Episode 08: Preparing for cannabis legalization

Nadine:

From the corner of Bay and Dundas in downtown Toronto, this is Like Nobody's Business, a podcast of thought leadership and business innovation.

I'm your host, Nadine Habib.

On today's episode of Like Nobody's Business, we speak to three cannabis experts about what legalization will mean for education, the workplace, and public policy.

TRSM instructor, Brad [Pulise] joins us now to discuss education, investing in [inaudible] stocks, and the limitations on marketing marijuana.

What do you think about legalization and how it's going to impact universities, or education in general?

Brad:

It's going to be several effects in the educational environment.

One is that we're going to have students who are today, using an illegal product begin using what's now a legal product. Yes, it'll be illegal to consume it on our property, or in our dorms, or whatever, but the possession of it will not be illegal. We're going to have to figure out where people are going to smoke it, because right now the options are fairly limited. We as Toronto Met are going to have to wrestle with that.

The other thing is, though, it's a great opportunity. Other schools around the country and in the United States have created programs aimed at cannabis. I'm happy to report that we're working on the same sort of thing here at Toronto Met. It's starting in the Chang school, which is where a lot of things of this nature start, but hopefully will ultimately become a multidisciplinary program for people who are interested in the cannabis industry.

Nadine:

Mm-hmm.

So, when it becomes legal, is there going to be certain zones, like smoking zones that would be on campus? Or is that no public spaces are allowed for people to actually use it?

Brad:

As of now, there is no allowed outdoor use of recreational cannabis.

If you factor into that equation the fact that landlords are allowed to prohibit the use of cannabis in their facilities, it literally means that there are some people who will have nowhere they can legally consume cannabis, which is one of the arguments for the licensing of cannabis lounges and that sort of thing. Something similar to a bar, where you would be able to go and purchase some cannabis, and consume it right there.

Nadine:

Mm-hmm.

Can you tell me a bit more about the program that you're working on for Toronto Met?

Brad:

It's starting as a business of cannabis course, and will ultimately expand to be a full certificate, and we hope an interdisciplinary certificate. Something where we'll cooperate with the biology department, or the chemistry department, or somebody like that. So, people who take the certificate will get more than just the business background, but a bit of the plant science as well.

Nadine:

Hm, interesting.

Maybe we can venture off into investing in marijuana.

Brad:

Sure.

Nadine:

I know that's a hot topic right now. Some portfolio managers, or people within the industry, or TD Bank, have advised people not to invest in marijuana companies. What's your take on that?

Brad:

It's a highly speculative investment, let's be honest.

You've got quite a few players chasing an unknown sized market. There are billions and billions of dollars that have already been thrown into this industry, and we don't know how big it'll be yet. I think the TD is just doing what banks do, which is being prudent. It's not their job to suggest to their customers that they risk all of their money.

The first thing I would say is that there's absolutely a lot of risk in investing in this space right now.

The second thing is, though, I think it's going to be a huge industry. If you pick the right ones, you could do really, really well. I think this industry is no different than any other. Fundamentals are going to rule, at the end of the day. People that can execute, people who know how to create a good brand, people who can create a consistently high quality product, all of those sort of things, are going to do well.

The other thing as a strategy prof that bothers me is I see the strategies of even some of the larger companies make absolutely zero sense to me. There's no other industry where people try to own it from I'm going to pull some plant out of the ground all the way to I'm handing it to a consumer, and they're going to consume it. Why companies are trying to do that now, in this space is beyond me.

Here's a good example, this company called Tokyo Smoke, which has become Haiku Brands. Their strategy makes zero sense to me. They want to be one of the big LPs, limited ... Sorry, licensed producers. Maybe a Freudian slip there, but they want to be one of the licensed producers, and yet they want to own the retail space. That's just crazy. You don't have Seagram's Rye, or Gray Goose Vodka owning the distribution chain. It just doesn't make sense. You focus on what you can do well, and nobody can do all of those things well.

Because we have this nascent industry, it seems like a lot of analysts, and a lot of pundents, people who comment other than me, are giving these companies a pass, and I just won't. I think that their strategy needs to be questioned.

Nadine:

Mm-hmm.

What do you think about the marketing, how it's going to be marketed, and maybe the standards that are going to have to come along with marketing a product that might have some concerns for younger children?

Brad:

There are already planned, fairly restrictive policies around packaging, generally promoting your product, and that would including advertising, events sponsoring, swag, and all of those sorts of things. A lot of the options that any other company in a different space, or even other regulated industries, like alcohol and tobacco, are not available.

