New regulations may spark Canada’s craft cannabis revolution

With full legalization delayed until the fall, Canadians are enjoying the options that come with micro-licensing.

By Lisa Campbell

Original story published by High Times

While legalization in Canada is delayed until October 17th, 2018, Canadians are celebrating as micro-licenses are finally coming out, ushering in the second wave of legalization. These micro-licenses are revolutionary for the industry, including smaller cultivators and processors more able to adapt to local consumer demand. Additionally, black-market genetics will finally be regulated, opening up the global floodgates.

Health Canada announced multiple classes of licenses including: processing (micro and standard), producers (micro and standard), nurseries, industrial hemp, research, and analytical testing, in addition to medical sales licenses. The regulations and application guide to apply for new licenses are available by request from Health Canada and will be public online soon. Most notably, there will be no restrictions on how many licenses an individual can possess, opening the door to cannabis co-ops with decentralized diverse distribution systems. While current licensed producers face very few changes as they transition, there are a few game-changing regulations.

With calls for cannabis amnesty reaching the mainstream news, Health Canada finally announced that they will not discriminate against those with previous non-violent cannabis convictions. “Historically anyone with any type of criminal activity in relation to controlled substances could face an automatic rejection from Health Canada,” said cannabis compliance consultant Mathew Columbro, president of Vindica Cannabis Corporation. “Security clearances will now be analyzed on a case-by-case basis to screen out organized crime pre-application.”

Outdoor cultivation is finally legal, and new industrial hemp regulations now permit the sale to processors to extract CBD. Advertising remains strict for recreational cannabis, and Canadian licensed producers continue to be disruptive in the space despite celebrity endorsements and event sponsorship being banned outright. This was par for the course for Health Canada, which previously forbade promoting cannabis using luxury or recreation, and now includes an outright ban on advertising to the general public. Several licensed producers have already been scolded to take down websites for recreational brands scheduled to be launched this fall.

Some of the top genetics companies in the world have already integrated into the existing medical program in Canada.

What no one expected from the new federal recreational cannabis regs was for black-market genetics to be able to register in the new legal recreational market. Similar to Jamaica, Canada is allowing black-market genetics to transfer into the new program through micro-producer licenses (1250 sq/ft max), which are allowed to sell seeds to nurseries and phenotype genetics to bring to market globally. While it’s currently illegal to sell seeds in Canada outside the medical system, the black market for genetics is ripe in Canada, as collectors swap and trade them as “novelty” items across borders. Through the previous designated grower system, some of the best cannabis genetics in the world were developed, but not licensed for commercial sale.

The majority of the original cannabis designated and personal grow licenses were in British Columbia, which is famous around the world for its “BC bud.” These licenses were grandfathered in, allowing designated growers to produce for up to 4 patients, but not sell to dispensaries. The new licensed producers were only able to genetics from the original medical growers for a short period of time in 2014, limiting the genetic pool for patients in the new medical program. This second wave of licensing for recreational will allow the top strains to finally be included in the new cannabis program after years of legal limbo.

According to cannabis lawyer Trina Fraser, “The ability of new cultivators to bring not only starting materials, but flowering plants as well, with them into the legal system shows the federal government’s commitment to encouraging compliance by reducing regulatory burdens.”

A huge barrier to licensed producers has been lifted, leading to the golden age of Canadian cannabis.

International award-winning Canadian master grower Jose Dominguez was elated by the new regulations. He told High Times, “I think the genetic transfer and new regulations for micro and nursery will greatly help the product diversity for the upcoming legalization. Unique strains and phenotypes will be available, and the more choice the better.”

When asked about the challenges of the new regs, Dominguez said, “Competition will be fiercer as lots of [companies] were growing and passing along the same strains. Breeders and expert growers will have more place in this new system that seems more inclusive for individuals that were before left behind. The new types of licenses will create a massive selection of flavors, products, quality, prices, innovations which will more than likely also help medical research.”

Some of the top genetics companies in the world have already integrated into the existing medical program in Canada, including Dinafem, DNA Genetics, Greenhouse Seeds, and as was recently announced, Canada’s international award-winning House of the Great Gardener. Most of the other genetics on the current legal market were imported through a short window in 2014 from designated growers to licensed producers, and the rest are either imported legally or smuggled in through swapping.

A huge barrier to licensed producers has been lifted, leading to the golden age of Canadian cannabis. This is not only monumental for Canadian growers, it’s huge for the world, as several countries, including the U.K., recently approved medical cannabis. Due to prohibition in the U.S., cannabis cannot be exported, but Canadian licensed producers and licensed dealers are allowed to import / export for medical and scientific purposes. It’s expected that many of the world’s top seed companies will relocate to Canada, where products have a global future as, like dominoes falling, countries open their borders to cannabis.

