Running a cannabis business won't be easy. Photo / Getty Images
Running a cannabis business won't be easy. Photo / Getty Images
Starting a recreational cannabis business won't be as easy as buying a few planters, seeds and soil from your local Bunnings.
The Government's Cannabis Legalisation and Control Bill proposes strict regulation, covering everything from cultivation and testing to retailing and advertising.
There are 10 activities listed as controlled activities under the draft legislation. To engage in any of these activities, you'll need to acquire a licence from the Cannabis Regulatory Authority (yet to be formed).
Importation, cultivation, production, testing, researching, wholesaling, retailing, operating a business, transporting or even the destruction of cannabis will require the appropriate authorisation from the Authority.
If, for instance, you do not have the necessary licence to cultivate then the standard personal use rules apply, imposing a strict limit of two plants on a property per person older than 20. If there are two or more people living on the same property aged older than 20, then the limit is a total four plants – hardly conducive to a burgeoning cannabis enterprise.
Rather than bemoaning the severity of the regulation, business executives on the medicinal side of the sector have welcomed the response from the government.
"This is very important as a lack of a clearly defined framework of how a regulated adult-use market in New Zealand would function creates confusion," said Cannasouth co-founder Mark Lucas.
"The medicinal cannabis industry and voters need clarity of what a yes vote means and it is pleasing to see the Government beginning to provide that."
Cannabis
Helius Therapeutics co-chief executive Paul Manning, who like Lucas has had to go through the rigmarole of applying for licencing on the medicinal side of business, sees the strict regulatory steps as a positive.
"This isn't going to be a lolly scramble," he says.
"It's going to be really tough for operators to get into the system, but once they do there could be a number of opportunities."
Cannabis cafes, dispensaries and farms are among the more obvious, but Manning looks beyond these and sees business opportunities throughout the supply chain – some of which are, in fact, created by the regulations.
The bill's proposed limitations on the potency of cannabis products, for instance, creates opportunities for research experts to establish testing facilities to ensure standards are met.
There will also be opportunities on the research and development side and for horticultural experts who may want to lend their skills to the sector.
This, says Manning, will all play a role in ensuring that consumers are better placed to make informed decisions rather than relying on the vague promises of a street dealer.
The Herald understands that marijuana currently sells at around $15 a gram on the black market, and Manning believes that legal businesses in a regulated market will be able to compete with that with a superior product that's been thoroughly tested.
"The regulation is really about making people safer," Manning says.
"Cannabis users aren't going to stop using the product if these regulations don't exist. It just means they're going to keep relying on untested products sold on the black market."
Helius Therapeutics co-chief executive Paul Manning. Photo / Supplied
Once all the regulatory steps have been met and a retail premises has been established, one of the biggest challenges a business could face lies in the total ban on advertising.
The limitations in this regard are akin to those imposed on tobacco products in that there are rules regarding the display of products.
This means organisations interested in entering the cannabis space at a retail or hospitality level could face major problems in terms of spreading the word about their products.
"You could argue a blanket ban on advertising is a bit tough given alcohol companies are still allowed to advertise, but I understand where they're coming from," says Manning.
As Andrew Little explained: "The primary objective of the legislation is to reduce overall cannabis use and limit the ability of young people to access cannabis."
One interesting omission from the legislation is that it doesn't specify limitations on how the cannabis can be sold or consumed.
There was initially speculation in the sector that the government may go as far as excluding even the sale of dried product altogether. Some also expressed concerns in respect of edibles, which could be seen to appeal to children (particularly in the shape of lollipops and notorious gummy bears seen overseas).
However, the Government seems to have focused instead on limiting where products are consumed and how they're marketed rather than how people choose to consume them.
That said, these are only the first draft of the regulations and there will be a few edits as we move toward the referendum next year. The aspirant marijuana business community will be watching closely.
