Ottawa’s latest rules risk ruining cannabis-infused beverages before they’re even legal

Opinion: Cannabis-infused beverages will not even be allowed to use the name ‘beer’ or ‘wine’

Dried cannabis and oils are currently legal in Canada and edible cannabis, which includes beverages, are scheduled to become legal for sale by October 2019. The federal government’s draft regulations for edibles, released recently, are riddled with problems, but some of the most glaring problems concern regulations on cannabis-infused beverages.

For newcomers to the concept, cannabis beverages are drinks infused with either CBD, THC, or a combination of other cannabinoids. These beverages, already a fixture in some American states that have legalized cannabis, such as Colorado, represent a new way for consumers to enjoy cannabis products without having to smoke. With no combustion and additional harm from smoking, cannabis beverages are a safer alternative than what we have now. This is a huge win for consumer choice. That said, these new products haven’t yet received the green light in Canada, and that means they could still be ruined by over-regulation prior to them ever being legal.

The first main issue with the draft regulations are the proposed production rules and how they impact infused beverages. Infused beverages will have to be manufactured in buildings that are entirely separate from any and all other food production. This will mean that in order to actually produce these beverages, manufacturers will need entirely new buildings and facilities, rather than simply creating sealed and secure rooms within existing facilities. Requiring manufacturers to operate in this way obviously hurts their bottom line. But more importantly, by inflating costs, it creates more barriers for consumers who might prefer the less-risky method of consuming cannabis via infused beverage, or any edible for that matter, rather than smoking it.

When it comes to packaging, these beverages will be required to be plain packaged just like other forms of cannabis currently on the legal recreational market. The arguments against plain packaging cannabis are well establishedand fairly straightforward. The issues with branding restrictions are especially true for beverages, because the draft regulations will prohibit well-established alcohol brands from using their name on cannabis products. This is problematic for consumers because alcohol brands have already solidified their brand with products that are for adult use only. Allowing for these alcohol brands to use their brand on cannabis products ensures that these beverages clearly signal to consumers that they are for only adults to use, which helps prevent and curb consumption from minors.

Beyond the importance of branding, and the obvious double standard when compared to alcohol (which allows for marketing and branding), there are significant problems with the physical limitations applied to how beverages need to be bottled. As currently written, these beverages will have to be in child-resistant packaging. It appears that current bottling practices may not meet this new threshold. Pry tops, pry tabs, and corks, although certainly child-resistant and good enough for alcohol products, don’t necessarily qualify. A simple amendment should be made to bring infused beverage regulations in line with alcohol bottling practices. In addition to this amendment, regulators should also allow for infused beverages to have similar bottle and can sizes when compared to alcohol.

The last major issue with the draft regulations is how these products will be named. If amendments are not made to the regulations, infused de-alcoholized beverages will not be allowed to be called “beer” or “wine.” This is problematic because beer and wine are the popular nomenclature for products of a similar nature. So long as the products specify that they are cannabis beer or cannabis wine products, there shouldn’t be an issue with the use of these terms. Clamping down on the use of beer and wine is similar to when the dairy industry tried to sue and shut down almond, soy and rice milk manufacturers for using the term “milk.” That over-reach was ridiculous, and applying the same logic to beer and wine would be simply replicating that mistake.

In addition to these federal regulatory problems, changes are going to need to be made provincially regarding where cannabis-infused beverages can be consumed. Currently provinces have consumption laws under the premise that most consumers are smoking cannabis. Because of this, legislators have treated cannabis consumption much like tobacco consumption. While that might be appropriate for smoking cannabis, it certainly isn’t appropriate for consumers who are ingesting it. Provincial amendments should be made to allow for edible cannabis products to be purchased and consumed anywhere that alcohol is permitted. This should include all licensed establishments such as restaurants, bars, clubs, special events via permit and consumption lounges.

Cannabis-infused beverages have the potential to be one of the safest and most popular methods to consume cannabis, but that is only possible if legislators don’t ruin these beverages before they even become legal. Unfortunately, without addressing the major issues in the draft regulations, it looks like the government’s paternalistic war on adult consumers will wage onward.

