Last year was a mixed bag of a year for Canadian marijuana investors. Speculation about the future of the sector fluctuated wildly as talks about federal legalization heated up in the United States and recreational cannabis prices reached historic lows. Additionally, players in the Canadian cannabis space are waiting with bated breath for the three-year review of the country’s cannabis legislation by federal lawmakers. The review began in December 2021, and the health minister will present the department’s findings and recommendations in 2023.
In the interim, industry leaders have a few policy changes in mind that they would like to see in 2022. George Smitherman, president and CEO of the Cannabis Council of Canada, would like stronger edible products allowed on the market. Currently, cannabis law limits potency to 10 mg of THC per packaged product. In comparison, California allows for 100 mg of THC per package. Smitherman also feels it would be beneficial if customers could buy more cannabis-infused beverages in a single package because as the 28-gram possession limit for THC prevents them from purchasing more than five beverages.
Another change would allow producers to sell their dried cannabis flower in packaging that isn’t childproof to reduce the amount of single-use plastics they use. Since cannabis flower presents a significantly reduced ingestion risk to children compared to candy, using nonchildproof packaging would also be safe.
However, the biggest challenge the industry faces right now is falling recreational cannabis prices, says Smitherman. Although prices are designed to draw customers from the illicit market, they have had a major impact on producers’ bottom lines.
Lawmakers can ease the pressure off producers by adjusting excise tax rates. Mandesh Dosanjh, president and CEO of Pure Sunfarms, would like a reform of the industry’s excise tax rules. Rather than a fixed or flat rate, he says, the government ought to change the tax to a more manageable percentage. As of December 10, cannabis sales are taxed at $4.97 per gram.
Dosanjh also criticized the country’s inconsistent lab testing standards, which often end up with different results for the same product. This has allowed some producers to test their products in different labs and then use the result with the highest cannabinoid value, which often translates to higher prices.
Niel Marotta, president and CEO of Indiva, would like to see an increase in potency limits for edibles. He also hopes that Quebec’s government will remove its ban on edibles and vape products. Low prices are also a point of contention, he says, although his company is more insulated because it deals with edibles rather than cannabis flower. Marotta hopes to be able to break into the restaurant industry one day with a variety of cannabis-infused edibles, including salt and sugar.
If the long-overdue changes are made to the regulations governing edibles and cannabis drinks, we could see an explosion in the demand for the products of Canada-based companies, including BevCanna Enterprises Inc. (CSE: BEV) (OTCQB: BVNNF) (FSE: 7BC).
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