Medical cannabis producers jockey for top spot as legalization for recreational use looms

Medical cannabis sellers are in Vancouver this week hoping to catch a glimpse of what their future may hold in light of the looming federal legalization of recreational marijuana.

Industry insiders discuss possibilities for the future at a conference in Vancouver this week

Medicinal pot producers like the Whistler Medical Marijuana Corporation stand to gain or lose big when Canada legalizes recreational cannabis this spring. (Geneviève Milord/CBC)

Medical cannabis sellers are in Vancouver this week hoping to catch a glimpse of what their future may hold in light of the looming federal legalization of recreational marijuana.

Workshops at the International Cannabis Business Conference that began Thursday and continue Friday include titles like "Safeguarding medical marijuana as legalization unfolds" and "The future of dispensaries in Canada."

The medical marijuana industry has flourished in the past decade, dominated by federally illegal but municipally sanctioned dispensaries. These small businesses operate despite a federal dispensary system led by large-scale producers. 

Both stand to lose or win big depending on how Ottawa rolls out legalization across the country this spring

"I'm not sure how it's going to play out, but it's going to be a very challenging situation for a lot of people," said Dana Larsen, a Vancouver-based dispensary owner and legalization advocate.

"I'm not very optimistic that they're going to recommend integrating dispensaries into the legal system."

Larsen is one of hundreds of industry experts attending the conference, with presenters running the gamut from international cannabis researchers to marijuana activist Tommy Chong, the Edmonton-born comedian, actor and musician who starred with Cheech Marin in the 1970s stoner movie Up In Smoke.

Cannabis dispensaries are illegal under federal law, but have been popping up in cities across Canada. (Michael McArthur/CBC)

Quality vs quantity

On the other side of the equation are the 30 or so federally licensed companies like Tilray that offer a highly regulated medicinal product through mail only.

"I really look forward to seeing what [the federal government] comes up with," said Philippe Lucas, vice-president of patient research and advocacy at Tilray.

"It's an unprecedented opportunity for investors and entrepreneurs to see a multibillion-dollar industry move above ground."

Lucas says he expects full legalization will alleviate what's left of the stigma surrounding cannabis use and increase his company's potential client base.

Under the federal Marijuana for Medical Purposes Regulations, licensed medical marijuana growers like Tilray must meet strict security, control and reporting requirements, and are regularly inspected. (Darryl Dyck/Canadian Press)

The advantage federally licensed producers have to offer over smaller dispensaries, he says, is a more standardized and regulated product — an advantage he hopes to use to expand into the recreational cannabis market.

"We've developed a remarkable amount of expertise on the production and distribution of medical cannabis," he said.

"We feel that those who are looking for a safe, high-quality supply that's labelled for THC and CBD, that's tested for impurities, are still going to want to use Tilray and others."

Looking at the numbers, those aspirations may come across as rather ambitious.

Lucas admits that only about eight per cent of Canadians who say they use medical marijuana do so through the federal medical marijuana program, leaving the lion's share to dispensaries like Larsen's.

But if the federal government proceeds with legalization of recreational marijuana as it did with medical marijuana — by only licensing major producers — companies like Tilray stand to win big.

Bringing consumers to the legal side

That prospect is troubling, says Canadian drug policy analyst Donald MacPherson.

"The government has to come up with a framework for regulation that as much as possible [licenses] business from the unregulated dealers," MacPherson said.

'The government has to come up with a framework for regulation that as much as possible [licenses] business from the unregulated dealers,' says Donald MacPherson, director of the Canadian Drug Policy Coalition. (SFU)

MacPherson also says Canada's illicit marijuana market is a multibillion-dollar industry, and it's concentrated in small communities like those in British Columbia's Interior and Kootenay regions.

"We have to be careful not to lose that local economic development that exists," he says, warning against having only 30 to 40 producers centralized in one or two provinces.

MacPherson also cautions that consumers will continue to buy pot from illegal sources like dispensaries if a legalized recreational marijuana system makes it too difficult for them to access it.

"You want to bring consumers over to the legal side as much as possible," he said.

'Craft cannabis'

Smaller cannabis sellers like Larsen point to another potential pitfall if recreational marijuana is centralized — a loss in product variety.

"Craft cannabis is definitely a concept that we're promoting," Larsen said. "Cannabis is a plant similar to wine in some ways in that there's so many different varieties and so many different flavours."

Could Canada soon see a 'craft cannabis' market similar to the craft beer market? (CBC)

Smaller producers liken the craft cannabis industry to craft beer. While big beer producers like Anheuser-Busch cater to a certain crowd, micro-breweries cater to another.

As for questions around quality control, Larsen says, that could easily be achieved as it is with any other industry — through regulation and government inspection.

"But I really think in Canada we're in store for several more years of conflict and confusion," he said.

"This is going to be a long drawn-out process as we come to terms with what legalization is going to look like."

About the Author

Maryse Zeidler

@MaryseZeidler

Maryse Zeidler is a reporter for CBC News in Vancouver, covering news from across British Columbia. You can reach her at maryse.zeidler@cbc.ca.