Removing current border crossing restrictions may hinder the Canadian cannabis industry

Published Sep 8, 2019 10:00 a.m. ET
iStock / The-Vagabond

Despite hesitance and concern from marijuana stocks investors who saw massive drops in value before seeing a leveling of the market, right now, the Canadian market is booming. It’s like the Canadian cannabis industry suddenly went from nothing to something in a matter of months. The only trouble is, right now licensed cannabis producers and vendors in the country are unable to export goods in the same way that other markets would freely function, which at first glance appears limiting, but might it be for our own good?

The truth is, that despite the worldwide perception of Canada being the first country to take such a progressive stance by bringing forward federal marijuana legalization our licensed producers are a rare commodity, and right now we have fewer than 25% when compared to the United States. Hearing that statistic might be shocking but bear in mind that several states had introduced legalization long before Canada took that leap.

The United States has so many producers, vendors and cannabis industry jobs, that it is bursting at the seams, and looking for a new market to pour into, in order to expand. Since the US does not have federal marijuana legalization, their growers are unable to legally ship products across state borders, which limits their customer base. These companies are eagerly awaiting the opportunity to break into Canada’s legal cannabis market, and some feel that might not be such a bad idea. After all, our federal government claimed huge shortages for the first year after federal marijuana legalization was in place.

The gap after legalization in Canada

Many Canadians, unfortunately, were unable to partake on the first day of legalization, that being especially true for Ontario residents. Their only option was to purchase online, which took two days to get delivered, and that was if their order got through at all amidst the website outage from far too much traffic for the servers to handle, and products selling out in a matter of minutes. The issue was not a lack of cannabis industry jobs or suppliers but instead was the red tape put in place by the federal government to break into the market.

Now, Canadian marijuana producers have found their rhythm, as they grow and expand to meet the needs of hundreds of thousands of Canadians, and it seems they are having the opposite problem as they did on that first day of federal marijuana legalization. They are attempting to store hundreds of pounds of product like dry buds that have a limited shelf life, as so many Canadians are choosing to avoid the legal market and opt for black market dispensaries instead.

That has left a gap, a place that so many marijuana dispensary owners and producers are now struggling with, as the inflated prices and low THC cannabis strains aren’t drawing in the crowds as they had originally hoped. The average cost of a legal gram of weed in the country varies by region but maintains at an average of $8 per gram compared to $5 per gram on the black market. What that means is that we already have thousands of pounds of local home-grown cannabis products sitting around, and or being disposed of regularly.

If we were to allow American marijuana producers to cross our borders, it could mean the death of the Canadian cannabis industry as we know it. Think of the small mom and pop type stores that used to be on every corner. You know, the ones that were replaced by big-box versions like Walmart or Superstore ages ago. That is exactly what could and likely happen if we opened the borders and allowed the well establish corporate companies to set up shop, which is something to ponder with the United States considering federal marijuana legalization right now.

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