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Removing CBD products from the Cannabis Act would have several immediate benefits for consumers

Last week Ottawa announced that the Cannabis Act, passed in 2018, will finally get its long-overdue mandatory review, which was supposed to take place in October 2021.

Regulators will have to answer some tough questions regarding Canada’s legalization experiment. As Liberal MP Nathanial Erskine-Smith conceded: “We didn’t get it perfect, or exactly right the first time, and this is an opportunity to make sure we get it right going forward.” One of the core priorities of the expert panel reviewing the act is better understanding how the legal market can stamp out the illegal market, which is still prominent.

According to the Ontario Cannabis Store’s own report, the legal market has made significant gains since 2018 but still only accounts for 59 per cent of all cannabis consumed. So what can be changed in the Cannabis Act to target the 41 per cent of cannabis that continues to be supplied by the illicit market?

First, CBD products, those containing cannabidiol but either no or very little THC, which is what produces the high, should be removed from the cannabis act altogether. Products that are not intoxicating and have a significantly lower risk profile shouldn’t be treated the same as cannabis products that include THC.

Removing CBD products from the Cannabis Act would have several immediate benefits for consumers. The first is that it would exempt CBD products from the heavy-handed marketing, branding and plain packaging restrictions set out in the Cannabis Act. Regulating cannabis the same way as tobacco is regulated was a mistake, given the important differences in risks among the various cannabis products. But regulating CBD products like tobacco is downright comical. To end the joke, we should treat any CBD product with a THC concentration of less than 0.3 per cent (the U.S. legal standard) as a natural health product and exempt it from the rules and regulations of the Cannabis Act.

On the producer side, removing CBD products from the Cannabis Act would help licensed producers make use of the glut of cannabis that ends up being destroyed as a result of oversupply — an oversupply that fails to lower prices because excise taxes create an artificially high price floor, while the excise tax stamp regime landlocks finished product within provincial boundaries. Fully 26 per cent of the legal cannabis produced in Canada in 2021, 426 million grams, ended up being destroyed because of oversupply. If CBD were removed from the act, this excess cannabis could be used to create CBD products, which could be sold at other retail outlets, not just licensed cannabis stores, thus significantly expanding buying opportunities for consumers.

On marketing and branding, the rules should be re-written to mirror what Canadians accept for alcohol. Cannabis is no more and arguably much less dangerous than alcohol, so its sale to adults shouldn’t be more strictly regulated. This wouldn’t just be for consistency’s sake, either. People who buy their cannabis in the illicit market need to be aggressively marketed to if the government wants to keep growing the legal market. Marketing and branding rules that are far less paternalistic than those currently in place would be a huge step forward in allowing retailers and producers to reach consumers still buying outside the legal regime.

Regarding product and price, some simple steps would go a long way. First, the 30-gram limits on both purchase and possession in public should be scrapped. There are no such purchase restrictions for alcohol: an adult of legal age can walk into a liquor store, more often than not owned by the government, and buy as many bottles of liquor as they please. If consumers can buy more than a lethal dosage of alcohol from a government store, they should be able to buy more than 30 grams of cannabis from legal retailers.

Regarding edibles and beverages, the act should either remove the 10mg THC restriction or significantly increase it. This restriction gives a leg-up to the illegal market, where edibles are often 10 to 20 times more potent. If legal edibles are to compete, they have to be comparable products.

Finally, as far as price regulation goes, the legal market needs to be much more competitive. Significantly simplifying and lowering the excise tax would help cannabis to be produced at lower costs and sold at lower prices, thus making it more attractive for those still buying illegally. Replacing the $1/gram minimum tax with a flat percentage would give a significant competitive boost to the legal market.

It is worth celebrating that 59 per cent of the cannabis market is now legal but serious changes are needed to crack down on the remaining 41 per cent. If the Cannabis Act is not amended to make the legal market more consumer-friendly, efforts to grow the legal market may fail.

Originally published here

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