David Clement is the North American affairs manager at the Consumer Choice Center.

Opinion: Lack of Price Transparency is Hurting Cannabis Consumers

Saying that Canada’s cannabis rollout has been a rocky road would be a huge understatement. Since Oct. 2018, consumers have been faced with limited access, supply shortages, and steep prices.

And, while all levels of government seem to be attempting to address and accommodate access and supply problems, one issue that has not been properly addressed, however; is price transparency and price competition.

Black market prices are around $3, nearly 50%, cheaper per gram when compared to legal cannabis, according to Statistics Canada. Because of poor access, and high prices, one-third of all cannabis consumers purchase cannabis illegally and avoid the legal market altogether.

Sticker Shock

For consumers in provinces with legal storefronts, one concern being voiced is that they don’t know what prices will look like prior to entering the store. Cannabis advertising, which is incredibly over-regulated, never includes any information about prices at the various outlets. Some may think that the lack of price transparency is an attempt by retailers to get away with high markups, but there is more at play here.

The lack of price transparency from cannabis retailers is a result of the federal government making it illegal for retailers to advertise any information regarding price. More specifically, Section 17 (1) of the Cannabis Act states:

Unless authorized under this Act, it is prohibited to promote cannabis or a cannabis accessory or any service related to cannabis, including

(a) by communicating information about its price or distribution;

The only exception to this rule is that retailers are allowed to advertise price and availability at the point of sale, meaning once consumers have actually entered the store. Thus, the federal government has actually mandated that retailers be less transparent in their advertising, which can impede consumer choice.

Why Price Transparency Matters

The lack of price transparency mandated by the federal government is problematic for three reasons:If price transparency is discouraged, it becomes far more difficult for consumers to actually know if prices are too high and adjust their purchase decisions accordingly.

The first is that this rule contrary to how alcohol brands and retailers promote their products. Across Canada alcohol retailers regularly advertise prices, whether they be private stores (in provinces like Alberta) or government-run stores (like the LCBO in Ontario). Consumers of alcoholic beverages will routinely see advertisements specifying pricing, or hear radio advertisements announcing upcoming sales. It is silly and misguided to allow such advertisements for alcohol, but not for cannabis.

The second reason why a lack of price transparency is a problem is that it prevents competition. If consumers could know cannabis pricing in advance, that would force retailers to more appropriately compete against each other.

Competition like this would make for a more consumer-focused marketplace, while also putting some downward pressure on pricing overall. Allowing retailers to advertise, letting consumers know that their products are at a better price point than a competitor, results in more purchasing power for consumers and more accountability on the side of retailers.

For example, if consumers are able to better compare pricing from store to store, then they are far more empowered to hold retailers accountable if their prices are exorbitant. As in any open market, consumers should be able to protest with their wallet and take their business elsewhere.

If markups are too high at one store versus another, consumer demand can shift accordingly. Right now that shift is largely non-existent because consumers would have to physically enter each storefront to compare.

Unfortunately, if price transparency is discouraged via government mandate, it becomes far more difficult for consumers to actually know if prices are too high when compared to other legal outlets and adjust their purchasing decisions.

Lastly, a lack of price transparency is problematic because price transparency is needed to help stamp out the black market. Price transparency in the legal market allows consumers to know when the legal market can compete with the black market and shift their behaviour accordingly.

Ideally, retailers would be able to advertise future sales or discounts, which could help attract the 33% of consumers who have not yet made the switch to the legal market. Once those consumers are exposed to the legal market, they are much more likely to remain in it given the protections that come with legal transactions.

Price transparency increases competition creates for more consumer-friendly pricing and helps encourage consumers to purchase cannabis legally. The federal government reversing its ban on price advertising would be one step in the right direction and could help Canada smooth out the rocky path that legalization has been thus far.

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Advocate pushes for private sector approach to cannabis sales

A manager with the Consumer Choice Center is calling for changes to Nova Scotia’s cannabis model.

David Clement says our province should move toward a private sector approach, rather than entirely government control.

