Edibles Regulations in Canada Bad For Business
Cannabis company, Cronos, gets vocal about the very restricted edibles market in Canada.
Major players in Canada’s fledgling legal cannabis industry will see serious restrictions with edible regulations. According to Mike Gorenstein, the CEO of Cronos Group, Canada risks losing the advantage it gained by being one of the first nations to legalize cannabis.
The regulations on edible products will come into effect in October and Gorenstein believes these are one solid example of overly-restrictive regulations. He spoke to BNN Bloomberg earlier this month about some of the issues he sees with the emerging regulations.
“I think that you need to build your base first and it’s really difficult with these advertising restrictions and plain packaging to build a global brand. If Canadians aren’t sure which brand is what, why would the rest of the world recognize them?” he says.
Gorenstein takes particular issue, as have many critics, with the 10 mg THC limit per package of cannabis edibles. Most consumers require more than 10mg to get the effect they’re looking for, and so would have to purchase multiple products under Canada’s upcoming edible regulations.
“Compared to what we see in the United States and in the black market where these products will have a lot more THC, so it’s really the consumer that’s going to be driven off,” Gorenstein says.
Restrictive edible regulations, such as single-serve packaging will create more environmental waste, wasted production money, and disappoint customers. The packaging on each single-serve product must also be child-resistant or child-proof, further adding to the environmental impact.
Government Playing it Safe
Bill Blair, Canada’s Minister responsible for border security and organized crime reduction, says company freedom isn’t his top priority. “It’s not the government’s intention to promote the use of this drug but rather to make it legally available in a well-regulated manner to reduce the social and health harms often associated with cannabis use,” he told BNN Bloomberg in June.
The Future of Cronos Group is Not Edibles Focussed
No one can convince Gorenstein that the restrictive edible regulations will do anything except drive off business. He says that Cronos Group does plan to get into the Canadian edibles market, however, it won’t be a main focus.
“There is certainly uncertainty in the rules, but we wanted to allocate supply in the category where we see the biggest advantage – and that is vapes,” he predicts.
Cronos is positioning itself to be a leader in the cannabis vape market. Especially through their partnership with American tobacco giant Altria Group Inc. Altria invested $2.4 billion in their partnership with Cronos last year. The move gave Altria a 45% stake in the rapidly growing pot company.
Cronos will work with Altria’s research and development team to create cannabis vape products for the adult-use market. Goernstien isn’t giving away any details on the developments, however. The tobacco giant is also helping Cronos with production standardization, government affairs, and marketing.
Will Canadian Edible Regulations Drive Off Business?
Restrictive edible regulations may not put off companies. According to Blair, Canada’s cannabis rollout is making progress. This is despite it meeting with a fair bit of criticism.
Blair cited market statistics from Statistics Canada for the first quarter of 2019, reporting that 47% of Canadian cannabis consumers legally purchased their cannabis.
Statistics like this are encouraging that the legal cannabis market will flourish beyond black market. However, with restrictive laws, like the recent edible regulations, black market still keeps a solid foothold.
In the meantime, the Canadian government needs to strike a better balance between consumer safety and market freedom. The goal is a fully functional cannabis market. This can’t come by hobbling the companies with the expertise to bring it to fruition.