Original story published by High Times. Lisa Campbell became a true cannabis expert by working extensively in international drug policy with Canadian Students for Sensible Drug Policy and is currently the Chair of the Ontario Cannabis Consumer & Retail Alliance. Lisa is now launching a cannabis subsidiary for Lifford Wine & Spirits, helping cannabis companies navigate the emerging cannabis industry across Canada and beyond. Lifford Cannabis Solutions will work with cannabis companies to help their brands come to market across all ten provinces, leveraging Lifford’s national salesforce and longstanding partnerships with provincial control boards. Lisa holds a Master of Environmental Studies from York University and is as a Canadian Institutes for Health Research (CIHR) Universities Without Walls alumnus.

Looming legalization gives rise to wave of cannabis startup accelerators

Cannabis legalization is attracting hordes of hopeful entrepreneurs to the sector. Yet when they have questions about complex regulatory issues and other business challenges, there have been relatively few mentors and programs to offer guidance. A new crop of cannabis-focused incubators and accelerators is hoping to change that by launching programs to assist fledgling firms in the marijuana sector.

“Any startup needs a system of support, and it’s very tough to be an entrepreneur,” says Alex Blumenstein, co-founder of Leaf Forward in Toronto. Leaf Forward is currently raising $3-million for its first accelerator program, scheduled to begin in October.

Incubators and accelerators provide mentoring, education, connections and seed funding to startups, with the aim of getting products and services to market faster. Programs often end with a demo day for outside investors. The model is well-established for tech startups. The Centre for Digital Entrepreneurship and Economic Performance (DEEP), a think-tank in Waterloo, Ont., estimates there are more than 140 startup-assistance organizations in the country.

Even so, there are few specialized services for the cannabis sector, despite growing demand. Leaf Forward already has around 150 businesses preregistered for its accelerator and boot camp program, according to Mr. Blumenstein. “We’re pretty confident we have a strong pipeline for this,” he says.

Along with two co-founders, Mr. Blumenstein, who previously worked in public affairs, first launched a meet-up for cannabis professionals in Toronto last year before expanding to other cities. Once armed with a network of entrepreneurs, industry leaders and other professionals, the trio decided to start an accelerator.

Leaf Forward offers a mix of programming, including online seminars and boot camps covering everything from regulations to marketing to financing. The accelerator, targeted to more mature startups, is envisioned as a three-month program focused on building relationships, setting and hitting performance goals and pairing firms with the right mentors. Leaf Forward currently has a roster of 25 mentors with expertise in areas such as production, branding and law. The program will admit four to six companies in its first cohort.

Leaf Forward could invest up to $50,000 in a company for a stake as high as 10 per cent. (Startups will actually receive $35,000; the remainder covers the cost of Leaf Forward’s programming.) “We want to graduate them on the other end at a higher valuation, where they will be able to raise more money,” he says.

Leaf Forward’s mentors are not compensated, but participating gives them an early look at emerging companies. While many investors are still focused on licensed producers, Mr. Blumenstein says the next opportunity concerns ancillary services, such as technology that provides accurate dosing information or that facilitates more efficient cultivation. Indeed, startups that have expressed interest in Leaf Forward run the gamut from makers of cannabis-infused skincare products to vaporizers to delivery services.

CannJoin, located in the east end of Toronto, is taking a similar approach. The goal is to have three different programs to cover very early-stage efforts through to more mature firms. According to president Dawn van Dam, CannJoin could invest between $50,000 and $100,000 in successful applicants. CannJoin aims to be operational in September, although it’s still finalizing its mentor list.

The accelerator is backed by Cesare Fazari, a founder of a commercial construction firm and an early investor in licensed producer Hydropothecary Corp. Mr. Fazari has since invested in smaller firms, and sees CannJoin as a way to fill a funding gap. “Right now, all the investment is going to the big boys,” he says, referring to publicly traded licensed cannabis producers. “But from what I can see, there’s so much underground innovation happening.”

Another upstart incubator, to be called the Infused Innovations Institute, plans to focus on cannabis food and beverage entrepreneurs. It’s a joint partnership between the Food Innovation and Research Studio (FIRSt) at George Brown College, Toronto non-profit Food Starter, distributor Lifford Wine & Spirits and law firm Dale and Lessmann LLP.

