The business of cannabis: Who’s profiting?

By in Opinions

From the government to licensed producers and independent retailers, it’s easy to imagine  that many people will profit from legalization. More likely than not, however, the industry won’t be the quick cash grab that many are hoping for. It’s uncharted territory, and the road to profit won’t be straightforward.

Legalization will most likely be lucrative for those who have already gotten their feet in the door. Saskatchewan received 51 retail permits — some of them were given to companies and others to entrepreneurs. The opening of the new stores is expected to create job opportunities, not only at the retail level but also at the production level.

These retail permits are a coveted commodity — Cierra Sieben-Chuback, owner of Living Skies Cannabis, received offers to buy off her permit and says people were referring to them as “golden tickets.” The comparison is understandable, since the store owners will be the first legal providers of a product in high demand. It could be a once-in-a-lifetime opportunity, but it’s difficult to know for sure how much they will be able to profit at first.

Pot is expected to receive heavy sin taxes to control consumption growth in the legalized age group. This wouldn’t necessarily be a problem — the alcohol industry proves it is not necessarily damning for store owners — if it weren’t for illegal dealers. If prices are too high, people will just keep going to dealers, whose prices are not controlled by taxes.

Legal pot prices are also expected to be high initially thanks to shortages in supply — not being able to meet demand is already a problem in Saskatoon and is considered to be the reason why no shops are likely to be open in the city on legalization day.

Cannabis retailers are likely looking at a few years of supply shortages as well as difficulties establishing themselves in the market before the industry balances itself out. The government, on the other hand, is already profiting from legalization. From costly permits to increased tax revenue and reduced incarceration expenses, the government will benefit all throughout the process.

Where will that money go? One group of students from the University of Alberta is trying to get their provincial government to commit to putting all cannabis tax revenue into mental-health and addiction programs, echoing wider concerns about the impact that legalization will have on health resources.

Looking at the precedent set by our southern neighbours, Colorado “saw a 23 per cent increase in pot-
related emergency room visits” in the first few months after cannabis was legalized in the state, according to Global News. In Canada’s health-care system, investing in minimizing cannabis-related health issues could eventually benefit the population in the form of lower taxes.

Consumers will benefit from having a legal and reliable source of cannabis, but they will probably have to deal with higher prices until supply meets demand. Retailers will eventually profit from the new industry, but how many will close before they get there? The government will see increased tax and permit income but at the probable cost of a burden on health care.

In the end, no one really knows what’s going to happen — it remains to be seen who will profit from legalization and who will be left behind in the process. As Sieben-Chuback says about the uncertainty surrounding the new industry, “There are other places in the world that have done this before, but the Saskatoon market is very unique — it’s a guessing game at this point.”

Ana Cristina Camacho / Staff Writer

Graphic: Jaymie Stachyruk / Graphics Editor