Five Years of Cannabis Legalization in Canada: What’s the Outcome?

The legalization of cannabis in Canada has led to a shift in societal attitudes, reducing stigma and leading to the wide availability of legal cannabis sources, but disparities in regulations exist. The economic impact, for one, has benefited the federal government while leaving the cannabis industry to face multiple challenges such as profitability issues, excessive regulation, and high taxation.

The legalization of cannabis in Canada is celebrating its five-year anniversary. A contentious topic in Justin Trudeau’s first term, it’s not being questioned by the federal government today but brings its share of concerns for the involved businesses, and new health and societal issues. What is the balance of these five years of legal cannabis?

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Evolution of Attitudes and Challenges in Canada

In the first half of 2023, over 70% of the cannabis consumed in Canada came from legal sources, a significant increase from the 22% recorded in the fourth quarter of 2018, just after legalization.

Consumption Trends

The legalization of cannabis in Canada has significantly reduced the stigma associated with cannabis without increasing its consumption overall. Consumption remains most common in the 18-24 age group. Reports from Statistics Canada show that consumption among 15-17-year-olds has not increased since legalization, addressing one of the main concerns of legalization opponents. And the average age of initiation has also slightly increased over time.

Canadian Provincial Disparities

Provinces are not on an equal footing, however. In Manitoba and Quebec, for instance, it is still illegal to grow cannabis at home for non-medical purposes. The lack of diversity of legal products in Quebec—such as sweet edibles or vape pens, which remain banned—leaves many consumers unsatisfied, handing this category of products over to the illicit market.

Justice: Reduction in Cannabis-Related Cases

Quite mechanically, the number of judicial cases in Canada related to cannabis decreased by 73% for women and 83% for men. Cannabis-related offenses reported by the police dropped from 99 per 100,000 inhabitants in 2018, the year of legalization, to 28 per 100,000 inhabitants five years later.

Health: Mixed Results

While the legalization of cannabis in Canada has opened new doors for recreational consumers, it has also raised health concerns. A study conducted in Ontario and Alberta reported a concerning 20% increase in cases of poisoning and disorders related to cannabis.

Another study in Ontario, Canada, found that emergency room admissions had multiplied by thirteen due to cannabinoid hyperemesis syndrome, often due to substantial and repeated consumption.

The number of pregnant women in Canada exposing their fetuses to cannabis during pregnancy has doubled, and hospital visits for children ingesting cannabis have tripled. Additionally, the incidence of car accident victims with THC in their bloodstream has doubled, going from 3.8% to 8.6%.

The consensus is that more prevention and education are needed in Canada to effectively address these health challenges.

Legal Access and Trade: Economic Impact and Industry Challenges for Canada

From an economic standpoint, the federal government of Canada is the main beneficiary of cannabis legalization. The legal cannabis industry has contributed an estimated 30 billion euros to Canada’s gross domestic product since legalization, with the recreational market revolving around 3 billion euros annually.

Industry Struggles

However, cannabis businesses in Canada struggle to be profitable. Only about 20% of cannabis growers currently have positive cash flows, reflecting the economic difficulties of the sector. Despite widespread legal access to cannabis, the cannabis commercial landscape is not without challenges.

Regulatory and Taxation Issues in Canada

In brief:

• Excessive regulation of the cannabis industry in Canada limits products, results in higher regulatory costs, and offers limited advertising opportunities for businesses
• High taxation erodes the profit margins of cannabis businesses. Various business movements are calling for reasonable taxation
• Despite the federal legal framework in Canada, the export of recreational cannabis products is currently prohibited, impacting the global expansion potential of the industry

As Canada celebrates the five-year anniversary of cannabis legalization, the regulation has seen successes and new challenges.

Canada has inspired an increasing number of countries that have made progress since: Malta and Germany for legalization around Cannabis Clubs, Luxembourg on self-cultivation, Thailand on broad decriminalization, and Switzerland on city-by-city legalization experiences. Is Canada the beginning of a domino effect?

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(Featured image by sebastiaan stam via Unsplash)

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