FIRSt at George Brown already works with small- and medium-sized food and beverage companies to develop products, conduct market research and provide sensory and nutritional analysis. (George Brown students are hired to work on at least half of the projects.) Expanding into edibles is a natural move – especially since FIRSt has received inquiries from people with recipes for cannabis-infused products. “We want to educate around regulations and safe production,” FIRSTs director Tricia Ryan says. “What we’re seeing is there’s a lack of understanding about food safety and shelf life and things like that.”

For now, the venture is starting with an edibles conference in October, followed by monthly educational events. FIRSt may eventually apply for a cannabis research and development license that would allow it to work with edibles in a test kitchen, a valuable resource for entrepreneurs. Since edibles are not slated for legalization until next year, existing products are often made in home kitchens. Even without a license, the incubator can assist with market research, as well as legal and regulatory issues.

From Lifford Wine’s perspective, an incubator could act as a business-development channel for its distribution services. Lifford, which works with alcohol makers to place brands in retail outlets, is launching a division for cannabis firms. “Our goal is to take these small craft brands and place them in appropriate markets,” says Lisa Campbell, a cannabis portfolio specialist with Lifford. “The advantage of the institute is it will allow small entrepreneurs to be part of the market, not just big business.”

Even though Canada has a growing ecosystem of accelerators, time will tell how beneficial they will ultimately be. DEEP studied the issue in 2015, and found the top 20 accelerators attracted more than $1.7-billion in follow-on investment, and led to the creation of more than 10,000 jobs. But DEEP also cautioned there is no nationwide performance data on accelerators, so it’s not possible to draw firm conclusions. Accelerators in the United States, meanwhile, have produced large companies such as Airbnb and Dropbox, while there are no equivalent Canadian successes.

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Do women really need their own weed?

In 1968, at the swell of the Women’s Lib era, Benson & Hedges launched Virginia Slims cigarettes with a catchy slogan: “You’ve come a long way, baby.” The suggestion was that a slim smoke made specifically for women was a required accessory to independence, a way to signal to society and women themselves that they were not just deserving of equality, but ready to seize it.

The problem is that paying hard-earned, still-unequal dollars for a toxic, addictive substance didn’t have much to do with freedom.

Virginia Slims wasn’t the first company to co-opt women’s struggles to sell a little buzz – cigarette makers had been doing it since the late 1800s, and Valium (or “Mother’s Little Helper,” as the Rolling Stones called it) was pushed on frustrated housewives to dampen their longing for a more fulfilling life. It was also far from the last. These days, liquor branding attempts to convince women that a slosh of Girls' Night Out wine can make up for the stresses of sexism: The effort to woozily sidestep the need for social change marches on.

For the past year or so, another chapter in this long history has been writing itself in my inbox, in the form of a flood of news releases about the exploding cannabis industry. An annoying amount are about what I’ve been calling “weed for girls” – pink, pretty products that are more intensely gendered than really seems necessary. These run the gamut from rose-gold vape pens and diamond-encrusted leaf pendants to a shady pitch for an “MB2e machine,” a “botanical extractor” that makes “magical butter” that can help me lose weight by enlisting “the downregulation of the specific cannabinoid receptor, CB1R.” There are also many calls to end the supposed stigma faced by women who “use cannabis,” especially moms, and launch announcements for female-focused cannabis businesses, such as 48 North and Fleurish.

I was already fed up with what I considered a flimsy corporate message of empowerment when a fresh news release invited me to a “global cannabis women’s summit” called Crafting the Future. I thought I’d attend and write a quick take on the latest faux-minist attempts to sell stuff. Instead, I realized the full scope of women’s involvement in not just the business side of cannabis, but its continuing political movements. There is, in fact, a feminist angle to this historic decriminalization, one that has the potential to end a war on drugs that has ruined countless lives, especially those of racialized women and their families. The trouble is, it’s being overshadowed by dollars.

While it wasn’t the only subject of discussion, those dollars were clearly on the mind of the crowd at Crafting the Future. The event was organized by Lisa Campbell, a long-time advocate who recently began working with Lifford Wine & Spirits, one of many beverage companies and importers aiming to add cannabis products to its portfolio. The summit was held this past Wednesday at Lifford’s Toronto headquarters, a renovated old Victorian on Jarvis Street where 100 or so people, at least 90-per-cent white women, mingled in the early evening. Before a set of speeches, we learned how to infuse olive oil with the correct dosage of cannabis before making a pureed beet hors d’oeuvre, snacked on an impressive spread of smoked salmon and meats sponsored by hot Mississauga-based cannabis company TerrAscend and sipped on a very tasty sangiovese. Vapers and smokers gathered on the lawn outside.

