Canada’s legal cannabis industry is not without risk

Canada is the first G7 nation in the world to fully legalize cannabis


Bethan Rose Jenkins, Cannabis News Writer/Editorial

Since Canada’s Senate approved amendments to Bill C-45 (the Cannabis Act) on June 19, the legal cannabis industry has gone full steam ahead.

As the world’s first industrialized country to legalize cannabis fully, Canada is under a lot of pressure to prove that cannabis reform is worthwhile. Consumers and business people are patiently waiting for October to arrive, because on the 17th of this month, the Cannabis Act will go into effect.

This is what the pro-weed Prime Minister Justin Trudeau says, anyway.  

Billions of dollars can be reaped from Canada’s cannabis industry if everything is executed properly. With a few months to wait, Canada’s cannabis industry can be carefully crafted by retailers who will can the delay to their advantage, such as by establishing regulatory infrastructure. 

New industries like this one can be risky and anyone who wants to capitalize on cannabis reform ought to consider the risks

Canada’s legal cannabis industry is at risk of regulatory concerns

The Cannabis Act has been passed, but lack of regulations could pose problems for Canada. One of the main regulatory concerns pertaining to Bill C-45 is the effect cannabis’ legal status may have on the safety of drivers. Further data is required to determine how cannabis impairs drivers, but there’s no denying that it may have some influence on a person’s driving ability.

Drivers cannot be tested for cannabis until the House of Commons or Senate permits law enforcement the authority to do so. Although cannabis-based breathalyzers could help to solve regulatory concerns of this kind, none have been adopted on such a wide scale before.

Canada’s legal cannabis industry is at risk of supply problems

Cannabis cultivators in Canada were eagerly waiting for the Cannabis Act to be approved so that they could push forward with costly grow projects. Demand could potentially outweigh supply since most projects are expected to be complete within a few months to two years. Canadian licensed cannabis producer Aurora Cannabis will complete its 800,000 square-foot Aurora Sky facility in mid-2018.

What’s more, a backlog of cannabis cultivation license approvals is an issue for unlicensed growers. Ongoing shortage problems may cause the price of dried cannabis to inflate which, in turn, might force consumers to buy cannabis from the black market.

Canada’s legal cannabis industry is at risk of long-term oversupply

On the other hand, Canada’s cannabis market could be at risk of producing too much product. Should this happen, the value of cannabis would drop significantly, as industry leaders try to settle oversupply problems. This might be beneficial for consumers who want to save money, but it won’t be profitable for the industry.

Sure, Canada could sell the excess to foreign markets, but a lot of countries that have legalized medicinal cannabis don’t allow dried cannabis imports. Pot stock investors should seriously think about these things before putting their money in certain avenues of Canada’s legal cannabis industry.