Pot Shots: Canada legalized recreational marijuana a year ago. What’s next?

Credit: Suharu Ogawa

One year later, the future of the recreational cannabis industry remains clouded in smoke

A few months ago, Muse Cannabis opened its doors, becoming the first retail cannabis store on Vancouver’s South Granville strip. At the launch, customers milled about glass cases filled with pipes, pre-roll carriers, rolling kits and the sexlessly safe, warning-emblazoned plastic containers in which cannabis is sold. The space is gorgeous. Dark, distressed wood floors play counterpoint to an open wood ceiling—even the shelving has been carefully chosen to look as if it’s been in place for decades.

Clearly, much thought has gone into the design. But most passersby will never know. As with all cannabis stores, the storefront windows of this prime retail berth are opaque and impenetrable, the facade testament to some of the wrongheadedness that threatens to hobble a fledgling industry. “People think, What’s going on in there?” says Muse’s owner, Geoff Dear. “Is it legal or not? If it is, let’s be open for business.”

October 17 marked one year since Canada began its experiment with legal recreational cannabis. Overall, it’s been a mixed (nickel) bag. Of course, the fact that recreational marijuana use is now legal is a huge development. Fast-tracked criminal pardons are a good thing. For investors who got into cannabis equities, some have done well in a highly volatile market defined more by potential than performance. (Aphria‘s recent impressive revenue gains excepted.)

It’s fair, however, to say that legalization hasn’t been without problems. In the past year, partly thanks to supply constraints, the price of legal cannabis has climbed and the ensuing gulf between the price of legal and non-legal product has widened—not exactly the way to kill a black market, one of legalization’s primary aims. In the second quarter of 2019, illegal pot cost Canadian consumers on average $5.93 a gram, according to Statistics Canada, while legal cannabis was going for $10.65 on average. Is it any wonder why, again from StatCan, almost 60 percent of consumers are choosing to buy illegal weed?

Access to provincially run cannabis stores is spotty. Last October, there was one government-run retail outlet operating in the whole of B.C. As of this writing, there are four. (Another 12 are “coming soon.”) The BC Cannabis Stores online shop is well designed and easy to navigate—if the “shopping experience” isn’t particularly exciting, shipping is generally quick and efficient. But the day or two lag between ordering and receiving doesn’t sit well with those consumers who prefer to browse and buy locally.

This situation leaves privately owned cannabis retail outlets as major instruments of public policy. Essentially, they’re the ones doing the heavy lifting (providing the locations, collecting and paying taxes, employing the people, distributing the product) while competing against an underground economy that remains unencumbered by oversight.

Then there’s the positioning of the industry. Is cannabis going to be treated like tobacco or like alcohol? Currently, strict packaging laws and advertising barriers put it much closer to cigarettes on the regulatory spectrum. But considering the health effects of cannabis compared to those of tobacco or booze (which, as an industry, enjoys much greater latitude when it comes to marketing, sales and packaging), this is hardly fair. And certainly ripe for challenge down the road.

As for the future? Expect even more consolidation as the bigger players continue to expand through acquisition and joint venture. Edibles will start hitting shelves in December—a possible game changer. Cannabis drinks could be the Next Big Thing. Or, as one wag put it, “the New Coke.”

Speaking of drinking, if you’re wandering South Granville and want to stock up on pinot noir at the same time you’re checking out Muse, you may want to stop in at JAK‘s, a few blocks down the street. It’s also owned by Geoff Dear.

You’ll know JAK‘s when you see it. How? For one, its windows are transparent. You can see what’s inside. And what’s not.