Most women were there with an entrepreneurial aim. One wanted to design cozy, female-friendly dispensaries, and a number complained of the patronizing, bro-y service they received at those that currently exist. Tricia Ryan of George Brown College explained that an increasing number of students at the school’s Food Innovation and Research Studio were presenting business plans that included edibles and she figured it was her job to help them succeed. There was talk of how hard it is for women to get start-up loans and venture capital funding, and Jane West of the U.S. networking group Women Grow discussed her own rocketship journey through the industry.

According to the Crafting the Future invite, Canada’s nascent cannabis industry has the potential to be worth $6.5-billion by 2020. If capitalism is the only project at hand then yes, I agree, women should get some of that cash.

“There’s definitely women pioneers in this industry,” said Rebecca Haines-Saah, a community-health professor at the University of Calgary who has been studying cannabis for more than a decade. When I spoke to her on the phone before the summit, she mentioned Abi Roach, who has owned a head shop and pot-friendly café in Toronto’s Kensington Market since 2000, and is still lobbying for people to be able to smoke in public spaces, not just at home. She also brought up Hilary Black of the B.C. Compassion Club Society, a veteran activist who testified in Parliament last fall about why affordability is crucial for medical cannabis users, and now works for a licensed producer.

“I think it’s interesting that at this time when a lot of people are going to make a lot of money, women are also trying to stake a claim,” Ms. Haines-Saah said.

But merely earning some women money is not enough to make an entire industry female-friendly – especially when that industry is as politically fraught as cannabis. So far, the federal government has signaled that it will consider some sort of amnesty for those convicted of possessing cannabis, but only after the drug is legalized in October. In the meantime, provinces differ: B.C. has said low-level cannabis trafficking offences won’t bar people from entering the legal industry, while Alberta appears to have outlawed anyone connected to the illicit trade from securing a retail licence. Limiting the participation of black-market veterans is one reason the brand-new industry already “favours those with wealth and connections,” said Annamaria Enenajor, a Toronto lawyer and the campaign director for the lobbying organization Cannabis Amnesty. At the summit, a young Jamaican immigrant called Alicia, who only gave her first name, told me her interest partly stemmed from a belief that black and other racialized people may as well make money off of cannabis, if they’re the ones who have paid the price.

Unsurprisingly, it was a woman of colour who dove into these politics at Crafting the Future. While most of the speakers were relatively new to the industry, Reena Rampersad has a long history with both the business and its drawbacks: Her father was arrested for smoking a joint in the 1970s and her late brother also had a criminal record for possession. The owner and chef at High Society Supper Club in Hamilton, Ms. Rampersad is also the volunteer coordinator for Cannabis Amnesty. She lauds a program that exists in Los Angeles and Oakland where a percentage of licences are actually reserved for those with prior convictions, or who come from specific marginalized communities.

When asked if the mainstream Canadian industry pays enough attention to those who have suffered from the war on drugs, Ms. Rampersad quickly said no. “The inherent racism of criminalization always gets edited out,” said the former social worker, whose parents were born in Trinidad. “The reasons why it was prohibited in the first place.” And while it’s most often young, racialized men who end up with criminal records for drug possession, historic discrimination has hurt women, too, including those left fatherless or parenting alone when men were jailed. Ms. Rampersad has also worked at the Vanier Centre, a women’s prison in Milton, Ont., and said at least half the women there were in for low and medium drug offences, usually possession charges received while working as drug mules to support their families. These records affect them in later custody battles, or in dealings with child-protection services.

Decriminalization won’t necessarily fix that. Ms. Haines-Saah recently gave a talk about cannabis to a group of family judges in Alberta, who told her they were nervous about what the new laws meant for their responsibilities. “They all said, ‘I know how to judge intoxication by alcohol, but if we have a parent who consumes cannabis recreationally or medically, I don’t have a metric for how much or when it’s risky for child protection,’” she said. Again, this will affect certain women more harshly than others – especially Indigenous women, whose children are already apprehended at unfairly high rates across the country.

Convincing middle-class moms to become consumers risks further vilifying those who have historically been penalized. One idea that kept popping up in my inbox is the need to create a distance between the new, professional female user and the old stereotype of a stoner dude – multiple news releases promised that using cannabis won’t turn women into either Cheech or Chong. Sure, those guys leaned into the dumb pothead stereotype, but they were also both young, racialized men. Richard Marin, who played Cheech, had Mexican parents, and the early 20th-century evolution of benign cannabis into terrifying “marihuana” often relied on anti-Latino racism. Rolling that history into pink papers and lighting it up is a dishonourable move.

