It’s been a month-and-a-half since Canada legalized marijuana.
The move was highly anticipated, but issues have emerged immediately following the Oct. 17 effective date.
For one, the industry is facing supply shortages that are expected to last well into 2019. Furthermore, only a handful of stores opened on time. And most were government-operated.
Despite the full legalization of marijuana in the country, each province and territory chose to approach the legalization in its own way instead of following a nationally approved set of rules. Benzinga has asked several cannabis industry experts about the legalization in Canada and how the approach differs across provinces.
Province-By-Province Distribution
One major issue stemming from the government allowing provinces to set their own rules regarding marijuana is in distribution.
Some provinces only allow state-run stores. Others permit a limited number of private licenses. And others took a free-market approach.
For example, all cannabis in Quebec is sold through the SAQ (Société des alcools du Québec), which created a subsidiary called SQDC (Société québécoise du cannabis). Manitoba is more free-market oriented. British Columbia allows both private and government-run stores.
“In this respect, Canada has become a true laboratory of democracy in terms of figuring out which systems work better than others,†said 4Front President Kris Krane.
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Jessica Billingsley, CEO of MJ Freeway — which recently merged with MTech (NASDAQ: MTEC) — also points out the different approaches provinces took in regards to distribution.
“For Canadian cannabis businesses, selling cannabis across Canada means successfully complying with a patchwork of varying compliance regulations. It’s the most complicated compliance situation a business could face," Billingsley said.
"Canadian businesses need a technology like MJ Platform that currently handles varying compliance requirements within one system."
The different approaches toward distribution across provinces creates limits for licensed producers, said Alan Brochstein, founder of 420Investor.com and NewCannabisVentures.com.
“LPs are very limited in their ability to participate in retail, and I think investors will soon begin to focus on retailers, as there could be tremendous value creation there."
Transportation Issues
In the U.S., the illegality of marijuana on a federal level is known to create a litany of problems. For example, crossing the state border from one state with legal marijuana into another one where marijuana is also legal represents a criminal offense.
Even though marijuana is fully legal in Canada, transportation between provinces is still problematic due to differences in rules and regulations.
“The legal age may be different, as well as what products are allowed, where you can make a purchase and where you are allowed to smoke," said Beth Stavola, chief operating officer and president of U.S. operations at iAnthus Capital Holdings Inc (OTC: ITHUF)’s MPX Bioceutical Corp (OTC: MPXEF).
"Edibles won't be introduced into the market until next year and cannabis-infused drinks will be on the horizon in the future. It will take time to work out all the specifics."
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Photo by Javier Hasse. Metal work by Caos y Fortuna.
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