COMMENT

New Zealand's government recently released its draft cannabis legalisation bill. As a Canadian business professor, I can't tell your country how to should proceed; that's your decision. But I can summarise Canada's legalisation experience so far and suggest some lessons your country might learn from it.

Canada began legalising medical-use cannabis in 2001 and has gradually made it easier to access. Currently, any physician can authorise cannabis for their patients. Registered patients can grow their own plants or order products from government-licensed producers.

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Legal recreational use began in October 2018. Adults can now grow cannabis themselves or buy it from more than 600 licensed shops and websites.

Only two product formats were legal last year: dry (smokable) cannabis flower and cannabis oils. Recreational users mostly prefer dry while medical users typically prefer oil. Cannabis-infused drinks, foods, vapes and lotions hit the legal market later this month.

In our debates preceding legalisation, many strident claims were made. Some folks said legal cannabis would cause huge social problems, while others saw it as a financial green-rush.

So, here's the first lesson New Zealanders might take from Canada's experience: ignore the hype.

Despite naysayers' warnings, we've seen little increase in cannabis-related problems such as impaired driving. That's probably because consumption has barely budged.

A man holds a pro-marijuana sign at the 420 festival in Vancouver. File photo / 123rf
A man holds a pro-marijuana sign at the 420 festival in Vancouver. File photo / 123rf

In the nine months before recreational cannabis was legalised, 14.9 per cent of Canadian adults admitted using it. In the nine months after, the rate was only one-tenth higher, at 16.3 per cent.

Similarly, legalisation isn't an economic miracle. It has created more than 9000 jobs in production and thousands more in retail. But producers' profits are scarce and government tax revenues are modest.

Another lesson is that legalisation is a journey, not an event. Newly legal suppliers need time to overtake established black markets.

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Here, legal recreational sales now supply perhaps 23 per cent of cannabis consumption. Medical sales cover another 8 per cent and home growers add a bit more. So, legal cannabis has captured possibly a third of the Canadian market. But black markets still control the rest.

Legal sales were held back initially by shortages of products and stores. With those issues improving, the industry next needs to decrease prices and improve quality. That'll help draw consumers away from illicit suppliers.

The third lesson is really a question. Should New Zealand treat cannabis products as pharmaceuticals or as consumer goods?

Canada went the pharmaceutical route. Producers, products and retailers are all heavily regulated.

That was clearly right for medical cannabis. Patients can buy oils in formulations that fit their needs, knowing they're tested for contaminants and potency.

And over time, medical use will become more scientific. Already more than 138 research licenses have been issued, and hundreds more are pending.

But I'm less sure about recreational cannabis. The pharmaceutical approach does suit policy themes like "responsibility" and "harm reduction".

But rigorous standards have prevented illegal grow-ops from joining the legal industry. Instead, they compete with its products and undercut its prices.

Michael J Armstrong Photo / supplied
Michael J Armstrong Photo / supplied

By contrast, the consumer product approach of some US states lets illegal suppliers buy licenses and go legit. Large volumes and varieties of legal products quickly become available.

But standards can be lax. Not all producers worry about details like quality control, pesticide safety, or accurate testing.

That leads to the final lesson: there's no perfect cannabis policy. They all involve trade-offs. The Canadian government is trying to work out the "least bad" cannabis strategy for us. I wish your government all the best in doing the same for you.

• Michael J Armstrong is an associate professor in the Goodman School of Business at Brock University in Canada.