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VIDEO: Hill + Knowlton Strategies VP Breaks Down Legal Cannabis Across Canada

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Hill + Knowlton Srategies Vice President of Public Affairs Ivan Ross Vrana visits the Midas Letter studio to compare and contrast how cannabis is being legalized across the country. In terms of sales at the provincial level, Vrana highlights New Brunswick’s approach and preparation as the province has a dozen public retail stores ready for October 17. With the exception of Manitoba and Quebec, the provinces will allow each household to grow 4 plants. In addition to home grow caps, each province has capped cannabis possession at 30 grams and retailers have capped amounts at the same level; however, there is no set monitoring procedures at retail locations to address possession overages. Across the country, the legal cannabis age is 19, except in Quebec where it is 18. Generally, the provinces have decided to follow cigarette consumption regulations; nevertheless, specific municipalities and institutions are creating stiffer anti-smoking regulations in anticipation of greater cannabis use.

Transcript

James West:   Hey good morning, and welcome to Midas Letter Live. My guest in this segment is Ivan Ross Vrana. He is the Vice-President of Public Affairs of Hill + Knowlton Strategies. Ivan, welcome back.

Ivan Ross Vrana:   Thanks very much, James.

James West:   It’s been four years?

Ivan Ross Vrana:   Four years.

James West:   Since we last chatted.

Ivan Ross Vrana:   It’s been a while.

James West:   And the landscape has emerged exactly as neither of us expected.

Ivan Ross Vrana:   Absolutely. You can’t predict it.

James West:   However, this week, legalization has arrived for recreational purposes.

Ivan Ross Vrana:   Yes it has, yeah.

James West:   Although I always find it a bit misleading to call it recreational, because it’s more attitudinal adjustment than it is recreational.

Ivan Ross Vrana:   Yeah, I would agree with that, for sure.

James West:   I use it culturally.

Ivan Ross Vrana:   Yeah, there you go.

James West:   [laughter] All right, so let’s talk about what is going to be happening as of the 17th. The provinces each have their own game plan; some of them mimic each other to some degree, others are completely different from all of the rest. So why don’t we just start and go province by province, and we’ll start with British Columbia in the west – we’ll start on the left, and move right. Can you buy it in a store in British Columbia?

Ivan Ross Vrana:   Well, they’ll have one store up and running, and that’ll be a public store. It’s supposed to be a mix of public/private. It’s amazing to me that the home, you could argue, of Canadian cannabis, with all the myriad of dispensaries  you know – you’re from Vancouver originally; you know what it’s like to walk down the street in Vancouver.

James West:   I interviewed Dana Larsen at his dispensary a week ago.

Ivan Ross Vrana:   There you go. So only one store legally available in the province of BC, which I find fascinating, but it’s not the only province that’s in this conundrum, like, for legalization.

James West:   Sure. This is the BC on a cannabis store.

Ivan Ross Vrana:   That’s right.

James West:   And do they have an online presence?

Ivan Ross Vrana:   They’re supposed to.

James West:   They’re supposed to?

Ivan Ross Vrana:   We’ll see how well that is up and running, and how.

James West:   So we’re basically looking at 10 new websites on the morning of Wednesday the 17th.

Ivan Ross Vrana:   Thirteen, actually.

James West:   Thirteen?

Ivan Ross Vrana:   You count the territories, right?

James West:   Oh, right, yeah. Oh, right, of course, I keep forgetting they’ve been divided in two up there.

Ivan Ross Vrana:   Three, now.

James West:   Three! [laughter] Okay, so BC you can’t buy it in a store unless you go to the BCSC, and that’s got to be in Vancouver.

Ivan Ross Vrana:   Yeah.

James West:   You might be able to buy it online?

Ivan Ross Vrana:   You might be able to buy it online.

James West:   And the dispensaries that were legal have uniformly shut down voluntarily?

Ivan Ross Vrana:   Of course not.

James West:   [laughter] Okay, so black market is still alive and well.

Ivan Ross Vrana:   Absolutely, yeah.

James West:   Okay. Alberta?

