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Canada becomes first industrialized nation to legalize cannabis

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Canada becomes first industrialized nation to legalize cannabis

Canada becomes first industrialized nation to legalize cannabis
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By Chris Wattie and Nichola Saminather

ST JOHN'S, Newfoundland/TORONTO (Reuters) - Canada became the first industrialized nation to legalize recreational cannabis on Wednesday, but a lawful buzz will be hard to come by in its biggest cities like Toronto and Vancouver, which will have no stores open.

Weed enthusiasts in Newfoundland and Labrador, Canada's easternmost province, kicked off the first permissible sales at midnight. Over 100 people braved the cold and wind in the province's capital St. John's, lining up outside a Tweed-branded store owned by Canopy Growth Corp., the world's most recognised cannabis producer.

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Canopy's Chief Executive Bruce Linton rang in the first sales to residents Ian Power and Nikki Rose.

"I came out tonight to be the first person in Canada to purchase the first legal gram of recreational cannabis, to help see the end of prohibition in Canada finally," Power said.

The day was historic for the country as adult Canadians will be able to legally smoke recreational marijuana after nearly a century-long ban.

However, many provincial governments' approval of only a small number of shops so far, and a shortage of weed supplied to these stores, means most Canadians' first toke on Wednesday will likely be of black-market pot.

"There will be a lot of celebrations on the day, and it will almost all be with illegal cannabis" in some of Canada's biggest cities, said Brad Poulos, an instructor and cannabis business expert at Ryerson University in Toronto. "Recreational cannabis users in Canada ... will just continue with their (existing) sources of supply until the legal system catches up."

Despite the dearth of stores in Canada's biggest cities, consumers can buy legal marijuana online, from provincial governments or licensed retailers, although delivery will take a few days.

Other countries around the world, many of whom are just approving medical marijuana, are watching Canada's recreational legalization, which combines federal rules with varying provincial regulations.

The move is a political win for Canadian Prime Minister Justin Trudeau, who vowed to legalize cannabis in his 2015 election campaign. That pledge was aimed at taking profits away from organised crime and regulating the production, distribution and consumption of a product that millions of Canadians had been consuming illegally.

But provinces and businesses have struggled to prepare, and legalization was pushed back from original expectations of a July start to enable setting up distribution and sales networks.

In the run-up to legalization, cannabis companies have been on a tear, as companies struck deals while others went public, creating an investor frenzy.

The federal government and many provinces have been cautious, starting with limited stores and products, including no edibles for a year, and tight control over supply.

WEED SHORTAGE

Ontario, home to Canada's most populous city, Toronto, will have no physical stores until April 2019, due to a change to the province's retail model by a new provincial government.

British Columbia, which plans both province-run and private outlets, has only one government store 350 kilometres (220 miles) from its biggest city, Vancouver. Private store licenses will only be issued after legalization, the province's Minister of Public Safety Mike Farnworth said.

"October 18th is going to look very much like October 16th, in many ways," Farnworth said.

Even in provinces with more shops, empty shelves are likely due to a shortage of product. A study by the University of Waterloo and economic policy think tank C.D. Howe Institute found legal supply will satisfy under 60 percent of demand in the early months, though that will change as production increases.

"Oct. 17 will ... probably be the least elegant day," Canopy's CEO Linton said. "But the key message is not how it works on the first day but that there is a first day."

Law enforcement going forward could be patchy. In August, Canada approved a device to detect levels of tetrahydrocannabinol (THC), cannabis's psychoactive element, in drivers' oral fluids.

But many large police departments will forego the C$5,000 device, Adam Palmer, president of the Canadian Association of Chiefs of Police, told reporters on Monday.

Draeger Safety Canada, which makes the device, has shipped some units, but a two-week federal funding delay has put further orders on hold, although it expects demand for between 300 and 500 units through March, Managing Director Rob Clark said.

Canada has invested C$274 million to enforce the new laws and some provinces have allocated their own funding, but Palmer said police will not crack down on illegal stores right away.

"When the law changes on the 17th, we're not going to see a big change overnight," Palmer said. "Police aren’t ... chomping at the bit to go out and start raiding stores."

($1 = 1.2934 Canadian dollars)

(Reporting By Nichola Saminather; additional reporting by Julie Gordon and Rod Nickel; Editing by Denny Thomas and Bernadette Baum)

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