It's been five years since Canada embarked on a groundbreaking journey, becoming the second nation in the world (after Uruguay) to fully legalize recreational cannabis at the national level. As we commemorate this milestone, we are proud to reflect on our accomplishments as an industry and set our sights on the promising future of Canada's cannabis landscape.
Cannabis Legalization
On October 17, 2018, the Cannabis Act ushered in a new era, granting Canadians the freedom to enjoy recreational cannabis legally. This historical move not only set an example for the world but also unlocked a world of opportunities for the cannabis industry.
One year later, on October 17, 2019, we witnessed the expansion of the market to include cannabis edibles, extracts, and topicals. This diversification not only broadened the product range available to consumers but also opened doors for innovative businesses within the cannabis sector.
The Success Story
As many expected, cannabis legalization has proven to be a substantial economic boon for Canada. According to a Deloitte study, between 2018 and 2021, the federal government raked in approximately $15 billion in tax revenues from cannabis retail. The nation's GDP received a substantial $43.5 billion injection during the same period, while directly and indirectly supporting around 98,000 Canadian jobs annually.
Furthermore, the legalization of cannabis has brought significant advantages to the justice and enforcement systems. The legal cannabis market has effectively curbed the illegal cannabis trade, with unlicensed marijuana sales plummeting from approximately $1.2 billion in 2018 to about $690 million by July 2021.This trend shows no signs of abating. In the two decades leading up to legalization, around 50,000 possession-related arrests were made each year. However, by 2020, this figure had drastically dwindled to approximately 1,000.
Challenges on the Path to Progress
While the past five years have been marked by significant achievements, we recognize that challenges still loom on the horizon:
Illicit Market Competition- The lasting presence of the illicit market, coupled with the price disparity between legal and illicit cannabis, continues to present a challenge. Regulatory compliance costs and taxes contribute to this pricing gap, which has provided fertile ground for the illicit market.
Oversupply of Legal Cannabis- The cannabis industry's unparalleled growth has led to an oversupply of legal cannabis, resulting in price decreases and margin compressions. Balancing the supply and demand curve is an ongoing concern, as fluctuations in pricing affect both businesses and consumers.
Stringent Regulatory Environment - The stringent regulations governing marketing, advertising, and branding in the cannabis industry demand a delicate balancing act for businesses. While these measures are essential for safeguarding public health and youth, they also pose compliance challenges for industry players.
Public Perception and Stigma- Despite five years of legalization, the stigma surrounding cannabis use still lingers, particularly within the financial services industry. Addressing these lingering biases and educating stakeholders is an ongoing mission for the cannabis community.
A Bullish Outlook on the Future
As we commemorate the five-year Canniversary of legalization, we do so with pride in our achievements and an unwavering commitment to overcoming the challenges that lie ahead. The cannabis industry has proven time and again that it is resilient, adaptive, and constantly evolving.
We remain confident in the bright future of the cannabis sector. Ongoing innovations, the maturation of the market, and a more balanced supply and demand equation will pave the way for sustainable growth. As public perceptions shift, and as cannabis establishes its rightful place in Canadian society, we anticipate further positive changes, particularly in the financial services sector.
Merrco was founded with the purpose of helping businesses in the cannabis industry securely and efficiently process payments. We understand the challenges of running a business in this rapidly growing industry, so we do our best to provide our clients with the tools they need to succeed. At Merrco, we are fervently dedicated to reshaping the narrative surrounding cannabis consumption, erasing negative stigmas, and setting a fresh benchmark for the cannabis retail experience.
The journey has been incredible, but the best is yet to come. Let’s raise a toast to the five years behind us and look forward to the promising years ahead in Canada's flourishing cannabis industry!