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Cannabis 2.0

Edibles will soon be legal in Canada. Now what?

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Canada will embark on its second wave of cannabis legalization on October 17, when Health Canada legalizes the sale of cannabis edibles (food and beverages), extracts and topical products at licensed cannabis retailers. However, it will take until mid-December before only a limited selection of product becomes available, and regulations governing their sale will be strict. Edible products will require child-resistant packaging, plain packaging with limited use of logos and health warnings, and will have to be manufactured in separate facilities.

That’s par for the course, says Mathew Columbro, president and co-founder of Vindica Cannabis Corp, a strategic consulting firm for companies operating in the cannabis industry. “The path for Health Canada has always been [to be] very strict and then to become more lenient over time, once they see there aren’t issues. That’s where we are starting out with edibles,” he says. “But it’s a starting point. Things will get easier.”

Most Canadians will eventually try an edible product, says Sylvain Charlebois, professor in food distribution and policy at Dalhousie University in Halifax. That said, tough regulations may have dampened enthusiasm for edibles. A survey released by Dalhousie last May found nearly 36% of respondents said they would purchase legalized cannabis edibles, down from 45.8% in 2017.

When the Liberal Party ran on a platform of cannabis legalization in 2015, “it invited Canadians to a huge party with great music,” he explains. But the strict regulations that ensued were the equivalent of having the party moved to “some dodgy basement with lousy music.”

READ: Producing pot gummies a challenge amid hazy regulations

Still, Charlebois predicts that sales of cannabis edibles will surpass sales of cannabis combustibles within the next five years. “Edibles are the way to go,” he says. “The human body was never designed to inhale drugs.”

A Deloitte report published in June, called Nurturing New Growth: Canada Gets Ready for Cannabis 2.0, pegged Canada’s edibles market at $1.6 billion and the cannabis-infused beverage market at $529 million. In a release, Deloitte said its research showed that much of this economic boost would be on top of current cannabis product spending.

READ: Martha Stewart offers business advice to cannabis industry

Rishi Malkani, the lead partner managing the cannabis practice in Canada at Deloitte, notes that in the first wave of cannabis legalization, there was “a lot of the hype and a lot of the folks using it were experienced.” But “with cannabis 2.0, you’re going to get not only folks who’ve used it before, but a whole host of curious consumers and folks who are interested in trying new formats.” There is less stigma and fewer health concerns for edibles compared with combustible products, which are “a turnoff for a lot of people,” Malkani adds.

This article appeared in Canadian Grocer’September/October issue.

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