At the summit, speakers were careful not to disparage those who worked in cannabis when it was still just marijuana. As she cautioned potential edible entrepreneurs about why those products are particularly tricky to bring to market, Robyn Rabinovich of TerrAscend made it clear that she meant “no disrespect to the people on the black market who screamed the loudest and pushed the hardest” for decriminalization to happen at all.

This paying of homage is common, Ms. Enenajor said. “The industry is so saturated right now that people are trying to get an edge,” she said. “A lot of them are doing so by attempting to make themselves appear to be part of the original crew, sort of the original fighters for cannabis legalization. A lot of them are quite interested in amnesty and adopting an amnesty position as part of their corporate social-responsibility framework.” That is, for now.

To their credit, the women I met this week found the girly pitches in my inbox amusing, or even insulting. I was reminded that health-care workers have long wanted cannabis as an alternate to opiates for this reason: It’s much less addictive. Further discrediting the pretty “wellness” approach, Andreina Herrera, who works as an intake officer at a chronic-pain clinic says her patients are less worried about how stylish their accessories are than whether they can afford their medicine. And although Ms. Haines-Saah expressed her own skepticism about cannabis “lifestyle” pushes, she also noted that female entrepreneurs are already conceiving products that could help many women, such as cannabis-infused vaginal lubricants that actually work.

In the end, looking at cannabis through a gendered lens reveals a familiar picture: There’s plenty here for feminists to consider, but shopping our way to equality has never really been an option. As October approaches, many women in the industry have good intentions to build businesses that are both financially successful and politically responsible. What remains to be seen is how many keep up the work as, come the fall, millions start to roll up and the millions start to roll in.

Can businesses make money with cannabis edibles?

When it comes to identifying trends in the food and beverage industry, it’s not always easy to see the forest through the trees. Much of the time, certain types of products gain momentum, and then before you know it, they are everywhere.

Sometimes however, it’s very easy to see a movement coming at you like a distant tsunami. Such is the case with the imminent legalization of cannabis in Canada.

Marijuana is expected to be fully legal across the country within a matter of months and this will undoubtedly lead to a kaleidoscope of offerings in the edibles and beverage sectors. Companies can either jump on the bandwagon and profit from this, or watch their competitors capitalize instead.

But navigating the intricate world of this almost-legal substance can be a daunting task. Those who want to add cannabis and its derivatives to their food and drinks need to know how to do so safely and within Health Canada guidelines.

“[Cannabis edibles] are expected to be legal within one year of legalization,” says Lisa Campbell, cannabis portfolio specialist for Lifford Wine & Spirits. “Now legalization has been delayed to late summer or fall essentially, so within that year we are expecting that Health Canada will approve other cannabis derivative products.”

Campbell went on to add that for a company not already in the cannabis sector to get involved, overhead costs such as added security need to be factored in due to the fact that cannabis is a controlled substance. One of the ways to negate some of these costs would be to work with an existing licensed cannabis producer, of which there are many. “A lot of licensed producers are looking for turnkey businesses they can partner with, or potentially acquire, to add to their product portfolios.”

Along with ascertaining any added costs in logistics, interested companies should consider if they will be processing cannabis oil on-site or acquiring the substances they need elsewhere from an existing manufacturer.

“[Most people] would be dealing with a processed cannabis extract from a licensed producer, but if someone has a processing or micro-processing license they could have that equipment in their facility to process the cannabis flower,” says Campbell.

Campbell also points out that the latter choice of processing the flower, could be a more expensive venture in the short term, but ultimately might pay for itself down the road depending on the needs and scope of the company.

“Once we reach peak legalization where we will have the micro-grows as well, prices will go down when there eventually is a surplus,” Campbell says. She added the possibility exists that companies may be able to source less expensive oil from international sources. “Just like we have wine from Chile, in the future we will hopefully have oil from Uruguay, Jamaica, Colombia, and other places where the costs are much lower.”

In regards to what products might do particularly well when infused with cannabis, obviously the traditional items like cookies, brownies and the like come to mind, but Campbell sees a much broader landscape than that. “It’s interesting because beverages are the biggest trend right now, the licensed producers are announcing different beverage deals. But when you look at the market data in Oregon [for example] on what edibles sell the most, beverages aren’t number one on the list in terms of sales. The number-one edible in Oregon right now is a raspberry gummy.”

Although gummies do very well, the regulations in Canada are vastly different than the U.S. states that have legalized marijuana. “With the new regulations [in Canada] nothing can appeal to children so no cartoons, nothing that looks like a character, so gummy bears won’t be a thing. But if it doesn’t look like an animal it can [potentially] still exist.” Campbell adds that Health Canada, more than likely, will try to facilitate healthier edible options such as products like kombucha and protein drinks.

