How unfair policy and regulation is crippling Canadian cannabis dispensaries

Published Aug 4, 2019 01:23 p.m. ET
Salt Spring Island: The entrance of the Salt Spring Compassion cannabis dispensary in Salt Spring Island. iStock / Ruben Ramos

When legalization first came into effect, the projected sales from cannabis dispensaries were expected to explode into the billions. Yet here we sit, nearly a year later and those numbers aren’t adding up to the same amount as what the federal government had hoped for. Though cannabis stocks appear to be stable for the moment, the industry itself is failing. Small-time entrepreneurs that had envisioned a bright new future for marijuana consumers have been locked out and what remains seems to have been divided up by the highest bidders. Aside from issues with ownership and fairness, the cannabis dispensaries themselves that have managed to license aren’t doing too well. So, should customers remain loyal and maintain the relationship they have with the long-time black-market dealer? Or, are there other, more controllable factors at play? These are the questions that many Canadians are struggling with, as they express some pretty common frustrations right across the country.

According to the latest cannabis news, dispensaries from all over the country are firing employees, with an average 7% reduction in workforce. How is this happening? Where are all the excited enthusiasts that stood vigilant and thought they had found fair and legal access? Was this merely a trend that died as quickly as it came? Though some of those things might factor in the overall success of the marijuana industry, there is only one barrier that seems to be in the way of cannabis dispensaries success, and that is federal regulation. The black market is still flourishing and growing rapidly as time goes on despite the most considerable efforts from local law enforcement agencies.  Though there are most definitely a variety of reasons for the lack of success in the legal market, there are a few specific regulations that are quickly turning Canadians away.

Cannabis dispensaries cannot choose their source

All legally licensed vendors in Canada must go through the government for contracts with licensed producers. This leaves very few for dispensary owners to choose from and even fewer products for consumers to purchase. There will likely be a slightly different menu across all cannabis dispensaries even though they all buy their products from the same handful of government-approved sources.

Cannabis dispensaries cannot set their own pricing

One of the biggest disappointments that many Canadian expressed after legalization was with the lack of affordability of legal marijuana products. Since the federal government has imposed a mandatory tax, alongside a limited number of producers, cannabis dispensaries have little to no control over the cost of their products. This makes it challenging to complete with one another and the average price of a legal bag of cannabis at nearly double the going black market rate.

Federal regulations forbid some of the most popular marijuana products

If you look at other regions with legal cannabis dispensaries like Colorado, the highest-selling marijuana-infused options are typically health-conscious options. Things like vape juice, edibles, sprays and pretty much all the products that remained prohibited after legalization. Though they will soon become available, opening without more than one or two item choices, resulted in massive losses for many cannabis dispensaries.

A limited number of cannabis dispensaries

Initially, Canadians were promised a free market for marijuana products that would welcome those that had built the industry while it remained illegal. Unfortunately, the conservatives altered the plan and chose to host a lottery that only a select few would win. The kicker was that anyone who entered didn’t need to have prior business experience, knowledge on cannabis or even a good plan to be accepted. This makes the absolute worst financial sense for the entire industry. There are now only a handful of dispensary winners who have opened, and most were immediately propositioned by massive companies who were throwing offers out within hours of the winning announcement. This has left very little for variety, or competition to drive these companies to please their consumers.

Maximum THC content limits set for the future do not look promising

Liquid concentrate limits being set to a meager amount that hardly appeals to even the newest customers, and more sought-after options like edibles and concentrates being prohibited from advertising or appealing to marijuana enthusiasts. Many consumers are wondering if they will ever feel enticed to walk into one of the legal cannabis dispensaries, especially when black market alternatives offer options that can be up to twenty times stronger than the future statutory maximum of THC, at a fraction of the price. It appears that there will need to be some changes before we see any actual growth or modification to the dull, overpriced lineup that is currently being offered to Canadians.

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