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Legalizing Recreational Marijuana, Canada Begins a National Experiment

Canada’s New Marijuana Economy: Meet the Winners and Losers

After 95 years of prohibition, Canada has legalized marijuana. We met with buyers, sellers, growers and students to hear what they had to say.

“We are right on the eve of the legalization of trees in Canada. At 12 o’clock midnight, you can smoke what you want, take hits from the bong. Canadians, make some noise!” It’s a new era for Canadians — the full legalization of marijuana across the country. It’s been legal to consume cannabis here for medical reasons since 2001. But now, anyone in Canada over the legal age can get high. And that means Canada’s booming weed business is about to get a whole lot bigger. We went to see some of the producers who are set to take advantage of this opportunity. “It’s got kind of a citrusy and pine smell both at the same time. This is one of the Kushes. It’s got more of a turpentine, maybe a little more earthy smell. This is a very popular strain for us. We call this deep purple, very fruity.” Warren Bravo was a co-founder of Green Relief, a medical marijuana company that is now well-placed to enter the recreational space. He’s aiming to increase production 20-fold over the next year and a half. And that’s nothing compared to Canada’s top marijuana producer: Tweed Inc., a brand of big-time operation, Canopy Growth. One vault here can hold about $150 million worth of cannabis. “Yeah, so in this facility, on this side that we’re touring here, we have 24 flowering rooms and then about another 24 on the other side as well. This is, at the end of the day, what all of the fuss and excitement is about, I guess. When we reached out the first time, I think, you know, the New York Stock Exchange probably, you know, rightly said, ‘No way.’ You know, we’re not having a cannabis company. And then that education process started. And if you try to break down these barriers, and demonstrate we’re a normal company creating a normal product like anyone else.” And it’s a product that’s becoming a formal field of study, fast. “We’re running the only postgraduate certificate program in cannabis in Canada.” Bill MacDonald teaches a class of 24 highly dedicated students, that includes a former police officer. “It did take some reconciliation because I was, obviously, on the other side. But it’s in society. It’s out there, now. So, if we’re going to have it and it’s going to be here, let’s control it properly.” That’s the thing — for people who were hoping for a free-for-all and one-love openness, it’s a disappointment. “Cannabis is going to be legalized in certain contexts, but it’s also going to be very heavily regulated. And my concern is that people don’t recognize the extent to which it will still, in certain contexts, be illegal. And that might bring them in conflict with the law.” “African-Canadian people, our community is very afraid to now come out and actually be a part of this market, because we’ve been criminalized for so long.” Noni Haynes is part of a group leading a discussion on new cannabis laws at a local community center. “And who is making money from the weed? Not the average person.” “I don’t know if you don’t know, we live in a capitalist society. And, you know, within capitalism, anything goes.” “That’s a very good point. I mean, now is the opportunity. If you capitalize on that, you have your business, or you grow your business, you expand your clientele. And you treat it like an actual corporation.” A few days before legalization, we came to a kind of marijuana farmer’s market in Toronto, at Planet Paradise. In the past few years, this place has been tolerated by police. But now, fines have been ramped up, and the organizers here are shutting shop, worried about a crackdown. “We’re planning on not really having anything like this till we see where the law is going to go. Because we don’t want to have a bunch of issues ourselves, right? So we figured we’d have one last hurrah, just to get people together and smoke.” We travelled to an indigenous Mohawk territory, another place where marijuana is openly sold illegally. There are over 40 unlicensed dispensaries here. Jamie Kunkel owns one of them, Smoke Signals. He’s not worried. “The amount of customers that we go through, I believe, is going to increase because of the system that they’ve set up. They’re not providing the Canadian constituency with a reasonable place to purchase this plant. I personally think they’ve set themselves up for failure.” Jamie is pointing to the fact that there are no legal brick-and-mortar dispensaries in the province of Ontario. Lawful purchases must be made online, and those do not include any of the cannabis-infused products sold here. “Milk chocolate espresso beans, milk chocolate almonds. Jeez, you know, I was really looking forward and hoping it was going to be the salsa.” Canada is only the second country in the world to legalize cannabis after Uruguay. But it’s the first major economy to run this experiment. And whatever it leads to, Canada will be leading the way.