Ivan Ross Vrana:   So Alberta, again, that’s a private system. It’s, the online is public; private system for retail. A number of stores are slated to open in Edmonton, excuse me. Calgary will only have two stores, and as for the rest of the province, it’s still rolling out. So the two major population centres, again, will have some sort of presence of bricks and mortar, but the issue is, today, how easy is it to actually go get it? So, Edmonton is leading the way.

James West:   Okay. So Alberta is more or less emulating their strategy with liquor and beer?

Ivan Ross Vrana:   That’s right.

James West:   Agencies are allowed to apply and get accredited, and then they can sell it. So that’s interesting. So, would you categorize Alberta as sort of the leader of the pack at this point?

Ivan Ross Vrana:   No, and I’ll explain why, in a sense, yeah.

James West:   I imagine you’ll tell me when I hit the province that is.

Ivan Ross Vrana:   Yeah, that’s right, yeah.

James West:   All right, and Saskatchewan?

Ivan Ross Vrana:   So, Saskatchewan is an interesting – they had about 24 stores awarded by the lottery. It’s still not clear how many are up and actually running today, and the online system is all private, so no government presence whatsoever. So again, I think Saskatchewan, it’s going to be difficult to actually, if you’re in Regina or Saskatoon, to go out and find out which stores are there and which are actually legal and available to distinguish between dispensaries that are illegal and those that are legal.

James West:   And is there a robust illegal dispensary market in Saskatchewan and Alberta?

Ivan Ross Vrana:   I know there was, at one point. I think it’s slimmed down a lot, but again, the online presence thing is what is interesting, right? Because there’s a robust illegal online presence right across the country.

James West:   True. They deliver within an hour.

Ivan Ross Vrana:   That’s right.

James West:   $99 an ounce.

Ivan Ross Vrana:   Sometimes it’s within 30 minutes or free.

James West:   Okay, and Manitoba?

Ivan Ross Vrana:   Again, Manitoba is another interesting case. Public online system will be up and running, or is up and running, excuse me. Private, again, they awarded a number of stores through an RFP process, but it’s not clear, for instance, how many are going to be up and running in Winnipeg. So again, we have this kind of interesting situation where it’s not exactly clear.

James West:   So it’ll be black market or nothing, probably.

Ivan Ross Vrana:   Yeah. And you will have legal stores there; again, it’s all private, so it’s just not clear how many will be ready for the date.

James West:   Right. Interesting, we should do a road trip together and see.

Ivan Ross Vrana:   Yeah, I think so. That would be fun, yeah.

James West:   Okay, now tell me about Ontario; we all kind of know what kind of mess that is.

Ivan Ross Vrana:   Ontario – I mean, that’s the beauty of our democratic system, right? Governments can come in and do what they want to do when they get elected. So we have no stores open. The online system is supposed to go live, and as we know, Shopify is going to be running that on behalf of the province. The plan is to have a series of stores, bricks and mortar, up and running for April. But they’re only accepting applications in December, so companies are going to have to move very fast on that.

James West:   I see.

Ivan Ross Vrana:   And it’s not clear about, you know, how many one company can own of these sort of stores, right? So the province is still trying to figure that out.

James West:   So the stores that they’re going to be opening up have to be associated, affiliated, with an LP?

Ivan Ross Vrana:   No, they don’t have to. They actually were quite clear on that legislation; they said a licensed producer can only own one store, and usually that’s on their land, on their facility property, so that kind of farm gate concept. So I know there’s a lot of concern about that, but it’s all private bricks and mortar, public online.

James West:   Really? So this means that technically, Midas Letter could open a store on Queen Street if I –

Ivan Ross Vrana:   Yeah, if you so apply. I’ll help you with that application.

James West:   Let’s do it! Another episode! Okay, moving on to Quebec?

Ivan Ross Vrana:   So, Quebec is, again, another fascinating province. You know, 7 million people; 12 stores open.

James West:   That’s pretty good, compared to the rest of them.

Ivan Ross Vrana:   It’s not, yeah, it’s not bad at all, and they say they’re going to have 17 up and running by, and these are publicly owned stores, by sometime in November. So we have to wait and see how –

James West:   Publicly owned? So the province is going to run them?

Ivan Ross Vrana:   Yeah.

James West:   Oh, interesting. Okay, let’s keep going. In Quebec, did they have a large black market?

