medical cannabis in Canada

Medical Cannabis in Canada LPs Go Global

Licensed producers of medical cannabis in Canada are exploring markets overseas, and why not? Health Canada‘s regulatory regime is so restrictive that the LPs would be foolish not to look for opportunities abroad. But that’s not the picture we’re likely to get from the mainstream media, who cast the LPs as the “free market” alternative to home gardens, and who view their stock prices as a sign of success rather than a financial bubble. The LPs may be expanding internationally, but they do so at the expense of the small farmers’ market, half of which is in British Columbia. BC Bud predates the LPs by a long-shot. If anyone should have access to international markets, it’s Canada’s independent cannabis growers who have been around for decades, not the crony-capitalist cartel of the Ottawa regime. But like George Carlin said, “It’s a big club, and you and I ain’t in it.”

medical cannabis in CanadaIt’s the same big club with which they hit us over the head, whether it’s the MMPR, challenging Allard with taxpayer money, or the simple fact that cannabis remains in the Controlled Drug and Substances Act. But with legal cannabis markets opening up worldwide, Canadian entrepreneurs are posed to reap the benefits in the international division of labour. But who are these entrepreneurs? In a free market, they would be the best producers as chosen by consumer buying power. Even in semi-free markets, like BC’s dispensaries and compassion clubs, consumers have more power to bankrupt the inefficient than they do under prohibition. But the LP-model is prohibition; it amounts to well-connected political firms masquerading as industrial farms. LP entrepreneurs aren’t entrepreneurial in a market sense; they cling to political protection for their market share, they prove their worth, not by having the best cannabis on the market, but by relying on what the CNSX says.

If there is a poster-child for all that is wrong with Canada’s cannabis industry[i] look no further than Tweed. Co-founded by Liberal Party CFO Chuck Rifici (who is now a multimillionaire thanks to this investment which has cost others millions), Tweed has repositioned itself as a multi-branded holding company, acquiring all the shares of its competitor, Bedrocan. According to Tweed CEO and Chairman Bruce Linton, the company will spend the remainder of this year working on its domestic operations, with international expansion slated for 2016. Brazil and Chile are two of the countries on Tweed’s radar.

“I want to first make sure we become the dominant supplier that is cash-flow positive and has a very significant market share in Canada and then use that expertise and credibility to pursue international expansion,” says Linton.

It’s not unreasonable to seek profits in international markets when the one at home is so restrictive and bureaucratic. It’s also not unreasonable to seek government-protection and benefits to keep competitors from actually competing with you. If you don’t lobby for these exclusive government benefits, one of your competitors will. So it’s not unreasonable, but it is a tad bit immoral, don’t you think? Who is really at fault here? Government or private enterprise? What if I were to lobby the government for an overhaul of the dairy market in Canada? Create new regulations to limit dairy production to a few LPs while outlawing it for everyone else[ii]. If I were one of these dairy LPs, would I really have an incentive to change the status quo?

Not really, but that’s why we have a free press. Or at least, we once did. While there’s no direct evidence linking LPs to pro-media messages, but so-called mainstream media does a universally poor job of investigative journalism. While there are exceptions to the rule, reports on cannabis tend to ignore or belittle the BC farmers as “black market” or “organized crime” while exalting the LPs as the only legitimate, safe, and effective producers of cannabis in Canada.

Khurram Malik, a clean technology analyst at Jacob Securities Inc., said the LPs have actually benefited from Health Canada’s over-regulation. “Health Canada considers marijuana a pharmaceutical-grade product, not a food-grade product, and that’s a huge distinction in how you manufacture,” he said, adding, “Because we have these regulations in place, we probably grow the cleanest, most pesticide-free, fertilizer-free marijuana in the world, at scale.”

Malik added: “It’s literally the highest quality marijuana you can get anywhere in the world,” without realizing how inane such a statement is. Who defines “highest quality marijuana”? LP quality control is simply what the government – not the consumers – defines as “lower-quality” or “higher-quality” cannabis. In the freer and fairer retail market, consumers define the relative term of “quality” by buying (or not buying) according to their personal tastes and preferences. Health Canada imposes cost-prohibitive rules and regulations that shift decisions from patients, consumers and entrepreneurs to arbitrary government bureaus and crony-capitalists. Sending the LPs overseas was either an unintended or intended consequence of domestic over-regulation. Take your pick, just watch out for the club.

~ Caleb McMillan

[i] Might as well drop the “medical” nomenclature since cannabis is not a toxin. All use is medical and/or therapeutic and the MMPR was designed for recreational legalization anyway.

[ii] This is actually how the Canadian dairy system works