  • Oct. 17, 2018

MONTREAL — Canada on Wednesday became the first major world economy to legalize recreational marijuana, beginning a national experiment that will alter the country’s social, cultural and economic fabric, and present the nation with its biggest public policy challenge in decades.

Across the country, as government pot retailers opened from Newfoundland to British Columbia, jubilant Canadians waited for hours in line to buy the first state-approved joints. For many, it was a seminal moment, akin to the ending of Prohibition in the United States in the 1930s.

It was also an unlikely unifier, coming at a time when Canada has been buffeted by bruising trade talks with the United States and has seen its prime minister, Justin Trudeau, repeatedly ridiculed by President Trump. Canada is the second country in the world, after Uruguay, to legalize marijuana.

“I have never felt so proud to be Canadian,” said Marco Beaulieu, 29, a janitor, as he waited with friends outside a government cannabis retailer in the east end of Montreal. “Canada is once again a progressive global leader. We have gay rights, feminism, abortion rights, and now we can smoke pot without worrying police are going to arrest us.”

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Canadians broadly support marijuana legalization, but amid the euphoria, there was also caution.

“Legalization of cannabis is the largest public policy shift this country has experienced in the past five decades,” said Mike Farnworth, British Columbia’s minister of public safety.

“It’s an octopus with many tentacles, and there are many unknowns,” he added. “I don’t think that when the federal government decided to legalize marijuana it thought through all of the implications.

In a stinging editorial published on Monday, for example, the Canadian Medical Association Journal called the government’s legalization plan an “uncontrolled experiment in which the profits of cannabis producers and tax revenues are squarely pitched against the health of Canadians.”

It called on the government to promise to change the law if it leads to increased marijuana use.

Under Canada’s new federal cannabis act, adults will be allowed to possess, carry and share with other adults up to 30 grams of dried cannabis, enough to roll roughly 60 regular-size joints. They will also be permitted a maximum of four homegrown marijuana plants per household in most provinces.

[Yes, Canadians can grow their own, but not in every province. No, it won’t be legal for kids to smoke. Here’s what you need to know as Canada legalizes marijuana.]

Marijuana for medical purposes has been legal in Canada since 2001, and about 330,000 Canadians, including cancer patients, are registered to receive it from licensed producers.

Pre-rolled joints, fresh or dried marijuana flowers, and cannabis oil are all permitted under the law. Cannabis edibles — like pot-infused jelly beans, peanut butter and coffee — won’t be legal for another year.

According to Canada’s national statistics office, 4.9 million Canadians used cannabis last year and consumed more than 20 grams of marijuana per person.

On Wednesday morning, the government announced that it would introduce legislation to make it easier for Canadians who had been convicted of possessing small amounts of marijuana to obtain a pardon.

While the government is not offering a blanket amnesty, Ralph Goodale, the public safety minister, said at a news conference in Ottawa that as “a matter of basic fairness,” the government would seek to end the minimum waiting period of five years to apply for a pardon as well as waiving the fee of 631 Canadian dollars.

The federal government has left the country’s 13 provinces and territories to carry out the new legislation and set their own rules, creating a patchwork of regulations. Among many open questions are how the police will test drivers who may be high and how employers deal with employees who smoke before coming to work.

Bernard Le Foll, a specialist in addiction at the Center for Addiction and Mental Health in Toronto, a leading teaching hospital and research organization, said that although the center supported legalization, he was concerned that the public dissemination of information about risks had been insufficient.

“Cannabis is not a benign substance,” Dr. Le Foll said. “There is a clear risk of addiction, and it can produce significant mental health issues if used by the wrong kind of people.”

He added, “It took decades for the public to understand the risks of cigarettes, and the legalization of cannabis has taken place only over a few years.”

Jean-Sébastien Fallu, an associate professor of applied psychology and a specialist in addiction at Université de Montréal, said he particularly worried about the effects on young people.

“We don’t want young people to feel stigmatized, for example, if they don’t use cannabis,” Professor Fallu said.

The legalization of cannabis has led to a so-called “green rush,” with licensed cannabis growers pressing to get a foothold in what is expected to be a $5 billion industry (6.5 billion Canadian dollars) by 2020, buttressed by the expected arrival of thousands of pot tourists from the United States.

