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Jay Rosenthal: 8 Things We’ve Learned from Year One of Legalized Cannabis

Jay Rosenthal: 8 Things We’ve Learned from Year One of Legalized Cannabis

It has been a year since adult-use, recreational cannabis became legal in Canada. It hasn’t been perfect. But, like any good teacher or parent would say, it has been a year-long “teachable moment”.

So, after reaching the one-year anniversary of cannabis legalization, it’s a good time to share some thoughts about what we have learned as a country and an industry, and what the future may hold.

1. The Sky Did Not Fall

For those that opposed cannabis legalization, there has been some bad news: the sky did not fall when cannabis became legal for adults. In fact, life went on pretty much as normal. Canada is still Canada. We will have an election, power will be transferred (or not transferred?) peaceably, the NHL season opened as usual, the Blue Jays caved. All is normal.

2. Canadian Workplaces Are Still Productive

In the year leading up to legalization, I spoke to scores of non-cannabis-industry groups about the impact of cannabis on workplaces — including a series of workplace trainings hosted by MNP and the employment law firm Sherrard Kuzz. There was concern and consternation that workplaces would be turned upside down by legalization; that employees would be using cannabis without regard to rules, policies, and common sense. This turned out to be wholly untrue. A recent survey conducted by ADP Canada noted that a vast majority (70%+) of Canadians believe that cannabis has not impacted workplaces in terms of health and safety, productivity, absenteeism, or quality of work.

3. Supply Was (and Is) an Issue

It turns out Canadians have a ravenous appetite for cannabis. From October 17, 2018 to October 17, 2019, Canadians have proven that they will buy cannabis until there is no more cannabis to buy. Supply was short on day 1 and will be on day 365, especially the legal supply of high-quality cannabis. Adding insult to injury, the Provinces have not been particularly adept at stocking shelves, as a recent Maclean’s investigation showed.

4. Quality Was (and Is) an Issue

Speaking of high-quality cannabis… While there have been some amazing products on the shelves to date, they have not been in large enough quantities or varieties. New research shows that 10 per cent of cannabis consumers consume two-thirds of all cannabis, an even more refined 80/20 rule. Why is this important? These consumers are in tune with the product, understand quality, and — most importantly — have been buying cannabis on the legacy market for a long time. They “have a guy” from whom they can buy. They do not need or want what the legal market has to offer… yet.

5. “Legacy” Market Still Thriving

Legalization is a process — it was neither an end point for the “legacy” (or black) market or a starting point of a full-fledged, well-oiled machine of an industry. A key policy goal of the legalization was to drive out the “legacy” market and keep cannabis out of the hands of children. These goals will take time, but there is evidence that suggests the process is working: recent data suggest that the “legacy” market has taken a 21 per cent hit since legalization.

6. More Products + More Retail = Challenges for Legacy Market (Maybe)‍

Two main factors will help to take a larger chunk out of the “legacy” market in the coming year: more products and more retail. We have seen that there is a direct correlation between cannabis sales and retail cannabis options for consumers. Right now, in nearly every province but Alberta, retail cannabis options are severely limited. In Alberta, a province with 10 million fewer residents than Ontario, there are more than 10 times the number of retail outlets, and their sales have far outpaced their larger provincial cousins on a per capita basis. This will change in the coming 12 months and I am predicting more than 1,000 new stores will break ground. As well, the introduction of new products, including edibles, beverages, and (maybe) vape pens will disturb the “legacy” vs. legal balance towards legal.

7. Cannabis is an Economic Driver‍

Statistics Canada suggested that cannabis drove $8.6 billion in economic activity last year. Business of Cannabis conducted a study with Nanos Research proving that, while Canadians may be somewhat divided on the policy issue of legalization, there is a broad consensus that the economic benefit of the cannabis industry is real. In fact, nearly four in five Canadians are accepting of jobs in the cannabis industry.

8. Canada’s “Lead” May Fade

Canada has been a central hub for global cannabis. We have several of the world’s largest cannabis companies located in our own backyard. But our lead may fade. New, more cannabis-favourable banking regulations are making their way through Congress in the US, which would advance the cause rapidly and considerably south of the border. Also, European medical cannabis markets are on the cusp of major growth. Both markets dwarf our own and put Canada’s current lead in risk.

As we head into year two, there are still lessons to learn, roadblocks to navigate, and milestones to celebrate, but the legalization experiment is working. Chunks are being taken out of the “legacy” market, consumers are buying legal cannabis at a rapid clip, economic development directly tied to the cannabis industry is being realized, and, at least for now, Canada can enjoy the worldwide lead in cannabis.

Here’s to the next 365 days of teachable moments.

Watch Jay Rosenthal, the co-founder and president of the Business of Cannabis — Canada’s authoritative source for news and analysis — speak with Breakfast Television on the overall impact cannabis has had on Canada since legalization, and what we can expect to see in the months ahead.

Jay has a 20-year career at the intersection of media, business, politics, and policy — especially as it relates to heavily regulated industries. The co-founder and president of Business of Cannabis, Jay provides context and insight into the dynamic and ever-changing landscape of the Canadian cannabis sector.

Interested in learning more about Jay and what he can bring to your next event? Email us at [email protected].