Ivan Ross Vrana:   Well, again, one could argue – nothing compares to Vancouver, BC, overall. You know, in Montreal, having – you know I live in Ottawa and been in Montreal quite a lot; there used to be a number of dispensaries in Montreal, but it seems I haven’t seen that presence as obvious as it once used to be.

James West:   Well, I’ve seen them shutting them down here over the last couple of weeks rather aggressively. New Brunswick?

Ivan Ross Vrana:   So, New Brunswick, to me, is my favourite province when it comes to this. For a population of about a million people, they’ve also got 12 stores up and running, and I think that’s actually increasing to 20. So given, you know, they’ve really gone after that quite aggressively, and again, that’s publicly owned stores, publicly owned retail.

So they’re probably one of the best provinces that have met this deadline and are up and running.

James West:   Really? Okay, that’s interesting. What abut Newfoundland and Labrador?

Ivan Ross Vrana:   So Newfoundland and Labrador, they have plans for 30 stores right across the province, and those are private stores. They’re opening to allowing an interesting distribution system, if it doesn’t cover off the entire island and Labrador, given how large it is. So they’re looking at sort of different mixes out there.

James West:   Prince Edward Island?

Ivan Ross Vrana:   Now, that’s another one of my favourite provinces, because they per capita, they’ve got three stores opening with a fourth one coming online. So you know, that’s a store serving about 100,000 people – so, not so bad. And you can cross the island, I think, and I don’t want to offend any PEI-ers, but I think you can cross the island in about three hours, right? So that’s not bad.

James West:   Northwest Territories?

Ivan Ross Vrana:   So, no stores in the Northwest Territories; it’s all online right now.

James West:   Probably they’re going to need to be delivered by drone.

Ivan Ross Vrana:   Maybe. And they are open now; they’re supposed to be public, but they are looking at a private model with their country, yeah.

James West:   Okay. And Nunavut?

Ivan Ross Vrana:   Nunavut? None. All online.

James West:   All online. Yukon?

Ivan Ross Vrana:   Yukon, one store in Whitehorse.

James West:   One store in Whitehorse. Okay, so it sounds to me like the black market entities who are online are going to be busy on Wednesday.

Ivan Ross Vrana:   I think so.

James West:   Let’s see if we can get one of them in here for an interview. Okay, now here’s a question that again, we’re just going to have to run through the provinces because this issue is also not uniform, and that is the ability to grow four plants per family, per household?

Ivan Ross Vrana:   Per household.

James West:   Okay, and I so know that Ontario, on Wednesday I have clones coming and they’re going get planted.

Ivan Ross Vrana:   Oh, really? Okay, good, that’s great.

James West:   How could I not?

Ivan Ross Vrana:   Well essentially, I think it breaks down to, I think it was Manitoba an Quebec were the only provinces that said they weren’t going to allow that.

James West:   Manitoba and Quebec?

Ivan Ross Vrana:   Yeah, but I think they’re opening themselves for a bit of a challenge, there, in the court system. Because even though this a is recreational distribution system, provinces have full purview over that. What’s not clear is how it crosses the line into medical, because medical you’re allowed to grow four plants, right?

So what was not clear to me, anyway, when I looked at the legislation in Quebec and Manitoba, was if you would be able to do that for medical purposes.

James West:   Okay, interesting. So in your opinion, or from where you sit, do you think that, you know, that there’s going to be a meaningful disruption for the black market at the outset? And if not at the outset, when?

Ivan Ross Vrana:   Well, I do actually think there will be a bit of a disruption, overall. It won’t be to meet people’s expectations, because I think they’re a little bit unrealistic. I know people said, Okay, once it happens, the black market needs to disappear. Well, way back when, well alcohol was legalized, that didn’t happen overnight. Different times, obviously different systems in place.

So it will take time, but slowly overall, I think you’ll start seeing a decrease. I think, you know, police forces across the country are prepared to be able to shut down these dispensaries, at least the online presence will be of big concern for police forces across the country. So I think there’s lots of action that we don’t know bout, happening, but it’s not going to happen overnight.

James West:   Okay, what about eh limitations on quantity? How much can you buy on a given day, on a given session, over the course of a year? Are there limitations?