“The retail model in the province is flawed from the start, mostly because it’s trying, it’s getting the government to try and do things we already know the private sector is better at doing,” says Clement. “It’s better at allocating resources, and they don’t run the risk of dipping into public purse.”

This comes after the NSLC released their third quarter results last week showing they fell short of turning a profit even with $17.4 million in sales.

Clement is the North American Affairs Manager for the Consumer Choice Center, and he says the McNeil government should look at Manitoba’s model and follow suit.

“It’s a great example of a model that can work towards meeting consumer needs via physical store fronts and private delivery options, while also turning a profit, and the best part of that equation is that if a business fails, taxpayers are not on the hook for that failure,” says Clement.

He urges Canadian governments to opt for a private approach as he believes it increases consumer access, while also shifting the financial burden of failure away from taxpayers.


Ontario delivers yet another cannabis decision that hurts retailers and helps illegal dealers

Opinion: A monopoly on e-commerce benefits the government, and the black market, at the expense of consumers

On January 31st, the Alcohol and Gaming Commission of Ontario (ACGO) stated legal cannabis shops in the province will be prohibited from offering online retail options to consumers. This means that the initial 25 cannabis stores in Ontario and the multitude of stores that could open once the province lifts its temporary cap on retail licences won’t be able to offer consumers online ordering for store pickup (click and collect). Nor will they be able to offer any same-day delivery services.

The move to mandate that the province have a monopoly on cannabis e-commerce benefits the government, and the black market, at the expense of consumers.

Having the Ontario Cannabis Store (OCS) be the only online retailer for cannabis consumers doesn’t make much sense once you factor in that all legal cannabis sold in Ontario has to pass through the ACGO. The retailers who are selling cannabis are required by law to purchase cannabis through the ACGO, which means the government has ample opportunity to ensure regulatory compliance and generate tax revenue. The only justification for the government to monopolize e-commerce is that it allows it to impose additional markups on OCS sales, which uncomfortably resembles the pain that Ontario consumers already endure buying alcohol at the LCBO.

By mandating that all e-commerce be run through the OCS, the government is enacting policy that will empower the black market. This benefits the black market because it eliminates the prospect of private retailers offering click and collect, or same-day delivery. Both click and collect and same-day delivery are purchase options that significantly increase consumer access, which is key to curbing black-market sales. In order to truly achieve the goal of stamping out criminal actors, legal cannabis needs to be more accessible than illegal cannabis, which is something that click and collect and delivery can help with.

This problem is made worse by the fact that 77 Ontario communities have opted out of cannabis retail altogether. These “dry” communities will have no retail options within their city limits, leaving consumers to either drive to the closest opt-in community, order online through the OCS and wait three to five business days for delivery, or purchase cannabis illegally on the black market. Unfortunately, when faced with these choices, many consumers may choose to purchase illegally as a result of poor access to legal product.

If the government were to allow private retailers to engage in e-commerce such as click and collect or same-day delivery options, it would go a long way towards creating more access for consumers living in those Ontario communities where politicians made the foolish decision to opt out of letting cannabis retailers operate in their towns. In a scenario where private online retail options were legal, we could see consumers in “dry” suburbs ordering online to pick up on their way home from work, or even better, ordering for same-day delivery directly to their home. A delivery option for residents in dry communities would help meet their access needs, especially when compared to online ordering with the OCS, all while respecting the will of prohibitionist city councillors who don’t want cannabis retail. Unfortunately, the government monopoly ensures such a scenario is impossible.

Allowing for communities to opt out of cannabis retail was already a mistake, because it ultimately signals to black-market actors that those supposedly dry jurisdictions are still open for illegal business. Preventing online ordering and delivery from private stores outside those communities dogpiles on to that growing problem and makes the situation much worse.

Consumer access and consumer choice matter in terms of curbing the black market, but these policy failures could have larger implications. Those who never wanted cannabis to be legal to begin with will be front and centre arguing that legalization has failed to curb the black market and has failed to meet its objectives. Policies like community opt-outs and a government e-commerce monopoly act as a ball and chain for the legal market, limiting its ability to compete, which is a huge disservice to Ontario’s cannabis consumers.

