Cannabis Policy Challenges Shared by Uruguay, Canada and the U.S.
When I began my professional journey in the cannabis industry and started learning about the plant, the words “Uruguay” and “Canada” would inevitably come up in my Google searches. That’s not surprising. Uruguay is a worldwide pioneer in cannabis legalization, having done it for adult-use in 2013. Just a few years later, Canada became the second country to legalize cannabis at the federal level.
Three years after that first Google search, I traveled to Toronto to attend the Lift & Co. Expo, meet with a delegation from Uruguay and participate in a meeting with the Ontario Chamber of Commerce’s Cannabis Policy Council. Uruguay, Canada and the United States share a number of similar legal cannabis policy challenges as they advance their respective industries. Here are just a few of them.
Reasonable cannabis advertising regulation is critical to a well-functioning legal cannabis market. It can also contribute to a country’s economic development, public safety, and industry-wide professionalization. Overly restrictive and unnecessary advertising rules for the legal cannabis industry are currently in place in all three countries.
Uruguayan law forbids all forms of commercial advertising of cannabis products, brands and services. Cannabis advertising regulations in the U.S. vary according to individual state laws, creating a regulatory environment across the country that is inconsistent for consumers and businesses. Further, because cannabis is illegal at the federal level in the U.S., cannabis businesses are prohibited from advertising in national newspapers and magazines, as well as on the radio, television, and other forms of advertising subject to regulation by the Federal Communications Commission.
Strict restrictions for cannabis advertising in Canada have had a huge impact on both businesses and consumers. One-third of cannabis consumers are unable to recognize the brand behind the product they are buying because the packaging is predominantly warning labels. That prevents legal cannabis brands from establishing brand awareness and recognition – a significant impediment to their bottom-line success.
Note: For more information on cannabis advertising in the U.S., check out Responsible Advertising & Branding in the Cannabis Industry from WM Policy.
A diverse offering of cannabis products is an opportunity for businesses to reach a wider spectrum of consumers and enhance profitability. Uruguay has far fewer products in development or in the market than Canada and the U.S. That’s because the Uruguayan government only allows cultivation of two cannabis strains capped at 9% THC for commercial purposes.
In Canada, all licensed retailers must offer the same products to customers, making it impossible for retailers to differentiate themselves from their competitors. This is particularly concerning in a big city like Toronto, where the proliferation of retailers has created a highly-competitive market. With a density of cannabis stores and products, what sets one dispensary apart from the rest?
Product diversification can also push greater representation in the cannabis industry. The U.S, for example, has seen a surge of new brands founded and run by people of color, women and members of the LGBTQ community.
Banking and Financial Services
Access to traditional financial services is a constraint shared by cannabis businesses in all three countries. In Uruguay, cash is the only form of payment permitted for cannabis purchases and banking services to cannabis businesses are prohibited since the industry is considered a “high risk.”
Canada faces a similar situation, where basic financial services such as a checking account remain unavailable to business owners, even three years post-cannabis legalization. Canadian national banks steer clear of the industry, particularly those operating internationally in countries where cannabis is still not legal.
The federal government’s cannabis policies are the main reason preventing U.S. cannabis businesses from accessing banking services. According to industry reports, about 70 percent of U.S. cannabis businesses lack bank accounts. As long as cannabis remains listed as a Schedule I substance, the majority of business owners will continue to tackle unfavorable situations such as paying their employees with cash and being a target for robbery
Ultimately, there are unique opportunities for cannabis policy development that unite Uruguay, Canada and the U.S. Who would think that these three countries can be so connected on cannabis issues, despite being geographically located on opposite ends of the Western Hemisphere. It is a small world after all, and I’m confident that cannabis will continue to bring more countries together.