After months of soaring share prices, though, the first day of legal marijuana sales initially saw steep drops in the value of marijuana stocks. That reversed somewhat in the afternoon, leaving the largest companies’ shares down just slightly by the end of trading. Many analysts say the value of legalization was long ago priced to the shares’ value.

At the government cannabis store in Montreal — one of 12 in Quebec — a line stretched across a long city block on Wednesday morning. Some of the hundreds of people had waited since 3:30 a.m., anticipating the store’s 10 a.m. opening.

Kate Guihan, 29, a beautician, said she planned to celebrate the “historic moment” on Wednesday night with several puffs on a joint. The low cost of government pot, she added, was a big draw for her, along with the fact that legal marijuana was screened and devoid of contaminants.

In Halifax, the mood was similarly buoyant.

“We are witnessing history,” said Shawn King, the host of a countdown to legalization on a local radio station. “Marijuana prohibition is ending after 96 years. There’s going to be a generation of people that never knew it was ever banned.”

Inside a government retailer in Halifax that looked like an Apple store, shoppers browsed for products including “Ghost Train” and “Lemon Skunk.” Bongs were on display. Some shoppers bought weed, and others accessorized.

Others across Canada were ordering pot online from government stores.

As online demand soared, stocks quickly ran out, creating fears of marijuana shortages.

In New Brunswick, the government cannabis agency provided a step-by-step guide on its website on how to roll a joint.

Inside the Walmart of Weed: From rural Canada, Big Marijuana seeks to dominate global market

SMITHS FALLS, Ontario — The skunky, floral smell of growing marijuana is everywhere, from the parking lot outside the cavernous warehouse, to the lobby, even inside the coffee nook where employees take a break.

The building itself is a chocolate brown box that once housed a Hershey’s candy factory. In just one wing, a labyrinth of white halls links seemingly endless rows of windowless rooms, some the size of a school gymnasium, with fields of cannabis inside growing under bright white and yellow lights.

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Workers wheel carts piled high with bales of green buds. In large open-floor production rooms, assembly lines of machinery pump out pot products, scores of perfectly rolled joints from the silver fingers of one, slews of red pills for medical marijuana patients in Germany spilling from another.

Welcome to the Walmart of Weed.

With Canada the largest nation to completely legalize marijuana, the world’s most valuable pot company, Canopy Growth Corp., has set up shop in this rural town seven hours northwest of Boston. Founded in 2013 and now worth about $6.4 billion, Canopy is one of the most watched and most controversial pot companies, the embodiment of Big Marijuana that critics contend uses size, market power, and lobbying prowess to accelerate the loosening of cannabis laws around the world and shoulder out competitors and smaller businesses.

“We’re seen as ‘corporate cannabis,’ the big kid on the block,” said D’Arcy McDonell, a Canopy spokesman, as he conducted a tour of the factory earlier this year. “What makes it corporate cannabis? Success, basically.”

Already Big Alcohol, Big Tobacco, and Big Pharma have bought their way into Canopy and other marijuana companies. And, like those longstanding giants, the new cannabis corporations are spending millions of dollars lobbying for laws that let them sell large volumes of potentially addictive products. Even in the Holy Land of marijuana — Jamaica — Canopy and other Canadian companies have contracted with local businesses to gain a foothold in the nation’s new medical market, anticipating a day when they can export ganja from the home of Bob Marley, while small traditional cannabis farmers are struggling to meet regulatory requirements.

“We’re seeing almost exactly the same thing” with marijuana as with tobacco and alcohol, said Dr. Sharon Levy, who runs the adolescent substance use program at Boston Children’s Hospital. “Honestly, at what point do we say, ‘We’re not going to allow people to get rich on the health of other people?’ ”

As with cigarettes, advertising for marijuana is sharply limited in Canada and the United States. But pot companies have found ways around such rules using sleek videos on social media. Canopy, for example, has announced ventures with celebrities Drake, Seth Rogen, Martha Stewart, and Snoop Dogg. Its new line with Drake was promoted on the rapper’s Instagram page, which has nearly 62 million followers.

