Pubdate: Sat, 30 Jan 2016
Source: Globe and Mail (Canada)
Copyright: 2016 The Globe and Mail Company
Contact:  http://www.theglobeandmail.com/
Details: http://www.mapinc.org/media/168
Author: Daniel Leblanc
Page: A3

MEDICAL POT PRODUCERS EYEING RECREATIONAL MARKET

Canada's producers of medical marijuana are sitting on a seven-tonne 
stash of weed, with the inventory steadily growing as supply exceeds 
demand in the legal system, according to the most recent Health Canada numbers.

Health Canada is currently studying 401 new applications for licences 
to produce cannabis for medical use, on top of the 27 firms that are 
currently in production across the country. In addition, the 
department is receiving about two new demands for licences a week, 
Health Canada spokesman Sean Upton said.

Still, the department acknowledged there is already an "overall 
sufficient supply of marijuana for medical purposes to meet the 
current access needs of registered clients."

Faced with this surplus capacity, producers of medical marijuana have 
launched a lobbying campaign to persuade the government to offer them 
privileged access to the market for recreational marijuana, once the 
drug is legalized.

"What we continue to hear from government, both at the provincial and 
federal level, is they are very focused on ensuring a high level of 
control and quality on the production of cannabis for the adult 
recreational space, and we are very supportive of that," said Greg 
Engel, chief executive of Tilray, which has been a licensed producer 
for nearly two years.

However, the surplus points to flaws in the federal model of medical 
cannabis, as users increasingly opt to purchase drugs at unregulated 
dispensaries, Vancouver lawyer Kirk Tousaw said.

He said it would be a mistake for the government to expand the model 
for medical marijuana when it legalizes the drug for recreational purposes.

"The difficulty is that taking a failed system and just making it 
bigger isn't going to make it work," said Mr. Tousaw, who represents 
a variety of clients in the cannabis industry.

He argues that Health Canada imposes too many costly regulations on 
licensed producers, mostly as part of an effort to prevent people 
involved in the illegal trade from joining the legal market.

"You don't need a PhD to grow high-quality cannabis that is 
contaminant-free. Most growers across the country are doing a great 
job of that and have not graduated from horticultural school," Mr. Tousaw said.

However, Health Canada found that licensed producers were holding 
7,312 kilograms of marijuana in their inventory as of Sept. 30. Three 
months earlier, on June 30, the inventory sat at 5,445 kilograms, 
which was up by 3,400 kilograms over the previous year.

Under current rules, medical marijuana is sent to users by registered 
mail - a system that both Mr. Engel and Mr. Tousaw agree should not 
be replicated for the recreational market.

"There is no question that some type of consumer-facing model is what 
is preferred in the adult recreational space, which to date has led 
to the proliferation of the dispensaries," Mr. Engel said.

Mr. Tousaw added: "People want to buy it from stores, like everything 
else. Particularly plants, this is something you like to smell, look 
at, before you purchase. It's like tomatoes. You want to see the 
quality before you spend your money."

Licensed producer Bedrocan Canada has just slashed the price of all 
of its products to $5 a gram, down from $7.50. Other firms charge up 
to $12 a gram for medical marijuana, but Bedrocan said it has the 
ability, as its production capacities increase, to make its medical 
product more accessible.

In an interview, Bedrocan president Marc Wayne added that the company 
is "flexing muscle" in the wake of the rise of illegal storefronts 
that sell marijuana for both medical and recreational use.

"It's not that we don't believe in storefronts - but we don't believe 
there is a level playing field here," said Mr. Wayne, who is also the 
chair of the Canadian Medical Cannabis Industry Association.

In last year's Speech from the Throne, the Trudeau government vowed 
to "legalize, regulate and restrict access to marijuana." The 
government's point man on the file, Liberal MP and former Toronto 
police chief Bill Blair, promised a series of controls once the 
market was opened up.

"There needs to be reasonable restrictions on making sure that we 
keep it away from kids, because I think that is very much in the 
public interest. We also have to ensure that the social and the 
health harms are properly managed and mitigated, and that can be done 
through regulation," he said in a recent interview.
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MAP posted-by: Jay Bergstrom