This product is being regulated much more like tobacco than like alcohol. Most people in the industry think that's wrong. They think that the government's overstepping.

We're going to have a recreational product, not unlike a bottle of vodka, and it's going to have a plain package. The brand, the logo, the word mark of the company will be same size as the stop sign that has a big cannabis leaf in it. That's the message we're sending.

That would be akin to going into the LCBO and wiping out three quarters of the Gray Goose label, and making it be white, then putting warnings all over it. That's the regime that we're going to be facing for the next little while. I do think that the rules will get relaxed eventually. In the meantime, for companies that are trying to break into this industry, it's tough.

A lot of them are using the investment markets, actually, as a way of generating buzz. You're probably aware of the fact that Gene Simmons is the Chief Evangelical Officer for one of the cannabis companies.

Nadine:

I did see that.

Brad:

He's a big investor. The Tragically Hip have invested in a company called New Strike, which is "Up" cannabis.

So, you're allowed to ... You can scream from the top of a mountain who your investors are, and if your investors happen to be famous then that's a way of potentially creating buzz. I think it's pretty smart on their part. It'll be those type of things that you'll have to do.

Nadine:

Mm-hmm.

Brad:

Outreach directly to patients, and that sort of thing for the medical industry, because again, there won't be any display advertising. There will be, even in Ontario, limited advertising inside the stores, and none outside.

Nadine:

Hm. So, we won't be seeing any commercials any time soon?

Brad:

No.

Nadine:

Yeah, that's not going to happen.

Brad:

That won't be happening. It's actually Federally illegal.

Nadine:

Right, right.

Brad:

At least, for the time being.

Nadine:

Yeah.

Brad:

If you think about it, if you're going to de-regulate anything, you probably should go slow.

Nadine:

Yeah.

Brad:

You should probably deregulate a little, see what happens, then deregulate a little bit more. As opposed to the alternative, which would be to just throw it wide open then have to pull things back. That's obviously going to create bad politics and lots of bad blood in the industry, and actually going to lose a lot of people a lot of money.

I think the approach the government's taking, as much as people in the industry, and I'm one of them, don't like the pace, I understand it.

Nadine:

We also spoke with Jessica Niwurth, a marijuana education and youth prevention coordinator in the Colorado State Government.

She spoke about Colorado's experience with legalization, and gave some words to advice to Canada as we proceed with the decriminalization of cannabis.

Jessica:

I work for the Colorado Department of Public Health and Environment. Our role is to fulfill the will of the people while protecting and preserving public health.

Pre to post legalization, we have a couple of jobs in that arena. One of those is to do data entry and tracking, which doesn't seem terribly exciting, but that, honestly, is one of the biggest questions that we get, is pre to post legalization, how is this affecting families? How is this affecting young people, how is this affecting our communities?

Data is one way that we can track that. Actually, what we see is we have steady youth use rates, it has not increased post legalization. We have steady adult use rates, it has not increased post legalization. So, we have steady pregnant women and breastfeeding women use rates, pre to post legalization. We are seeing a pretty reassuring trend there, that legalization is not increasing risk among young people, particularly in their youth or at risk populations.

Something else that we are often asked is what are the health effects of marijuana? What are the positive health effects and what are the negative health effects? There's not a terrible amount of research, after 100 years of prohibition. There is a definite lack of research when you compare it to tobacco or alcohol. What we do know is we put together a group of professionals, healthcare professionals and prevention specialists to review all of the literature out there about marijuana, weigh it against each other, and come up with public health statements.

We do know quite a bit about the health effects of marijuana. All of our messaging, and prevention education, and intervention education has been based off of those health effect statements. What are the population based health effects we've seen in colorado?

We see a couple different things about increased hospitalization rates from, frequently, tourists or novice users, who are unfamiliar with the product and how much they can use, and how it's going to affect them. We also have seen an increase in traffic collisions and fatalities.

Nadine:

An increase?

Jessica:

An increase.

So, there is ... We do know that marijuana increases your risk of having a car crash, even though the conception is that you're a safer driver because you're so much slower, more conscious, but actually the data shows us otherwise.

The caveat to that is we have definitely changed our recording and reporting of how we are even testing for marijuana, and that's something you would see post legalization, is an increase in every system measuring and monitoring where cannabis shows up in the population in any segment, pre to post legalization, which makes it really difficult, actually, to compare pre to post legalization. Most places, pre legalization, don't do a great job of tracking or studying or understanding some of the nuances that we do see post legalization.

