Daily Management Review

Marijuana legalization: Did Canada benefit from cannabis boom?


08/01/2019


Almost a year ago, Canadian authorities legalized marijuana use. What did they achieve, and why, despite hopes of the business, the legal production of cannabis is not growing so fast?



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Medical use of cannabis became legal in Canada in 2001. And since October 2018, Canada has become the first major country to legalize its use. Under the new law, adults will be able to purchase cannabis for personal use from authorized sellers and carry about 30 grams in public.

Canada was one of the countries with the highest per capita consumption of cannabis even before legalization. According to various estimates, the annual turnover of the black market in this area amounted to €4 billion. It is clear that the transformation of cannabis trade into a legal business cheered up businessmen involved in this.

A number of enterprises began preparations for work in this area even before free sale of cannabis was allowed. They were doing it with a great risk to themselves, since for a long time it was not known whether legalization would occur. The legalization was one of campaign promises of current Prime Minister of the country, Justin Trudeau. He argued that this could be the best way to combat the illegal sale of cannabis and its use among young people.

Legalization resulted from a difficult compromise of many political forces. This is striking when you look at the legislative framework governing this area. All legal manufacturers and suppliers must obtain a federal license. Each region of the country independently regulates distribution of marijuana and determines the age from which consumers can buy it.

Despite the great demand for the products, the market is not developing as fast as planned. Companies made a lot of promises in order to get money from investors, but in fact it will be at least three more years before legal production of cannabis will satisfy the demand, says Mark Rendell, an economic columnist for one of the largest Canadian newspapers The Globe and Mail.

Analysts from the Analysehaus Arcview Group center share a similar opinion. According to them, the legal cannabis market will reach a volume of €4 billion by 2024. So far, according to Canadian experts, he has won only 20 percent from the black market.

Entrepreneurs are standing in line for a license. The market promises great profits, but does not develop too fast. There are several reasons for this. Firstly, cultivation of cannabis for legal producers is a new thing. It requires special equipment, giant greenhouses and skilled personnel.

All this is expensive. In addition, in the early years it is not always possible to achieve high yields and the corresponding quality of cannabis grown. And large firms have not invested much money in production, waiting for the results of the legalization experiment. Will it be possible to completely eleminate the black market?

And, most importantly, will the new measures really contribute to the fact that the number of cannabis consumers among young people stops growing? Would it be possible that new major players in the market for the production and sale of cannabis in Canada perforce contribute to the spread of drug addiction in the country? 

source: dw.de






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