5 Differences Between American and Canadian Recreational Cannabis

When Canada legalized recreational marijuana, it became only the second country worldwide to pass legislation for adult-use cannabis. Many U.S. states had already accomplished this feat. As a result, the Canadian recreational cannabis market took shape very differently from the American market.

The Canadian provinces each worked out their own regulatory provisions, and retail sales officially opened on October 17, 2018. Years later, those early choices still shape how the two markets compare. Here are five of the key differences that defined Canada’s approach.

Province Run Dispensaries

One of the major differences is that each province decides how cannabis retail sales work. For instance, Ontario initially chose to let a government Liquor and Control Board handle commercial sales. Meanwhile, British Columbia’s provincial government elected to allow a mix of private and public cannabis retailers. In contrast, Saskatchewan and Newfoundland opted to permit private dispensaries.

Due to the remote nature of many areas of Canada, marijuana can also be sold in existing liquor stores. Moreover, the legalization bill set the minimum age to purchase cannabis at 18. However, several provinces mandated that it be set at 19 years old instead. This stands in stark contrast to the legal age in the United States of 21. In addition, home grows vary among the provinces. While most provinces decided that four mature plants should suffice, Quebec banned home cultivation entirely.

Cannabis Prices and Taxes

The U.S. marijuana market has traditionally been supplied by private growers and cultivators. In Canada, by contrast, the government took far greater control of marijuana production. Federally licensed growers sit at the top of the supply chain. Moreover, government officials help determine the minimum market value for marijuana.

Cannabis taxes in the United States have reached exorbitant amounts. For example, many dispensaries in California face taxes that can be as much as 50% of the sale. As a result, this allows the black market to flourish as consumers seek alternative sources for more affordable marijuana. By contrast, Canada set a comparatively modest tax framework, with both provincial and federal sales tax layered on top of the cannabis tax. Even so, this generally remained a fraction of the U.S. tax rate.

Access to Banking

One of the biggest hurdles for cannabis retailers in the U.S. has long been limited access to banking services. Consequently, many dispensaries are forced to use cash or gift cards to pay expenses, utilities, and payroll. This leaves them susceptible to armed robbers. Since Canada does not consider marijuana a Schedule I drug, however, cannabis retailers there can deposit their profits into a bank account as any other business would.

Early in Canada’s medical marijuana legalization, some corporate banks were hesitant to work with cannabis businesses. As a result, retailers sought financial assistance from small independent banks, brokerage firms, and investment banks. In recent years, by contrast, the big banking players have gotten more involved, allowing dispensaries to establish bank accounts and credit lines.

Products and Labelling

Canadian recreational cannabis carries regulations that may hinder retailers, distributors, and manufacturers. For instance, labelling statutes can seem excessive because the federal health department mandated large warning labels. Specifically, these carry requirements on font size, style, and color.

The labelling regulations leave little room for original branding or design. It’s clear that preventing sales to minors is a high priority. However, this also limits smaller businesses from differentiating their products. Additionally, marijuana edibles were not available for retail sales during the first year of Canadian recreational cannabis.

Marijuana by Mail

Lastly, Canada allows recreational consumers to purchase cannabis online directly from the government. This is extremely advantageous for very remote regions, since residents can place an order and have it delivered to their door. Moreover, this gave the Canadian Postal Service a new role, as it had long provided shipping services for the medical marijuana industry. Upon delivery, however, the purchaser must be present, as they are not allowed to leave the package without seeing identification.

On the whole, the provinces took a very common sense approach to Canadian recreational cannabis. As a result, regulations have continued to evolve, just as they have in the U.S. In the meantime, private cannabis retailers should keep preparing in advance. Therefore, securing a reliable and customizable dispensary point-of-sale software is a great place to start. Schedule a demo to learn more about our innovative POS system.