With all the regulation and effort it might take to get involved in the burgeoning cannabis edibles and drinkables sector, it’s completely natural to wonder if the whole idea is worth it. In other words, is recreational cannabis edibles just a fad or is it here to stay?

“It’s going to get bigger because the edible market is way more accessible to new consumers,” says Campbell. “I’ve been hearing a lot of non-consumers, people that maybe smoked cannabis in high school but stopped, those consumers are starting to come back to cannabis. [They’re saying] I want something that’s going to relax me, that’s not going to make me cough, but will have the same therapeutic effects.”

In a matter of months, Canada will become the first G7 country on the planet to legalize recreational cannabis at the federal level. This trend is coming fast, but still slow enough that companies interested in jumping on board will be able to do so.

Perhaps it’s time to reach out to your local licensed cannabis producer and book a meeting.

Jonathan Hiltz is a journalist in the cannabis industry and the director of content for INDIVA, a licensed cannabis producer in London Ontario.

Weed Pairs Well With Wine, at the Corporate Level in Canada

As Canada prepares to reintegrate cannabis into society after an almost 100-year deep freeze, the palpable anticipation in the retail sector is evident. This includes the massive wine, beer, and spirits industries as well.

Canada’s wine industry alone hovers around the $9 billion mark annually, according to a report commissioned for Canadian wine trade associations. For cannabis, a recent report from a major Canadian bank revealed conservative estimates that show the recreational marijuana industry could grow to  $6.5 billion per year by 2020. 

“The wine world is already really experienced with the supply chain in Canada,” said Lisa Campbell, the cannabis portfolio specialist at Lifford Wine & Spirits in an interview with Marijuana.com.

Campbell was also quick to point out some of the similarities between wine and cannabis.

What You Need to Know About Canada’s Cannabis Act

Yesterday was a historic day for Canadians, as the Cannabis Act passed through the Senateafter two years of intense debate. The landmark decision makes Canada the first G-7 country to legalize cannabis recreationally, with the first legal stores expected to open by October 17th 2018.

The bill passed on a vote 52 to 29, with several opposing Senators cited concerns that legalization for non-medical cannabis violated the UN drug control treaties.  Yet despite heated opposition, Bill C-45 is now making its way into law and is expected to come into effect 8-12 weeks after Royal Assent which is expected by the week’s end.

Independent Senator Tony Dean who sponsored the bill was elated celebrating the end of cannabis prohibition in Canada, “We have seen in the Senate tonight a historic vote that ends 90 years of prohibition of cannabis in this country, 90 years of needless criminalization, 90 years of a just-say-no approach to drugs that hasn’t worked.” Dean emphasized, “I’m proud of Canada today. This is progressive social policy.”

Amendments that were originally proposed by the Senate were struck down by the House of Commons, could have been disastrous for the industry. Originally, the Senate had proposed a ban on all cannabis swag, including t-shirts and tote bags and attempted to reinforce the province’s ability to ban homegrown cannabis.  Under the Cannabis Act, every Canadian can grow up to 4 plants which certain Senators complained would increase children’s access to cannabis. Senators ironically also attempted to decriminalize adults giving their children cannabis as young as age 16.

The Senate has also originally proposed disclosure of foreign investment, as millions of dollars poured into float Canadian cannabis companies from offshore tax havens like the Cayman Islands. These amendments were struck down by the House of Commons and did not make it to the final version of the bill, which led to a suspenseful voting session at the Senate after the stock markets closed for the day.

An Economic Boon

Not passing the bill would have been disastrous for Canadian economy, but now Canadian cannabis stocks expected to soar as soon as the markets open leading up into legalization. Shortly after the bill passed, Canada’s Prime Minister Justin Trudeau tweeted #PromiseKept, “It’s been too easy for our kids to get marijuana – and for criminals to reap the profits. Today, we change that.”

As trade wars between Canada and the US amp up, legalizing cannabis federally means that Canadian licensed producers can import and export for medical and scientific purposes, while US companies remained landlocked in legal states by federal prohibition.

Legalization for medical use occured in 2001 in Canada, with private companies expanding into cannabis starting in 2014 and growing into a robust industry now with over 100 licensed producers in 2018. Canada now boasts cannabis stocks as some of the highest traded, which are beginning to premier on the NASDAQ in 2018, while US cannabis penny stocks continue to fluctuate due to federal prohibition. It’s worth noting a lot of US cannabis brands have moved north with hopes of trading on the major exchanges, including MedMen, Dosist and Province Brands, with other companies licensing IP to Canadian companies including Dixie, Bhang, Greenhouse, O.PenVAPE, and many more.

