Five years ago the cannabis (marijuana) industry was supposed to be the next big thing in Canada — for pot smokers, investors and government treasuries.
Legalizing cannabis was intended to provide a safer product, reduce access by youths, cut into illegal sales, raise government revenues and reduce crime.
On the surface it seems a booming industry with stores in every nook and cranny.
A five-year anniversary review by the Canadian Medical Association Journal and the financial press indicates the legalization of cannabis has been a mixed bag.
For those developing the industry and those investing in it with high expectations, the experience has turned into a nightmare.
Investors took a pounding. Occasionally one of the cannabis companies shows a monthly profit after five years.
Hundreds of millions were invested. Most of that money has been written off.
Price of two leading cannabis players Canopy and Aurora were $68 and $129 respectively in 2019. Today both stocks are less than $1.
The main reason: Too many players in the industry with competition creating lower and lower retail prices.
Prices fell from $11.78 a gram to a range of $3.50 to $6 a gram in Ontario in September.
Meanwhile one Ontario operator calculated cost of production at $15 a gram before excise taxes. Taxes equal 23 per cent of the retail price.
This scenario seems a lot like grain farming where there is no control over price, but costs keep rising.
Canopy has sold seven un-needed properties with large job losses.
The five year review by the Canadian Medical Association Journal offers mixed news.
Access by youth has remained stable over the five years.
Between 50 per cent and 80 per cent of use is now legal, cutting out drug traffickers.
Fewer people have been charged with cannabis-related crimes like possession. Data is lacking on any change in crimes inspired by cannabis use.
Use of cannabis has increased from 22 per cent to 27 per cent of the population.
Impact on health care has increased. Cannabis-related presentations and admissions to emergency departments have increased 20 per cent.
In one Ontario study ER increase was 300 per cent.
One year after legalization, a study found ER admissions of cannabis-poisoned children, aged to nine years, in four provinces increased three-fold.
Introduction of edibles is expected to increase child poisoning episodes.
Canada-wide data is lacking on cannabis use disorders and the need for treatment or how cannabis has been substituted for alcohol.
Cannabis-related impaired driving appears to be the same as before legalization.
Different provincial regulations affect the picture too.
The journal article says the data may have been influenced by the COVID pandemic and suggests rigorous monitoring of cannabis use and impacts.
“It is too early to draw conclusions on the impact of cannabis legalization in Canada that can robustly inform policy reform,” concludes the article.
“Assessments of cannabis legalization in the United States also concluded that five years is early to evaluate the full effects of such a fundamental policy change.”
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
