Driving Growers and Sellers Underground, the Canadian Government Begins to Usurp the Marijuana Industry

Most may be surprised to learn that Canada’s largest black market involves the very same substance the government has recently deemed to be legislated as “not illegal.” But for many otherwise law-abiding members of society, “not illegal” doesn’t mean “legal” either. Members of this enormous underground market aren’t tattooed thugs or violent criminals—they’re parents, grandparents, teachers, community members, professionals, and others who prefer to buy and sell medical marijuana through local dispensaries and consume it at lounges rather than depend on corporate businesses hand-selected by government organizations like the Liquor Control Board of Ontario (LCBO).

Many of Canada’s medical marijuana dispensary and lounge owners prefer to consider themselves part of the country’s “grey market” because their status under the newest marijuana laws is ambiguous at best. Although they want to be (and are) productive members of society, the businesses they’ve built are most likely to be made illegal again even after the government sought public input on its marijuana supply and consumption laws.

Read on to learn why the Canadian government’s plan for total control of this area seems likely to lead to a much more robust underground market for the sale and consumption of marijuana, even though the vast majority of dispensary and lounge proprietors want nothing more than to become/remain legal, tax-paying business owners.

What Exactly Did the Voters Approve? 

The only “legal weed” available in Ontario beginning in the summer of 2018 is medical marijuana, available to those who have a documented medical condition eligible for this treatment. Medical marijuana will be tightly controlled by the LCBO and may only be delivered to consumers by government-licensed producers who send it via Canada Post. To begin the advent of legal marijuana in Ontario, government permits are only going to be issued to around 150 stores that are run by the LCBO. Dispensaries, including online dispensaries, are technically considered illegal without a permit, as are lounges that offer medical marijuana to cardholders or delivery services that promise quick door-to-door service of edibles, buds, waxes, oils, or other forms of cannabis.

Meanwhile, Quebec has a recreational marijuana bill pending in the Senate, and the Minister of Public Health himself has said that the government is reaching out to private suppliers so it will be “ready to move” when marijuana is made legal. While many government projects have open and transparent bidding processes, five of the six suppliers selected by the Quebec government isn’t even based in the province, a seeming slap in the face to local suppliers who would like to stay competitive (and legal). Cannabis-friendlier British Columbia has eliminated the contracting process entirely and has instead announced plans for standalone government marijuana shops.

Before the passing the Cannabis Act, the government held a number of public forums designed to solicit public input and take the temperature of the public opinion on the legalization of medical marijuana. However, despite great public support for the services provided by current dispensary owners, lounge owners, and delivery drivers, it appears that the government is pushing for total control of the entire industry—regardless of the legal and financial impact this control may have on those brave entrepreneurs who first carved out a place for marijuana at the table.

Many of the public comments and even the votes in favour of legalization of medical marijuana envisioned a free and open market for cannabis sales, with the government merely providing standards for quality control. One of the biggest downsides of black market marijuana had been the lack of transparency; although some dispensaries were open when it came to the THC content of their Indica’s and Sativa’s, other growers were unaware (or unwilling to disclose) the strains or THC content of the cannabis they sold, making it tough for legitimate medical users to maintain their treatment. 

By injecting government control into the process, officials promised it would be much simpler for consumers to pick and choose the strains they’d prefer, opting for a lower THC content or a more relaxing experience based on their specific illnesses or conditions. But because medical marijuana is still illegal for anyone but a government-sanctioned business to sell, the government is using this opportunity to hand-select big corporations to serve as legal dispensaries, choking out the small businesses that fought to make medical cannabis legal in the first place.

Not only does the stranglehold of government control harm the brave small business owners who started this process, it removes competition. This will give the government carte blanche to set cannabis prices too high for the average Canadian to afford, decrease the THC content of government-approved cannabis, or take other measures that are based on principles of government policy. This push could ultimately harm the hundreds of thousands of Canadians who depend on medical marijuana to prevent seizures, treat chronic pain, manage anxiety, and battle nausea and other serious side effects of chemotherapy. If the government is permitted to control who sells, not just the quality of what is sold, the ability of private sellers to thrive seems bleak.

What Does This Mean for Online?

Despite this at-times pessimistic outlook, there are many new companies that offer innovative technologies and other unique contributions to the industry. Cannabis conventions draw tens of thousands of attendees and fill entire convention centres, with proprietors and purveyors optimistic that, at the end of this legalization effort, the industry will still belong to “the people” rather than the government.

When it comes to the marijuana industry, the Canadian government has some advantages that just aren’t available to those who don’t write the laws. Government organizations are able to use hosted web solutions like Shopify, while private entrepreneurs are prohibited from using these platforms because of their terms of use. Instead, dispensaries must use WordPress or Magento to sell their products, and many online dispensaries have been under attack since their launch.

With news of data breaches hitting the airwaves on a weekly basis, the country-wide government control over the marijuana industry brings up security questions. Just who is collecting this data, and is the government taking proper steps to keep it secure from hackers?

Online dispensaries such as Buds2Go and Greenz have taken steps to be as secure as possible by combining the latest in cyber-security, user-privacy controls on a reliable e-commerce platform. Because personal identification information and financial information is deleted immediately upon verification, it completely eliminates the risk that a hacker will access long lists of customer’s personal information. They are also one of the few players that possess a valid business license, even offering compassion pricing for up to 75% off the cost of medication for terminal patients.

These dispensaries bravely function and pay taxes like any other business, despite their legally ambiguous status. Farm to consumer dispensaries such as MyKush manage to operate relatively incognito and also without the government’s blessing, but work very hard to be transparent about the services and prices they offer.

During the course of the grey market boom, these dispensaries have been the innovators and refiners of the cannabis economy. They’ve designed everything from shipment methods to secure and anonymous payments, helping prevent Canadians from going into the deep black market like the Silk Road and other TOR sites that don’t offer this security or honest customer service.

Despite this hard work, many online and brick and mortar dispensaries and cannabis suppliers aren’t able to guarantee to their employees that they’ll have a job a year from now. The government’s entry into the marijuana growth and supply industry has made thriving and customer-oriented businesses run by local representatives, PTA members, taxpayers, grandparents, college students, and other contributing members of society into an illicit grey market industry.

Some opt to openly maintain their status as a supplier of marijuana, with owners promising they’ll reopen the next day with a new name if the RCMP raids them. Others have completely lost hope of legitimacy and gone back underground, some offering pop-up locations to their loyal customers but keeping their exact location a secret to avoid the odds of government intervention. Each dispensary owner has reacted to this development in his or her own unique way, but it’s clear that no one is going away soon (or willingly).

It’s still important to give proper credit where it is due. The federal government’s efforts to decriminalize the possession and consumption of cannabis are admirable. Rather than giving into “reefer madness” like our southern neighbors, Trudeau’s government has acknowledged the advantage of cannabis over many other drugs and prescription medications and has acknowledged the large population of recreational cannabis users that don’t want to hide in the shadows anymore.

However, the mandate the Canadian federal government has put out along with the quasi-illegal grey area many dispensaries find themselves operating within, The Feds are making it very difficult for many would-be legitimate businesses to become legal after the government begins issuing contracts to make only certain dispensaries and suppliers government-approved. It’s only common sense to use the knowledge of the pioneers who founded this industry, not just a select few government-approved ventures with ties to government families and friends to make decisions and policy that govern our businesses and our industry.

The government doesn’t like competition; they are a one-trick pony.