While the first year of legalization in Canada products will be limited to dried flower and oil, Deepak Anand, Vice President of Government Relations at Cannabis Compliance Inc. was optimistic about diverse cannabis products being approved within a year of Royal Assent. “Health Canada has already started thinking about regulations surrounding forms of Cannabis not going to be legal on proclamation day.” On the retail side, he noted, “Provinces such as New Brunswick appeared far better prepared for a September legalization date when compared with BC or Ontario.”

While the west side of the country amps up for private retail, east of Ontario is primarily government retail outlets with potential for privatization as government swings right. Originally legalization was supposed to take place by July 1st on Canada Day but now is expected in September giving provinces more time for the rollout.

Justice, Freedom, and Cannabis

Despite the celebrations, many activists worry that legalization will ultimately leave out those who have most been affected by the war on drugs in Canada.  For those Canadians who have a criminal record for cannabis, there are no pardons proposed currently in the Cannabis Act. Having a criminal record or being suspected of breaking the law are grounds to deny someone a cannabis business license. Critics say that cannabis should take an equity perspective, especially with Canada’s massive diversity problem when it comes to cannabis. Health Canada is listening to criticism and recently announced that Indigenous cannabis applicants are being fast-tracked now to make up for the lack of diversity.

The new Cannabis Act includes micro-cultivation and micro-processors, which will be able to produce edibles, extracts and beverages by 2019. While marketing remains restrictive in Canada, there is the potential for farm gate sales for micros in the future as legalization potentially opening the door to licensed cannabis lounges, restaurants and cafes depending on provincial restrictions.

As for next steps for Canada, Trina Fraser co-managing partner and CannaLaw® group leader at Brazeau Seller Law is optimistic for the future of craft cannabis, “Hopefully the regulations will include implementation of previous proposals by the federal government, including ‘micro’ licences with lower regulatory burdens, clarity on security clearance requirements for prior illicit market participants and improved access for medical patients.”

It’s hard to know if legalization will truly be inclusive after almost a century of prohibition, whatever Canada does will set an example for the world. As the World Health Organization releases its pre-review for cannabis, according to Senior Policy Analyst for Transform Drug Policy Foundation and consultant for Health Canada’s legalization task force Steve Rolles, “This will have major repercussions at the UN.”

Rolles reflected that while the UN ignored Uruguay, and turned a blind eye to the US states, Canada is a major voice in the United Nations, so this will inevitably force the debate on drug policy reform back to center stage. “The malfunctioning and antiquated UN system is long overdue for some modernisation, so it comes a good moment. We hope the Canadian government can now show the same leadership at the UN they have shown domestically.”

Craft cannabis growers say better bud will be key to thriving in the legal market

Lisa Campbell, who recently joined Toronto-based wine distribution company Lifford Wine & Spirits to work with cannabis companies, says craft producers will be able to distinguish themselves by growing better-quality marijuana than large-scale producers.

“A lot of the licensed producers right now, their goal as publicly traded companies is producing the cheapest cannabis possible for the commercial market,” says Ms. Campbell. She says craft producers will be able to use different genetics, grow in different soil and use other methods to distinguish their cannabis. “A lot of people say hand-trimmed buds is craft, so the trim is really important. If it’s dense and not fluffy, it’s great, and obviously, smell and flavour are factors … It’s like getting a bottle of wine for thousands of dollars – there will be certain products that will fetch a premium.”

The pen is mightier

Cannabis vape devices are a hit with consumers -- so why won't they be legal right after legalization?

A cannabis vape pen is essentially an e-cigarette, but for cannabis oil instead of nicotine oil. A rechargeable battery powers a heating element, which vaporizes cannabis oil contained in a replacable or refillable cartridge. (Disposable, limited-used vape pens are also available.)

"Vape pens are super-discreet, so unlike smoking cannabis there's very little odour," said Lisa Campbell, a cannabis portfolio specialist with Toronto-based liquor distributor Lifford Wine & Spirits, which is adding cannabis to its product mix.

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Lisa Campbell, “a badass lady in the cannabiz,” according to the popular online cannabis resource, Leafly, used to run Green Market, an underground marketplace for specialty products and a hub for makers, artisans and members of the growing Canadian cannabis community.

Green Market, which stopped running events earlier this year due to mounting liability issues, mostly showcased edibles, which Campbell also sees as one of the most promising sectors in cannabis.