Massachusetts has tried to limit corporate domination in the pot business. But as the Globe Spotlight Team reported earlier this year, some bigger pot operators have tried to skirt the state’s cap on licenses and exploit the mandate to foster a diverse industry by recruiting minority entrepreneurs to serve as the local face of the company while maintaining substantial control over the businesses. Companies have also hired former politicians and consultants to help them win coveted permits from municipalities.

Canopy executives say the nascent marijuana market has room for all types of businesses, while insisting its size is an asset: The company can produce enough marijuana to meet the growing demand at prices that keep consumers from buying on illicit markets — a crucial need for legalization to succeed; it also has the wherewithal to impose the tight quality and security controls governments require of a regulated drug.

“There’s a lot of good things we can do with our scale and our size,” Canopy chief executive Mark Zekulin said.

As countries around the world loosen medical cannabis laws — with global consumer spending on legal pot projected to hit $40 billion by 2024 — the jockeying for primacy in this growing industry is largely among a handful of large Canadian companies.

In recent years, Canopy started exporting medical marijuana to Germany and Australia, and is building a hub in Denmark to supply Europe. The company also has operations in Colombia, Brazil, and southern Africa. And this year, Canopy inked a $3.4 billion deal to buy one of the biggest US pot companies, Acreage Holdings, whose board includes former House speaker John Boehner and ex-Massachusetts governor William Weld. The deal hinges on changes to US law easing marijuana restrictions.

While recreational marijuana is legal in 11 states, to date federal law has limited the size of pot companies by hampering access to financial markets and cross-state commerce. But that is poised to change. The US House of Representatives recently passed a cannabis banking bill, which, if signed into law, would likely allow Big Marijuana companies to explode in the United States.

Many policy analysts say the US has to find a better way to regulate potentially addictive products to avoid repeating the market consolidation and public health issues associated with tobacco, alcohol, and addictive pharmaceuticals.

“This isn’t about saying, ‘We need to smash capitalism’; it’s about mitigating the excesses of corporate capitalism,” said Steve Rolles, a London-based policy analyst with Transform Drug Policy Foundation, who advised Canada on marijuana regulation. “Emerging cannabis markets could be a really great opportunity to show how we could build new markets to serve the public interest and not allow these harms. In five to 10 years, that boat will have sailed.”

Public health concerns

One of Canopy’s newest innovations is the creation of branded pot-infused beverages — such as a ginger ale drink — that have recently become legal in Canada and are expected to hit licensed stores there in mid-December. The effort benefited from the expertise of Constellation Brands, a conglomerate that owns Corona beer, Svedka vodka, Robert Mondavi wines, and other popular alcohol brands. Constellation invested $4 billion in Canopy in 2018, giving it 38 percent of the company and four seats on its seven-member board.

Constellation “saved us decades of knowledge-gathering,” said Mario Castillo, Canopy’s eastern Canada regional manager.

Meanwhile, Cronos, another Canadian cannabis company, received a $1.8 billion investment last year from Altria Group, maker of Marlboro and other cigarette brands, giving the tobacco giant a 45 percent stake in the pot company. Both tobacco and marijuana industries see potential in vaping technologies that can appeal to both consumers and regulators, especially given the recent concern over vaping-related lung illnesses.

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Public health advocates fear such partnerships will inevitably follow a harmful playbook.

Levy, the Boston Children’s Hospital pediatrician, co-wrote in The New England Journal of Medicine that she expects marijuana companies to follow a roadmap drawn up by the tobacco industry: “deny addiction potential, downplay known adverse health effects, create as large a market as possible as quickly as possible, and protect that market through lobbying, campaign contributions, and other advocacy efforts.”

As with alcohol and tobacco, marijuana companies’ revenues rely on heavy consumption from regular users: Daily and near-daily cannabis consumers account for 75 percent of spending in the industry, a 2016 study in the Journal of Drug Issues found.

That dynamic incentivizes companies to create more potent and more addictive products, such as “dabs,” waxy clumps of highly concentrated marijuana that are often smoked with a blowtorch-like device, and are popular with teenagers, Levy said.

Federal drug laws have long prevented funding well-designed studies on marijuana. Now, cannabis companies are paying for research they hope will demonstrate the therapeutic benefits of their products, raising questions about conflicts of interest tainting supposedly unbiased scientific inquiry.

