Mexico could ease Canada’s cannabis problem

The plan to drive illegal cannabis growers out of business is going slowly.

The problem is supplying enough legal cannabis to lower retail prices. Eventually illegal sellers will be a quaint memory, something like the bootleggers of alcohol of the past. For that to happen, a plentiful supply of cannabis has to be available and it’s going to take years for that to happen with Canadian growers only.

image: Greenhouse Canada

The cost of legal cannabis remains nearly 50 per cent higher than potleggers according to crowd-sourced data obtained by Statistics Canada. The cannabis store Kamloops seems to fairly well-stocked but in some parts of Canada like Quebec, stores have had to close on some days of the week due to lack of supply.

One way to lower retail prices immediately is to reduce taxes; a solution favoured by the cannabis industry. In addition to provincial sales taxes, the federal government charges one dollar per gram excise tax and an annual cultivation fee of 2.3 per cent of revenue.

Some jurisdictions in the U.S. with legal cannabis markets, such as California, are considering such temporary tax reductions to lure customers away from the illegal market after disappointing early sales.

I don’t think lower taxes are the solution. The whole idea of legalization of cannabis is generate revenue so that other taxes could be reduced. Like other “sin taxes” on recreational drugs such as tobacco and booze, taxes on cannabis provide revenue on a product not currently taxed.

Regardless, Canada has no intention of following the U.S. lead. A Canadian Finance Department spokesperson said: “There are no planned changes to the existing duties at this time (Globe and Mail, February 4, 2018).”

Another way to reduce legal cannabis prices is to increase supply.

Mexico plans to legalize cannabis. The new interior minister of the Obrador government has introduced draft legislation to regulate cannabis. Mexico has been studying Canada’s model of issuing licences for the cultivation, processing, packaging, sale and possession of cannabis.

Mexico has something going for it that Canada doesn’t -climate.  Cannabis doesn’t need to be grown in greenhouses there. The president of Mexico’s National Association of Cannabis Industries says:

“We’re going to be able to create a new industry based on new regulations, to produce cannabis for the rest of the world – our geographic situation and our labour [pool] gives us a major advantage (Globe and Mail, November 8, 2019)”

Enthusiasm is mutual on this side of the border. Canada’s Canopy Growth Corp. is looking at investing in Mexico. Their co-CEO said:

“We think [Mexico] is a real opportunity. When you’re on both sides of America with really well-positioned products, this could be a very good platform to reflect both sides of the border with the U.S. and enter an economy that is substantial.”

However, Mexico faces hurdles. Much of Mexico is controlled by drug cartels who oversee the growth of illegal marijuana. Seizing control of agricultural land will be a challenge. Also, Columbia is also poised to compete in the legal cannabis market and have a workforce experienced in its growth.

Of course, Canada’s fledgling cannabis industry needs to be protected but controlled importation could help our supply problem.

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Provincial health ministers should stop bickering

The provincial health ministers should resolve in the New Year to stop bickering, take the money from the feds, and use it as intended.

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It’s a recurring bad movie says Canadian Medical Association president Granger Avery: “The Groundhog Day-type discussions where political leaders bat around percentages and figures at meetings in hotels have to stop. Our system needs better, and most important, our citizens deserve better (Globe and Mail, Dec.19, 2016).”

The provinces have had thirteen years of increases from the feds at 6 per cent a year to improve health delivery. “The transfers have been growing quite generously,” says Livio Di Matteo, a health-care economist at Lakehead University in Thunder Bay. “If you go back to about 2007, if you look at public-health spending, which is largely provincial, it’s grown about 40 per cent. The Canada Health Transfer to the provinces has grown about 70 per cent.”

We need to spend smarter. Canada spends more on health care than Australia, for example, with poorer outcomes as measured by life expectancy and infant mortality.

The provinces have not fixed the problem during times of plenty and now are faced with problems of an aging population. In addition to increased funding at 3.5 per cent a year, the feds have offered $11.5 billion for home care and mental health. I don’t know who writes the province’s absurd scripts: let’s refuse the offer, even though it’s what we want, because we want more.

Provincial health ministers don’t get it. B.C. Health Minister Terry Lake worries that if B.C. were to take the money offered, and start home-care programs, that the programs wouldn’t be sustainable when funding dries up. That would be true if hospital costs remain the same when home-care programs are added.

Home-care programs would reduce hospital costs. Hospital beds cost $1,100 per day whereas home care is one-quarter that cost according to the Canadian Institute for Health Information. Seniors take up 85 per cent of those expensive hospital beds and one-half of them remain in beds even though they are well enough to be moved because there are no long-term care facilities or home care.

Take the money spent on hospitals and spend it in the community. That would mean that four seniors would be cared for at the same cost as one in a hospital -and they would be happier.

The politics and perception of health care would have to change. Hospitals have become a measure of a politician’s success because they are highly visible monuments to health care; something that you can be sure the B.C. minister will point to often in the campaign leading up to the provincial election next May.

It’s a problem of perception, too. Home care is virtually unseen except by the few affected. It’s hard to point to the thousands of seniors happily living at home as a measure of success. British Columbians will have to change perceptions of health, from hospitals as shrines were doctors are the high priests, to a flatter hierarchy where care is diffuse and in the hands of other professionals.