As of March, she’s the brand new cannabis portfolio specialist for Lifford Wine & Spirits, an established national agency that this year is adding both beer and weed to their more traditional portfolio.

“We’ve gotten a lot of interest from Licensed Producers now that provincial regulations are coming out, and it’s looking like cannabis will be distributed similarly to alcohol,” Campbell says.

“I’ve heard that edibles may be on the shelves of the Ontario Cannabis Retail Corporation, or OCRC, as well as [infused] beverages, but it’s just rumours at this point.”

The Attorney General has announced that cannabis lounges will be considered in the second phase of legalization, and the AGCO will be in charge of laying out the licensing structure, which will regulate them.

Although it’s not likely that cannabis will be co-located beside alcohol in Ontario anytime soon, Campbell notes that several provinces in Eastern Canada will be allowing co-location and in an industry so young and disruptive, nothing is fixed.

“Ultimately, I think it should be about consumer choice. If we’re at a restaurant, you should be able to order your cannabis beverage and I can have my glass of wine – it shouldn’t be a problem,” Campbell says.

As independent producers and canna-corporations gear up for legalization, expect a torrent of innovation to create new products and design ways of marketing them.

“People are building up these cool brand and niche products, like EP Infusions and Canna Cocoa, which make beautiful hand-painted chocolates,” Campbell says.

“And big companies like Canopy Growth Corp have patents and trademarks for all of these brand new products.”

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Four takeaways as Big Alcohol makes another foray into Canada’s cannabis market

• April’s announcement that Lifford Wine and Spirits, a major supplier of wine to the Liquor Control Board of Ontario, created Lifford Cannabis Solutions to help licensed producers market and sell their products.

What does this mean for Canada’s cannabis industry? Here are four takeaways:

1. Expect more deals

John Kaden, managing partner of Navy Capital, a New York firm investing in international cannabis companies, believes Southern Glazer’s may not be Aphria’s last alcohol partnership.

The Southern Glazer’s deal follows Aphria’s recent hiring of Jakob Ripshtein as chief commercial officer. He’s a 10-year executive veteran of Diageo North America, the subsidiary of London-based alcoholic beverages conglomerate, Diageo.

Kaden cited the Ripshtein hire as evidence of the company’s ongoing courtship of Big Alcohol, and specifically Diageo.

2. Look for future partnerships involving unique MJ expertise

In legal cannabis markets, liquor sales are dipping, and alcohol companies want to offset those losses. So says Paul Pedersen, a former cannabis consultant and now CEO of NextLeaf Solutions, an extraction firm in Vancouver, British Columbia.

That means alcohol companies could potentially join with cannabis businesses in an effort to tap some unique forms of expertise.

“The biggest thing the alcohol guys are concerned about is can they do the science? They need R&D,” Navy Capital’s Kaden said.

“Creating a cannabis cocktail with controlled release and onset times takes a lot of science. That expertise is hard to find.”

And speed is becoming increasingly important.

“They need to get involved sooner, not later,” Kaden added, “because they can’t get involved when its already legal and it’s time to have products out, because they’ll be way behind.”

3. Pay attention to what this means in the U.S. market

Southern Glazer’s move is perhaps another signal that major mainstream American companies are looking at the Canadian market as a venue to develop their cannabis expertise. Then they could be better prepared if and when the United States removes the federal prohibition governing cannabis.

“With the Canadian market being federally legal, it gives bigger companies a chance to test run a strategy, in this case distribution, in a federally legal jurisdiction,” said NextLeaf’s Pedersen.

A Southern Glazer’s representative, however, denied the company has any interest in the U.S. cannabis market.

“The sale and distribution of cannabis in the United States is currently prohibited by federal law,” Southern Glazer’s Cindy Haas said. “Therefore, we have no plans to distribute cannabis in the U.S.”

“Our role in the distribution of cannabis is limited to Canada at this time.”

4. Keep an eye on scale, efficiency

Observers also see this partnership as another clear signal that consolidation is inevitable.

“This is going to be an industry dominated by a handful of players, three to six, and a lot of craft guys,” Kaden said. “This market is going to be all about scale and efficiency.”

He expects a small number of licensed producers will work with a small number of big distributors. And that’s why Kaden sees Aphria’s partnership with Southern Glazer’s as wise.

“They’re using one of the world’s largest alcohol distributors as an internal salesforce,” Kaden said. “That saves Aphria from putting together a full-fledged sales team because they have an experienced alcohol group that’s going to fight for shelf space.

“It’s a more efficient way for Aphria to maximize its resources right now and get an experienced group at a fifth of the cost of putting together a sales team yourself.”