabis retail shop to operate legally in Vancouver, it requires a provincial licence, a municipal licence and a municipal development permit, which, altogether, cost owners more than $35,000 a year, according to Le and Dinh.

As well, legalized shops are only permitted to sell regulated, higher-priced government cannabis products.

These extra costs are reflected in the price of the products on retailers' shelves, which can often give the black market the upper hand.

"We do get customers who come into our stores and say 'why are prices so much more?'" says Dinh.

"But we are providing clean, regulated, taxed products."

Le agrees it's frustrating to go through the entire licensing and permit process and spend all the extra money to then lose out on profits to the unregulated stores. But he says his shop is committed to help eliminate the illicit market.

"We are here, we like to comply… and we want to take all the steps to make sure we do everything properly," he says.

Provincial enforcement

Illegal shops are also being actively promoted on websites and applications like Weedmaps.

A quick search shows among the listings is the illegal dispensary Herbs R Us, which recently lost a legal battle with Toys "R" Us over its name.

The city says up until recently, the store had a business licence to sell accessories but that was revoked after it was discovered to be selling cannabis.

Weedmaps contains reviews of cannabis from Herbs R Us from two years ago, and signs at the store openly display that it sells the drug. When contacted by CBC News, Herbs R Us would not confirm that it sold cannabis.

In a statement to CBC News, the city said "any location operating without city land use approval is subject to enforcement by both the city and the province's Community Safety Unit (CSU)."

When pressed further on how it goes about enforcement, it said in a follow-up email it's predominantly handled by the province.

Illegal sellers will not be shut down overnight, said the Ministry of Attorney General in a statement.

The Ministry of Public Safety says over the past year, CSU officers have visited 275 unlicensed retailers for the purpose of education and to raise awareness about cannabis laws, and has followed-up with enforcement action against 40 unlicensed retailers that chose to continue to operate without a licence.

"Our goal from the start has been voluntary compliance," the ministry said in a statement. "However, those who continue to operate illegally should be warned that if they do not obtain a provincial licence they will have to close or will face increased enforcement action," which, it says, could include monetary penalties.
 

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