What scientists do know: Cannabis can be addictive, though less so than alcohol, cigarettes, and opioids. Frequent pot use can affect memory, motivation, and cognitive functioning. Heavy use of high-potency marijuana has been linked to psychosis in studies, though it’s unclear why. On the other hand, cannabis can provide medical relief for people with such conditions as epilepsy, cancer, and chronic pain.

Most US states that have legalized pot — such as Massachusetts — have chosen for-profit models through ballot initiatives, said Beau Kilmer, director of the RAND Drug Policy Research Center. That’s unfortunate, he said, because it limits voters to a “yes” or “no” choice on legalization generally, without understanding how it will be implemented and the range of possible alternatives.

Options that could lead to better health results than the for-profit model, Kilmer said: government-run stores, such as those implemented in some Canadian jurisdictions, or requiring cannabis producers to be nonprofits or to follow rules for socially responsible corporations.

“If you talk to folks who are pro-legalization outside of the United States,” Kilmer said, “they look at the US and say, ‘Why are you allowing the big companies to control this?’ ”

Social justice

Canopy has hired inventors and engineers, and filed for hundreds of patents for its products and processing equipment. One machine, for example, can do the work of nine people checking the weight and packaging of jars of marijuana.

These efficiencies are one example of how large corporations can outmuscle smaller competitors. This has implications for a big ambition of marijuana advocates — that legalization would benefit black and Hispanic communities that were targeted during the war on drugs, a cornerstone of Massachusetts’ legalization law.

The state has taken steps to help locals start pot businesses, but Kilmer questions their long-term prospects. If the United States legalizes cannabis across state borders, the bigger companies by dint of their reach would have access to many more markets, he said, and could further undercut local operations by growing pot at scale in warmer climes at lower cost, taking the jobs there with them.

Shaleen Title, a Massachusetts cannabis commissioner who helped craft the state’s measures aimed at boosting small businesses, said it was important for government officials to avoid unnecessary “fear-based policies,” like requirements that marijuana businesses not locate near certain types of other businesses such as funeral homes, which can drive up real estate costs.

“Companies with unlimited resources love barriers to entry and requirements that demand large amounts of capital,” Title said, “because such requirements push others out and give the already-privileged a boost toward the market domination and market consolidation that they’re seeking.”

One of the Massachusetts measures she supported is a cap on each company of three licenses of each kind — retail, cultivation, or production, for example.

Zekulin, the Canopy CEO, said the company expects to compete in those markets that have licensing limits by selling other retailers its branded and patented products for sleep, pain, and anxiety that are under development now.

‘Cannabis colonialism’

With Canada serving as a model for legalizing marijuana, Canopy has hosted tours for government officials from around the world, giving it an opportunity to pitch looser cannabis laws. That worries activists, who say the Canadian system has shut out smaller businesses.

“Canopy is going around telling every government on Earth, ‘Do it like us, grow the plants in prison-like facilities with big walls and concrete, we know what we’re doing, don’t let in those little people,’ ” said Jodie Emery, a Canadian marijuana activist. “This reeks of cannabis colonialism.”

Canopy said it does not lobby exclusively for indoor cultivation and grows cannabis outdoors in Canada and other countries.

In Colombia, Lesotho, and other countries, Canopy has acquired local companies or is contracting with them. Those investments, Canopy points out, have provided stable incomes and health insurance to locals who have never had such benefits.

“To us, it’s inherent to always be giving back and always be locally committed,” Zekulin said, adding the company is also working with researchers and doctors in those countries.

But activists see such moves as the wealthy further enriching themselves off the poor.

In Jamaica, where medical marijuana is legal and recreational smoking is decriminalized, small-scale cannabis farmers were “hopelessly outgunned” by the Canadian companies’ lawyers and lobbyists looking to exploit the country’s pot-paradise image, said Rolles, the analyst.

“I’m not naive enough to think cannabis can somehow smash the inequities of capitalism, but it is a blank slate,” he said. “If there’s an opportunity to use emerging cannabis markets to build a fairer, more just, less iniquitous market structure, that’s great. We have a responsibility to try to do it better.”