Five year anniversary: Legal pot a tough road for business owners

Tuesday marks the five year anniversary of the legalization of marijuana in Canada.

But for all the promise of a budding new industry, insiders said it’s been a tough row to hoe.

George Smitherman, who presides over the Cannabis Council of Canada, said many marijuana dispensaries have been going bankrupt, partly because of unregulated black market competition.

But Smitherman said it’s also because the federal government takes a cut of 50 to 60 per cent on the sale of pot.

“The government middle-man through his variety of taxes and regulations has [kind of] gotten too much of the pie, and has left very little, if you will, on the fringes for the producers of the product or even for the retailers that sell them to the end consumers,” explained Smitherman. “So, it’s been a low-margin environment.”

At Right Puff cannabis shop on Commissioners Road East in London, assistant manager Crystal Casimir admitted the market has become saturated.

Crystal Casimir, assistant manager at Right Puff Cannabis in London, Ont. is seen on Oct. 16, 2023. (Bryan Bicknell/CTV News London) But even still, she said they’re seeing a variety of customers at the independent dispensary.

“All walks of life, all age groups,” she said. “We see a variety of people right from 20 years old to 90 years old coming in. We’ve got our professionals. We’ve got our students. So it’s a wide range of people we get to see every day.”

When the government legalized marijuana, it was anticipated that the regulated market would replace the black market industry – but that hasn’t necessarily happened.

Michael DeVillaer is an assistant professor at McMaster University's Department of Psychiatry and Behavioral Neurosciences, where he is also a faculty associate with the Centre for Medicinal Cannabis Research.

The author of the recently published ‘Buzz Kill: The Corporatization of Cannabis,’ DeVillaer said it used to be that products bought on the street were cause for worry. Now, he said products purchased legitimately and legally are also cause for concern.

DeVillaer said Health Canada has logged nearly 3,000 infractions by licenced producers.

“Things like unauthorized pesticides being used, cannabis with mould on it and microbial and chemical contamination. Lots of problems with mislabeling of the product,” he explained. “And the infractions also include some of these large companies actually involved in corporate crime, including collusion with the illegal producers that they were supposed to replace.”

In the meantime, on Tuesday the Cannabis Council of Canada will hold its annual conference Grass on the Hill in Ottawa, a summit for industry representatives to meet with policy makers.