Ivan Ross Vrana:   Yeah. Every single province, with the exception of Quebec, which is really fascinating, it’s 30 grams. Interesting thing is, though, if I go to one store and I buy 30 grams, what’s to stop me from going to another store in Alberta and getting another 30 grams, right? They’re not going to ask for proof that you’ve purchased; you don’t need an authorization card.

Fi you do get stopped by a police officer and you’ve got 60 in your car, then there’s going to be an issue. Of course, they can’t come into your home to do that. Quebec, what they’re saying is, you can have in your home stored up to 150 grams, so that’s the one province that’s interesting.

James West:   And to in the provinces, now, if you can grow four plants in your house, and I happen to know that you can yield up to 450 grams per plant on dried, premium flower. Now, if you’re traveling across visiting Auntie Mae in Newfoundland, bringing her a care package, how are they going to deal with it if you can say no, tis is hat I’ve grown, well within my rights?

Ivan Ross Vrana:   Well, I think that’s a great sort of issue. I would suggest you travel with the 30 grams for now, even though you might have –

James West:   What if that’s not enough?

Ivan Ross Vrana:   then you have to go to the government-run store or the private store in that province to top up.

James West:   Okay. So interesting, and now, the age that you have to be to cross the country?

Ivan Ross Vrana:   So in every single province again, except Quebec, it’s 19. Quebec it’s 18, but with the election of the new government in Quebec, they’ve used about, changed that to be 21. So it follows all the liquor laws across the country, essentially. So 19 is the age right across all the provinces, 18 in Quebec, but we’ll see how quickly this new government will be able to change that, and if they still want to do that.

James West:   You bet. Now, what about where you can, where you’re allowed to smoke it?

Ivan Ross Vrana:   SO now we don’t have a pattern to follow whatsoever, okay? It’s generally, most of this follows the rules about where you can actually smoke a cigarette, a tobacco product. However, what we’re seeing is municipalities actually getting involved in this debate, so in Halifax, for instance, right now, they are saying no tobacco can be smoked anywhere on the streets, and that, then, applies to cannabis, which is fascinating, right? They are allowing restaurants to apply or a designated area on tobacco; e don’t know if that’s going to apply to cannabis yet, but that’s the type of things that you’re starting to dal with.

In Ottawa, my hometown, Algonquin College, they said you can’t smoke on campus anymore, everywhere. Outdoors, indoors, whatever. And they said we came up with this law because it was for cannabis.

James West:   So in may respects, if you think about it, I mean in Vancouver for the last five years, you’ve been able to more or less walk down the street puffing a joint, walk right by a cop and he’s not going to say anything. And generally, when you go to college and school to slip out into the smoking area and pump back a doob is a rite of passage, one might argue.

And so especially when it comes to establishments where people drink – bars – the ritual of going out for a reefer is entrenched.

Ivan Ross Vrana:   In the dead of winter.

James West:   Exactly, in the dead of winter. In the worst of conditions. So does this mean that we’ve actually got a situation where the cops are going to be busting people left, right and centre for doing what they’ve always been doing, their whole lives?

Ivan Ross Vrana:   That’s an excellent question, and I hope not, in that sense, because I mean, I think they need to apply their resources somewhere else about worrying whether people are smoking on the street or so forth. I know people will, generally all the rules follow, you know, you can’t smoke near your school, you can’t smoke near a playground – think those rules are reasonable, but to try to be able to control that behaviour – and I’m not a fan of smoking whatsoever, I don’t do it, but you know, again, there’s a bit where it crosses the line, right?

So maybe it’s the role for bylaw officers to hand out a ticket, as opposed to police. So I wonder how that is going to do. And I guess the key thing that I keep on talking about when I do things like this is if, when government’s coming up with these policies and police forces I hope that fine, you’ve got it, you want to try it, but adaptability has to be the key as to what you learn and don’t learn, and what things are the hard lessons. And so hopefully, that will change over time.

James West:   All right, well, that’s great insight. Ivan, I thank you for your participation. We’ll come back to you again and have you back sooner than four years.

Ivan Ross Vrana:   I hope so! Well that’s great. Thanks very much, James.

James West:   Thank you.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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