'A big economic impact': Legalized cannabis could be $250M market in Sask., report says

A group of public policy experts in Saskatchewan have released a lengthy report advocating for a limited number of private cannabis retailers licensed and regulated by the province.

U of S, U of R experts' report recommends province make legal age for cannabis the same as alcohol

As marijuana legalization looms in Canada, provincial governments are working to create policies. (Darryl Dyck/The Canadian Press)

A policy expert in Saskatchewan says the province could be dealing with a $250-million market when recreational cannabis is legalized.

"That's going to have a big economic impact if we move that market from illegal and underground to the legal market," said Jason Childs, an associate professor of economics at the University of Regina. 

He is one of a handful of public policy experts in Saskatchewan who have released a lengthy report advocating for a limited number of private cannabis retailers licensed and regulated by the province.

"Based on the estimates of demand … a well-functioning market for cannabis in Saskatchewan can be expected to generate $250 million (at $10 per gram) in economic activity per year," the report says.

Jason Childs, an associate professor of economics at the University of Regina, says taxes must be low on recreational cannabis once it's legalized in order to kill the illegal market. (CBC News)

The federal government is aiming to make the production, distribution, and sale of cannabis legal in Canada by July 2018, and provincial governments are currently working to create their own policies.

Saskatchewan's Ministry of Justice collected feedback on how it should regulate the sale of cannabis through an online survey, the results of which will be released by the end of 2017, according to a department spokesperson. 

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The six professors from the universities of Regina and Saskatchewan looked at a variety of aspects that must be considered when creating such policies, including public safety, public health, economics and innovation.

Their report says the successful legalization of adult-use cannabis would enable the legal market to diminish the illicit market.

"Your average person in Saskatchewan doesn't want to break the law. They just haven't had the opportunity to buy it legally and I think a lot of people will make that choice, that do already use," said Kathleen McNutt, one of the authors of the report.

"I'm not suggesting there's going to be an explosion of people turning to cannabis."

The report makes 40 policy and programming recommendations and calls for a limited number of regulated, government-licensed private retailers to sell cannabis.

The government, in turn, would focus more on education and regulation. The Saskatchewan Liquor and Gaming Authority should be the provincial watchdog for cannabis, as it is for alcohol, according to the report.

McNutt, who is the executive director of Johnson Shoyama Graduate School of Public Policy, said the government body should be in charge of intake and distribution of all cannabis in the province. That way it would be able to immediately identify the source of any illicit cannabis.

She said the separation of retail and regulation would allow the provincial government to better fulfil its mandate as a regulator.

McNutt and her co-authors want a cannabis-inspection agency established to make sure that the product doesn't contain contaminants. It would be in charge of tracking quality and potency.

Same legal age, standards as alcohol

The report said their suggested system would be modelled after the one used to license private alcohol retailers in the province and would shift cannabis consumers to buy legally.

According to the report, having a limited number of retailers allows for easier regulation. And because the retailers are private, they would be motivated by profit and consumer demand, ensuring that the variety of products they sell and prices are highly competitive with the illicit market.

George Hartner, an economics professor at the U of R, emphasized the need to make legal means of acquiring pot easy and cost-competitive with black market cannabis, if not less expensive.

Hartner recommended a limited private retail option and regulated private distribution in the province, but said adaptability in a new market will be key.

"We want to make sure that the market's going to be responsive and adaptive to the voice of the customer or the consumer preferences, so we don't know how exactly this market's going to evolve over time," he said.

"There's a lot of uncertainty." 

The Saskatchewan Advocate for Children and Youth recently said that the legal age for cannabis in the province should be 25, citing the fact that the brain is still developing until that age.

In the report, McNutt and her colleagues said the legal age for cannabis should be in line with the legal age for alcohol, so that youth aren't turning to one or the other because they legally can.

"We are actually recommending 19," said McNutt. Currently the largest demographic of people smoking marijuana is aged 18-24, she said.

But the use of illicit cannabis by young people aged 12 to 17 remains "a little bit more troubling," said McNutt, which is why she favours policy that puts marijuana and alcohol on par with one another. 

McNutt said cannabis should not be sold any place where youth might be — like a grocery store or pharmacy — and thinks it should be sold separately from alcohol.

"People do co-use so I would hope that those would be separate systems," she explained.

Other recommendations from the report include:

  • Creating a preventative public information campaign to educate Canadians.
  • Disincentivizing licensed retail outlets from selling to minors.
  • Reinvesting a percentage of cannabis taxation into policing.
  • Establishing a single point of entry for bulk cannabis, seeds, and clones.
  • Licensing and regulating the distributor through a central cannabis advisory board.
  • Granting a limited number of licences to private retailers to minimize the illicit market.

The authors of the report will be hosting panel discussions at the University of Regina in Room 210 of the research building, and in the University of Saskatchewan's Diefenbaker Building on Thursday at 10:30 a.m. 

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