David Clement is the North American affairs manager at the Consumer Choice Center.

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Throne Speech promises may backfire for consumers, expert says

One advocate says the administration costs of those promises could end up getting passed on to buyers.

David Clement, North American Affairs Manager with the Consumer Choice Centre, says saddling business operators with rules about breaking down costs often leads to added expenses for the wrong people.

“Consumers will ultimately end up paying for that,” he says. “And so, whatever measure that is undertaken from the government has to be done with the perspective increased costs on suppliers or on producers could ultimately translate into higher prices for consumers.”

He says the best way to bring prices down is usually to boost competition.

As for promises to crack down on the unfair resale of concert tickets in B.C., Clement says that could also be risky because some buyers may have legitimate reasons for needing to offload them.


The Beer Store Is Flat Out Wrong on Consumer Choice

Toronto, ON —On February 1st, Ontario’s public consultation on alcohol policy officially closed. The Ford Government sought out feedback on how Ontario could modernize its alcohol market. Unfortunately, some entities, like The Beer Store, have actively pushed back against increased consumer access. The Beer Store’s President Ted Moroz recently argued that if the province allows for beer sales in corner stores that “the price of beer in Ontario is likely to go up and 7,000 jobs are going to be put at risk across Ontario.”.

David Clement, Toronto based North American Affairs Manager of the Consumer Choice Center (CCC), said that “The Beer Store arguing against increased consumer access is nothing more than a crony institution clawing on to its selective benefits,” said Clement.

“It is absolutely unacceptable that The Beer Store continue to be shielded from competition. The legislation¬†and agreements that mandate this protection should be immediately addressed so Ontario consumers can have more choice when it comes to where they purchase beer,” said Clement.

“Moroz’s claim that increased competition will drive prices up, and put the entirety of The Beer Store’s workforce at risk is fearmongering and deceitful. Our hope is that Premier Doug Ford listens to consumers, and not The Beer Store, when it comes to how Ontario should modernize alcohol sales,” said Clement.

Beyond ignoring the ridiculous statements put forward by The Beer Store, we recommend that the Province do the following:

  • Rip up Ontario’s 10-year agreement with The Beer Store
  • End the LCBO’s monopoly on the sale of spirits
  • Allow for alcohol sales at businesses already trusted to sell age-restricted goods
  • Un-cap the number of licenses for alcohol retail
  • Eliminate price uniformity to encourage competition
  • Allow for retailers to purchase directly from producers

***CCC North American Affairs Manager David Clement is available to speak with accredited media on consumer regulations and consumer choice issues.

Ottawa is baking a bitter taste into its rules around edibles

David Clement is the North American Affairs Manager at the Consumer Choice Center.

In December, the federal government released draft regulations around the production and sale of edible cannabis products and launched a consultation period for industry and the public that ends Feb. 20. Ottawa’s goal is to gather feedback that will guide it in efforts to minimize health and safety risks.

However, by naming the consultation period the “Strict Regulation of Edible Cannabis, Extracts and Topicals” the government has essentially tipped its hand to some major holes in its proposed regulatory framework.

The first major issue with the edible regulations is the 10-milligram/THC per-package limit on edible products, which means consumers won’t be able to purchase edibles in bulk. Rather than have a 10mg per-package limit, the limitation should be 10mg a unit or serving, with multiple servings permitted within a single package. Having a limit of 10mg a unit would serve the government’s goal of trying to prevent overconsumption, while still allowing for consumers to purchase products in bulk when convenient.

A limit of 10mg a unit would also bring Canada in line with jurisdictions such as Colorado when it comes to edible regulations. Not making this change will mean that edible products will be insanely overpackaged, just like the packaging requirements for dried cannabis products. All that aside, there is still a looming question as to why a limit needs to exist in the first place. Simply look at alcohol content restrictions and it becomes quite clear that there is an obvious double standard at play here.

