Canada is in danger of getting smoked by the competition because the marijuana industry isn't waiting for government legislation. American companies know it, and now Shoppers Drug Mart has shown it knows it, too.
A public request by Shoppers to sell pot in its stores shows the "pusher" stigma has begun to fade. Shoppers is part of the Loblaws chain known across Canada for its family-friendly Canadian Superstores and President's Choice brands.
But the government is still playing catch-up.
A year ago when Canada had just elected a pro-pot government, it seemed that the country was poised to become a leader in the industry, as I wrote at the time.
But instead of moving efficiently to create a groundwork of legislation so businesses knew where they stood, the Canadian industry has been infected with government-led paralysis.
Now with marijuana on the ballot in nine states during the Nov. 8 election, the New York Times says the U.S. is at a potential turning point on pot legalization. American businesses aren't delaying. They're pushing into all parts of the medical and recreational pot business hoping to get a piece of the action when pot becomes legal.
U.S. stock listings for pot companies have proliferated. If, as expected, California (population 39 million) votes yes, it will transform the market and create a serious challenge to Washington's national anti-marijuana policy.
"It is being looked at as a marijuana growth story," New York-based analyst Ivan Feinseth told the business news service Bloomberg.
'Facebook for cannabis'
Not only are U.S. marijuana businesses getting established now, their influence is beginning to seep across the border into Canada. Because the pot business is about more than pot sales.
One such company, Massroots, already trading over the counter with the ticker name MSRT, is what CEO Isaac Dietrich calls "the Facebook for cannabis."
"We plan on being much more involved in the Canadian market, especially if recreational [pot laws are] finally enacted in the next few months," says Dietrich, whose company has received an investment from the Canadian licensed producer Aphria, known for naming its marijuana strains after Canadian lakes.
And like many other startups, the strategy is to get the Massroots brand out into one part of the market, with an eye to future expansion.
Dietrich hopes to launch medical or recreational pot distribution once that becomes legal, but for now the company acts as an information clearing-house for Americans — and Canadians — who share knowledge about the various types of marijuana varieties and products on the market.
"This strain helps with back pain, this strain helps with nausea, this product makes you sleep at night," says Dietrich from the company's headquarters in Denver, Colorado, where pot is sold legally. "We're providing community-driven actual information."
When I spoke to him, Dietrich had already heard about the move by Shoppers Drug Mart to become an outlet for medical marijuana. In the U.S., he says, the stigma attached to pot has kept many of the big family brands out.
Shoppers' step 'huge'
This spring, his own company was denied a listing on Nasdaq, the market best known for tech company shares. Here in Canada, banks have balked at providing services for the marijuana industry. But the position of Shoppers makes Canada a business pot leader.
"Having a mainstream chain openly selling cannabis, I think that's huge," says Dietrich.
"I do not see someone like [U.S. pharmacy chain] Walgreens entering this space for some time."
Later this week, management consultants Deloitte are releasing a study on the business potential of recreational marijuana in advance of Canadian legislation, "to understand the size and potential of this new market," according to a Deloitte release.
But without a legislative framework, and with the grassroots origins of pot as a mood-altering folk remedy, companies are left guessing.
Is marijuana a medical treatment like sleeping pills or pain medication? In that case, it should be distributed in all pharmacies, not just Shoppers Drug Mart.
Is it a recreational drug like coffee, cigarettes and alcohol? In that case, offering it through family pharmacies seem to provide pot with a credibility it does not deserve. Wine or coffee shops might be a better model.
It is the government that has to make those decisions.
The main reason for pot to be legalized is to end a criminal industry and stop its users from being arrested and jailed for consuming a product that most experts say is no more harmful to society than alcohol.
As soon as the government creates its legislative framework, Canadian businesses must be prepared to step in and supply the legal product or someone else will.
"I think to have a mainstream brand openly selling cannabis will move the entire industry forward and create significantly more demand and interest in cannabis," says Dietrich.
The move by Shoppers Drug Mart shows government inaction can't stop the evolving position of marijuana in Canadian society. But the longer Ottawa waits to make its rules, the more it loses control.
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