As data continues to roll in from North American policymakers on the state of cannabis, European countries should be taking notes. Although the recent wave of legalisations has been far from a perfect success, some experts are happy to report that they got at least a few things right. From limiting harmful advertising, stepping out from the shadow of the alcohol industry and tackling supply chain issues, both Canada and the United States offer a trove of insight.
For leaders in the EU, catching up on this research could be critical for nursing new cannabis industries in Europe.
Canada leads the way
There are more than a few key distinctions between governance in Europe and in Canada. Alberta is much bigger than Luxembourg, for example, and the entire province of Ontario has the same population as the city of Istanbul, Turkey.
These facts paint a unique picture long before one begins examining the rich history of Europe. Remember, Canada only celebrated its 150th birthday as a nation in 2017.
Still, the young nation has a lot to teach other regions that are just beginning to dip their toes into the cannabis space. Already, smaller European countries like Luxembourg are following Canada’s cannabis lead.
Far from a firm law, leaders in Luxembourg City are hard at work debating the models set in place by its North American partners.
First off, the small European country plans on legalising the possession of 30 grams of cannabis. Anyone over the age of 18 who has proof that they have lived in the country for at least six months, would have access to this supply. Similar to Canada, the Minister of Health of Luxembourg, Etienne Schneider, would also forbid ‘advertising, internet sales and delivery’, according to Marijuana Business Daily.
Part of Luxembourg’s new cannabis push is to help wipe out the black market. Schneider told Politico in 2019 that:
‘This drug policy we had over the last 50 years did not work. Forbidding everything made it just more interesting to young people.’
Helping navigate this transition is Luxembourg’s Justice Minister, Félix Braz. To complete their research, the duo even visited a grow house in Smith Falls, Ontario. It was here that Bruce Linton and Canopy Growth Corporation repurposed a historic Hershey’s chocolate factory to start growing bud.
For all their proactivity, however, there are still several features of the Canadian market that Luxembourg would do well to exclude. And with the so-called ‘Cannabis 2.0’ showing cracks, the Canadian model is far from perfect.
Understanding the Canadian cannabis model
First off, Canada is not Luxembourg; and though they resemble member states in the EU, provinces are not countries. This is an important distinction to make because of how the Canadian government has delegated certain regulations.
The Cannabis Act, which ushered in broad legalisation, stipulated that province leadership could still keep cannabis illegal locally. This allowed more conservative states to maintain their stance on the product while letting other, more liberal states dive right in. If a province continued to ban cannabis, interested buyers were also offered a government-run website from where users could order cannabis.
The reasoning behind this was that keeping a single, federally-supported stream of cannabis available for users would continue to limit black market sales. Province leadership can save face and represent its conservative voters, while the nation limits the sale of illegal cannabis. A win-win.
A quick comparison with the United States offers further analysis.
Unlike Canada, individual states in the U.S. are responsible for spearheading cannabis legalisation. This is in line with the American values of individual sovereignty and so forth. Plus, states in the south, like Mississippi or Alabama, couldn’t be more different from Washington state and California, where recreational cannabis is alive and well.
Allowing state governors to lead their communities also keeps federal powers from having to make imprecise decisions based on local cultures they may not understand. In this setup, the federal government only needs to monitor how cannabis moves between states. Only then will it step in.
One can think of these two forms of governance as a flexible top-down approach versus a more grassroots movement. For Europe, and its young union, the model may look much more like what is happening in the United States. Although each country is evolving at different speeds, they will likely continue to do so without the clear direction of the European Commission in Brussels.
Alexandra Curley, the head of insights at Prohibition Partners, concluded that:
‘From a regulatory perspective, Europe resembles the United States in its patchwork of inconsistent regulations.’
This patchwork is causing various issues for companies in each state too. Without clear rules about cannabidiol (CBD), supply chains, and what it means for a cannabis startup to leverage traditional financial services, the industry will struggle.
But continuing to focus on Canada’s missteps may help soothe some of these issues.
How can Europe improve on the Canadian cannabis model?
Supply issues have been front and centre of the Canadian cannabis movement since 2018.
On the one hand, shortages were common in the beginning as the federal government was slow to hand out licences. Only with a licence could provinces begin to nourish the distribution and retail side of the operation.
As mentioned earlier, provinces moved at different speeds. Canadians in Nova Scotia, for instance, were some of the first customers served. This difference in speed of service is also related to distinct private and public models. Ontario allows the private sector to handle sales, while Nova Scotia’s retailers are all operated by the state.
These shortages put an early damper on enthusiasm throughout the country. But as demand never waned for legal pot and licences, eligible growers began overproducing. Soon, companies complained about oversupply and low prices for high-quality flower. There have even been reports of Canadian growers burning their inventory to help improve the market.
In the quick flux between shortages and oversupply, however, the cannabis industry boomed. It was at this time that stock prices inflated and everyone, especially celebrities, began printing their names on the next pot company.
European legislators and cannabis firms have a lot to learn from these three phases.
Firstly, supply should move in lockstep with demand. Although many medical cannabis patients throughout Europe are experiencing shortages, suppliers like Bedrocan in Holland are responding accordingly. To improve this process, member states should help cultivate a local cannabis supplier rather than relying on the Netherlands.
This will offer greater flexibility for meeting customer demand for cannabis, which only appears to be increasing. In actively following citizens’ demand, countries will also avoid the pitfalls of oversupply.
Finally, for companies that find themselves in the throes of the next green gold rush in Europe, they must keep in mind basic business principles. The former Bacardi Canada President, Rob McPherson, spoke on this subject in an interview about the Canadian cannabis industry.
For those that have been following, many pundits have compared cannabis with the beer, wine and spirits market. But as McPherson reminds, it doesn’t matter ‘if it’s cannabis, coffee or canoes, there are foundations and fundamentals to business that apply. And too many cannabis companies somehow think cannabis is magical and mystical and different, and it’s not.’
Concluding, although the European cannabis market is still very young, understanding the dynamics of more mature markets is critical. From legislators to entrepreneurs, everyone has something to learn from countries like Canada and the United States. These distinctions are also prescient for Canadian companies coming over to Europe.
Without a nuanced cultural understanding of Europe’s history, each country’s role in that history, as well as the pace of business within the European Union, many spokespeople from North America will fail to form meaningful connections.