The second major issue with the new proposed regulations is the revised personal carry limit for these newly legal products. The new maximum package size and personal carry limit will be 7.5 grams. From a consumer’s perspective, this makes a bad law worse, given that the penalty for violating this can be upward of five years in prison. When we consider that other substances don’t have personal carry limits, it’s questionable whether cannabis should have a limit at all.

The existence of a carry limit could also have some serious criminal-justice and social-justice implications. We know that cannabis possession fines and arrests disproportionately effected minorities in Canadian during the lead up to legalization. We also know from U.S. data that cannabis offences in states where cannabis is legal are disproportionately applied to black and latino Americans. The existence, and further complication, of a personal carry limit will most likely affect marginalized communities the most, just as the war on drugs has.

The third issue is that the new regulations maintain, for the most part, the government’s silly plain-packaging and branding restrictions. This means that edibles, extracts and topicals will have almost no branding and will have neutral packaging. The purpose of maintaining this is to try and discourage use. The problem with this approach is that brands convey knowledge to consumers. Branding helps consumers better understand the taste, impact and overall experience of a product. Branding matters, especially for cannabis products, because most consumers are new to cannabis. Branding allows for companies to convey information and knowledge to consumers, which increases the likelihood that consumers make appropriate and informed decisions for themselves. Just as with personal carry limits, the regulatory structure for alcohol regarding branding shows another giant double standard. There is no rational reason why cannabis branding and packaging should be more limited than products that contain alcohol. Regulating cannabis in this way is incredibly paternalistic and completely disregards the continuum of risk between alcohol and cannabis.

Beyond what is written in the draft regulations, there are also issues with what the Task Force on Cannabis Legalization and Regulation recommended be put into the regulations. For example, the task force has suggested that cannabis edibles should be prohibited from mimicking, or looking like, regular food items. If taken at face value, this would mean that items such as cookies, brownies or any other confectionery, would be prohibited. If adopted, this would be just another example of the government overstepping when it comes to how it treats adult consumers.

Waiting a year to legalize edibles, extracts and topicals was bad public policy from the perspective of harm reduction. These forms of consumption are much less risky than smoking cannabis. Now that these new products are soon to become legal, it unfortunately looks as if the federal government is destined to make what are glaring policy errors, all at the expense of adult consumers.

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Global consumer advocate says legal pot is good for communities

The Consumer Choice Center is confirming what marijuana advocates have been saying for a long time.

It said smart regulation of cannabis will reduce violent crime and boost economic gains. Those are some of the findings in its policy paper on the regulation of cannabis.

“It is clear that legalizing cannabis for medical and recreational consumption has boosted consumer choice and, at the same time, successfully deterred continued crime and black market activity throughout North America,” said Toronto-based Consumer Choice North American Affairs Manager David Clement.

The center said the latest research demonstrates that legalizing cannabis helps reduce overall levels of violent crime, as has been the case in the State of Washington. According to researchers, medical marijuana laws in California were found to have reduced both violent and property crime by 20 per cent.

“We stress the importance of smart regulatory policy in each jurisdiction where it is considered, and pieced together important lessons and recommendations that policy-makers should heed in their next steps to create a legal and safe market for cannabis,” added Clement.

The center’s policy paper examines cannabis policy recommendations for retail regulations, public consumption laws, selling to non-residents, taxation, grower licences, and branding. Among them are opening private retail stores, allowing public consumption in the same places as tobacco, creating cannabis lounges and establishments, investing in educational resources for minors and at-risk consumers, keeping taxation reasonably low, and allowing public advertising and freedom of branding.

The Consumer Choice Center promotes economic freedom and empowers consumers to raise their voice. It said regulators keep regulating more and more areas of consumers’ lives, leading to less consumer choice and usually higher costs.

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Canadian legal cannabis prices nearly 50 percent higher than black market prices

420 INTEL: David Clement, the North American affairs manager for consumer advocacy group Consumer Choice Centre, said that it’s unsurprising that prices of cannabis have risen.     

Clement said that in legalizing marijuana, products are now subject to both federal and provincial taxes in addition to licensing costs and numerous other fees associated with running a cannabis business all the way through the production line to the retailer.