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The federal government’s plan to legalize marijuana means there may soon be two markets for cannabis in Canada: medical and recreational. How will the introduction of consumer pot affect the existing medical marijuana industry? Some licensed producers view it as a tremendous opportunity to tap into a new market, but others worry it will only lead to confusion.
Recreational and medical markets are totally separate, said Brent Zettl, CEO of CanniMed in Saskatoon. “From our vantage point, it makes it more of a challenge to educate people so they understand that what we do is truly scientific and not a recreational nirvana. … This other noise really serves to confuse the matter and, frankly, it doesn’t help our cause at all.”
CanniMed will remain strictly medical, said Zettl. There is still much to learn about how the different cannabinoids in marijuana can be useful in treating various conditions, he said, and his company plans to participate in studies to “slice through and get to the real meat of it.” The recreational market, on the other hand, is unlikely to be as interested in research.
“The recreational purpose, getting high, is an overdose response. Functional treatment is usually 10% of that,” said Zettl. “People who want to use it as a medicine take just enough to manage their symptoms and get on with their day. They don’t want to get stoned.”
Bedrocan Canada, based in Toronto, also plans to remain solely medical. Company President Marc Wayne anticipates a split in the medical sector after legalization — between legit, science-based companies and those more interested in moving product. “The first layer, as you peel the onion away, is seeing which companies are truly medical marijuana companies and which ones aren’t,” said Wayne. “You have companies that are in the medical marijuana space now because they, perhaps, are looking to go into the consumer space down the road, and then you have your truly medical marijuana companies. From our perspective, we are truly a medically focused cannabis company.”
Recreational and medical markets are totally separate, said Brent Zettl, CEO of CanniMed in Saskatoon. “From our vantage point, it makes it more of a challenge to educate people so they understand that what we do is truly scientific and not a recreational nirvana. … This other noise really serves to confuse the matter and, frankly, it doesn’t help our cause at all.”
CanniMed will remain strictly medical, said Zettl. There is still much to learn about how the different cannabinoids in marijuana can be useful in treating various conditions, he said, and his company plans to participate in studies to “slice through and get to the real meat of it.” The recreational market, on the other hand, is unlikely to be as interested in research.
“The recreational purpose, getting high, is an overdose response. Functional treatment is usually 10% of that,” said Zettl. “People who want to use it as a medicine take just enough to manage their symptoms and get on with their day. They don’t want to get stoned.”
Bedrocan Canada, based in Toronto, also plans to remain solely medical. Company President Marc Wayne anticipates a split in the medical sector after legalization — between legit, science-based companies and those more interested in moving product. “The first layer, as you peel the onion away, is seeing which companies are truly medical marijuana companies and which ones aren’t,” said Wayne. “You have companies that are in the medical marijuana space now because they, perhaps, are looking to go into the consumer space down the road, and then you have your truly medical marijuana companies. From our perspective, we are truly a medically focused cannabis company.”
Still, Wayne thinks legalization is a good thing. Over the past decade, there has been a shift toward greater acceptance of marijuana, he said, and this will only “take it to the next level.” Legalization may also remove the gatekeeper burden from doctors, as recreational users posing as patients move to the consumer side, getting “rid of that grey area.” And Wayne isn’t worried about losing legitimate medical users, even if retail pot purchase is more convenient, because he doubts the recreational market will be able to provide marijuana that is of equal quality and consistency.
“We’ve built our company around standardization of production,” said Wayne. “We provide the same cannabis, the same chemical profile, every time, and only a few companies can do that. Most of the cannabis produced, even in the medical market, is not standardized and varies from one batch to another.”
“We’ve built our company around standardization of production,” said Wayne. “We provide the same cannabis, the same chemical profile, every time, and only a few companies can do that. Most of the cannabis produced, even in the medical market, is not standardized and varies from one batch to another.”
Medical marijuana will also likely be cheaper than consumer cannabis. The Canada Revenue Agency considers medical cannabis purchased under prescription to be an eligible medical expense. Licensed producers are also lobbying the government to exempt their products from sales tax, and some experts predict that medical cannabis will one day be covered under insurance benefits.
Another advantage that medical producers have is their experience. They have call centres and customer services and scientific knowledge. A new company that forms to serve the recreational market may not only struggle to ramp up their production by the time legalization occurs, it would also take them years to build up similar expertise.
“If you are looking to alleviate ailments or symptoms, and you don’t know about dosages, you need the security blanket of speaking to someone who is knowledgeable on the subject,” said Denis Arsenault, CEO of OrganiGram in Moncton. “We have become very knowledgeable on medical marijuana and it only makes sense that this resource continue to be utilized. Buying marijuana at the corner store might be good for a person who has already learned how to self-medicate and knows which strains work for them, but others need knowledge from a place other than a street corner or the Internet.”
Another advantage that medical producers have is their experience. They have call centres and customer services and scientific knowledge. A new company that forms to serve the recreational market may not only struggle to ramp up their production by the time legalization occurs, it would also take them years to build up similar expertise.
“If you are looking to alleviate ailments or symptoms, and you don’t know about dosages, you need the security blanket of speaking to someone who is knowledgeable on the subject,” said Denis Arsenault, CEO of OrganiGram in Moncton. “We have become very knowledgeable on medical marijuana and it only makes sense that this resource continue to be utilized. Buying marijuana at the corner store might be good for a person who has already learned how to self-medicate and knows which strains work for them, but others need knowledge from a place other than a street corner or the Internet.”
Unlike CanniMed and BedroCan, however, OrganiGram does have plans to expand to the consumer side. Arsenault believes many other licensed producers will do the same.
“We will clearly be on the recreational side also,” said Arsenault. “I think that for licensed producers, their focus right now is serving their medical marijuana patients. And the second thing is preparing both their production capacity and human resources to be able to position themselves in recreational marijuana.”
Of course, one needn’t rely purely on speculation to anticipate how legalization will affect the medical cannabis industry. In Colorado, the sale of marijuana became legal on Jan. 1, 2014, and recreational sales began exceeding medical sales by August of the same year. Despite higher costs, recreational marijuana continues to outpace medical cannabis in sales growth in Colorado, and some analysts predict that the state will eventually combine the two markets under one set of regulations and tax rate. There have also been calls in Oregon to combine the recreational and medical markets to “avoid expensive duplication in legal sales settings and complication in tracking potentially more than one supply chain.” — Roger Collier, CMAJ
CMAJ 2016. DOI:10.1503/cmaj.109-5286
