In March, a panel of experts in Canada quietly released the first authoritative evaluation of one of the biggest public policy changes in the country in recent memory: its legalization of cannabis. In 2018, Canada became the first G-7 nation to legalize the drug, launching a billion-dollar industry virtually overnight. (Many countries, such as the Netherlands, have decriminalized cannabis but not made it fully legal.)
In March, a panel of experts in Canada quietly released the first authoritative evaluation of one of the biggest public policy changes in the country in recent memory: its legalization of cannabis. In 2018, Canada became the first G-7 nation to legalize the drug, launching a billion-dollar industry virtually overnight. (Many countries, such as the Netherlands, have decriminalized cannabis but not made it fully legal.)
As a condition of passing the law, Prime Minister Justin Trudeau’s Liberal government agreed that a panel of experts would conduct a formal review of the policy three years later. After a delay due to the COVID-19 pandemic, the government’s final report has arrived. The review concluded that Canada’s highly regulated but privatized cannabis market is deeply flawed. Legalization partially sacrificed public health to create a commercial market, experts found; even so, many cannabis companies are still struggling to turn a profit.
Ottawa’s panel of experts is not alone in its conclusions. As more jurisdictions around the world flirt with the idea of legalizing cannabis, many of them view Canada’s example through a critical lens.
Canada’s approach to marijuana legalization has yielded some accomplishments. Adults have largely moved their purchasing to a legal market, and criminal convictions for possession have dropped by 95 percent, the review found. “If one of the goals was to reduce the burden to the criminal justice system, it’s been a huge success,” said Akwasi Owusu-Bempah, a professor of sociology at the University of Toronto and co-author of Waiting to Inhale: Cannabis Legalization and the Fight for Racial Justice.
But pardons for those already convicted of cannabis-related crimes were an “afterthought,” Owusu-Bempah said. The government created a program for convicted Canadians to apply for amnesty, but Owusu-Bempah described the process as “byzantine.” As a result, to date, few pardons have been granted.
Overall, Canada’s legalization regime has done little to address the inequalities introduced by the criminalization of cannabis a century ago, according to both Owusu-Bempah and the review. Many communities that were historically overpoliced under previous cannabis laws—including First Nations and Black Canadians—should have been the first to benefit from a legal marketplace, they said. Instead, these groups face massive hurdles to entering the legal market, which has become dominated by large corporations.
Small- to medium-scale producers are not benefiting from legalization, the report found. Canada’s law initially created two license classes—a standard class and a “micro” license that offered smaller-scale growers lower regulatory fees. But the review said those in the latter class are struggling to turn a profit; high excise taxes force producers to price their products low, and regulatory fees are high.
Terri Blumes, the CEO of the small Alberta-based cannabis firm Almanac Grow, said micro licenses also come with low production caps that make finding investors impossible. Despite incurring regulatory fees that are tens of thousands of dollars higher, Blume, like many fellow small growers, opted to obtain the larger license. “Why would you invest in a facility whose revenue would be capped by its license type?” he asked.
In the years since legalization, meanwhile, the cost of cannabis has tanked due to overproduction by large companies. As a result, even these large producers are unable to please investors, the review found, leaving dozens of companies struggling for survival. “The economics of it have not been reconsidered,” Blumes said. “If something isn’t done about making this industry sustainable in Canada, for all sizes of enterprise, then the pendulum will swing the other way”—meaning, back toward the black market.
Meanwhile, legalization’s public health impacts seem to have been negligible or even negative. Canada’s cannabis use rate among those under 25 was already among the highest in the world before legalization; since then, it has not decreased. The review also cited “increasing reports of poisonings among children” who unintentionally consume edibles, suggesting that existing regulations are not preventing harm to minors.
The government report found that doctors are receiving industry payoffs for prescribing certain brands of medical cannabis; it warned that police have committed few resources to enforcing regulations on the sale, marketing, or prescription of the product. All the while, the review said, cannabis products keep getting stronger—the majority sold now have a THC content of over 20 percent. Experts advised the government to “stand ready” to regulate some products off the market and implored producers to offer lighter products rather than driving buyers to consume at higher potency.
For Peter Selby, a senior scientist at the Centre for Addiction and Mental Health in Toronto who contributed to the report, these issues are directly connected to Canada’s commercialization of the cannabis market. “With [decriminalization], you didn’t see the harms going up,” he said. “But as soon as you allowed commercialization, you started seeing this.”
In Malta and Germany, governments have opted to limit sales to nonprofit cannabis clubs, which collectively invest in the growth and processing of cannabis that can only be sold back to members. The system, Hughes noted, “effectively blocks” the development of a billion-dollar international cannabis trade that had attracted the interest of large-scale investors from the United States and Canada.
Instead, European proposals and policies like these emphasize their potential benefits to public health by moving cannabis consumers out of the illegal market. Malta and Germany also appear to have given more thought to pardons for those formerly convicted of cannabis possession than Canada; Germany issued blanket pardons for more than 200,000 convictions. Hughes said references to the potential tax revenues and job creation—a major part of the case for legalization in Canada—have become less popular among European politicians as Canada’s experiment has wound on.
In European countries exploring legalization, meanwhile, there has been an emphasis on conducting small-scale experiments prior to major policy change. In the Netherlands, where cannabis is widely available via a tolerated black market, a handful of cities have approved a pilot project to introduce legal, government-licensed marijuana as a competitor product for a few years. In Switzerland, Hughes said, individual regions are empowered to design their own pilot projects—be it for medical licenses, cannabis clubs, or private retail markets—as long as they collect data on public health outcomes.
Whatever Canada’s failings, it seems the legal cannabis market is here to stay. Legalization remains generally popular: Last year, an online poll found that 64 percent of Canadians supported the policy—though, interestingly, this support dropped to less than half among Canadians ages 18 to 34.
And while the review’s warnings about child poisonings and calls for better enforcement sound like red meat for a conservative campaign—particularly ahead of next year’s anticipated general election—Canada’s Conservative Party has so far remained quiet on the issue. Conservative leader Pierre Poilievre voted against legalization in 2017 but the party reversed course in 2019. At the party’s convention last year, a proposal to reduce excise taxes on medical cannabis won support but failed to become party policy. (Poilievre’s donors include cannabis tycoons.)
Ultimately, Selby said, the review shouldn’t be taken as a sign that Canada’s policy has failed—just that it could use some long-overdue adjustments. “I think [legalization] really requires a more nuanced approach,” he said. “It isn’t a one and done—you need to have an infrastructure behind it to monitor it, to tweak it.”
The same goes for Europe—no matter what legalization frameworks countries choose to settle on. “This is one big natural experiment,” Selby said. “We should all be learning from each other.”