Nadine:

Maybe, what does legalization look like? When it happened in Colorado, was it night and day? Was it a dramatic change where people all of a sudden felt freed? What did it look like, what did society look like after that?

Jessica:

Sure. So, immediately before and after legalization, and to this day, we have very strong advocates and very strong opponents. There will definitely be personal and professional ideologies on both sides that will not go away. So we voted to legalize marijuana, which is different from marijuana and hemp, so we actually don't call it cannabis. But we voted to legalize marijuana in 2012, and then the first shops opened January 1 2014, so there's a bit of time for our society to adapt, and to figure out what this means, for dispensaries and grow houses to get established, and for us to figure out what the regulation looked like.

Post legalization felt like the Wild West for a while, and figuring out what are the best policies, what is the best way to respond as a community, as local government, as state government, as non-profits, as advocates or opponents of this issue, with no guide map, with no road map, was pretty difficult. So what I do is I work with other states other provinces to help them figure out what are our lessons learned, what did we do well, what are some strengths, and what are some things we wish we had done differently, and how can you learn from some of those things?

Nadine:

And so what's one piece of advice you would give to Toronto or Canada as we head into legalization?

Jessica:

Yeah, so one piece of advice would be, while there is not a lot of research in the best policies for marijuana or for cannabis, there is 50 odd years of research into tobacco and alcohol that tells us what are the best regulatory policies, how do we reduce youth access and exposure to cannabis, many of those policies can be used in this sense. There is a deep well of public health knowledge to preserve public health while mitigating some of those negative effects of legalization while still making sure that cannabis legalization is something that - it's going to happen, regardless of how you feel about it, so how then do you respond, and how then do you make sure that you're protecting folks? And so our job at the Public Health Department has been, and something that I recommend to everyone is, stick to the science.

Nadine:

Our last expert is the CEO and President of cannabis company, Terrasana, Michael Nishat spoke to us about how cannabis legalization is going to impact the workplace and medical marijuana users.

Michael:

I think that the legalization will definitely bring changes in the workplace. When you look at alcohol, for example, there are special rules and special policies that workplace has on the use of alcohol in the workplace settings.

What we'll probably see, I believe, is a removal or an addition for the word alcohol and add the word cannabis, is that it should be treated like alcohol. People who show up to work should not be using cannabis recreationally, it's something to be done after work, during leisure time, people who drink alcohol can get drunk. People who smoke cannabis or use cannabis through an edible can get high. I think that's going to be a little bit of the same message going forward as it goes forward through legalization.

The fear that I have is the medical component associated with it. There are patients who take cannabis for medical reasons, and if I look at other medications that patients could potentially take, like opioids, Oxycontin, different therapies that are there that might have the drowsiness associated with it, employers don't necessarily walk around asking the employees, Hey what's in that medicine bottle over there? What do you have over there? So we need to make sure that there is a protection that's granted to the medical patients that they're not discriminated against, and there is rules in place to address that, but we also make sure that the recreational cannabis in the workplace is addressed somewhat similarly to alcohol and how it's being treated in the workplace.

Nadine:

And do you find that corporations now are starting to look at legalization and how that's going to affect their own employees or how they're introduce it into their workplace in terms of Christmas parties or even after work?

Michael:

Absolutely, I think that even as a company ourselves, we have to kind of weigh that responsibility because there's legal responsibilities, there's risk management issues that we have to address, and we've actually dealt with a [inaudible] board of trade where we're located to address all these things associated with workplace policies [inaudible]. Employers are going to have to update their policies and how they deal with these things. Some of them already are, some of them are probably not looking at it as closely as they should have, and they'll have to address with it. It's important to make sure that we are in a position where we're not going to be reactive, we want to be proactive about this so there are no surprises and from an employer perspective, reduce your risk mitigation as much as possible.

Nadine:

So maybe we could talk a little bit about the difference between smoking cannabis and edibles and sometimes that the challenges or risks that's going to happen with those two differences.

Michael:

Absolutely. So smoking and edibles are very different experiences for clients associated from the recreational perspective and the medical perspective. On the medical perspective it's important to say that when people choose to smoke, or choose to vape, the reason that they're doing that is because they have symptoms that need to be addressed right away. Smoking or vaping has an onset that can be as short as 10 to 15 seconds. So some people use cannabis for anxiety, some people use cannabis for migraines.

Edibles start working in an hour. You don't want to wait an hour when you have one of those conditions, you want to smoke it or vape it, associate with it. There's other ways you can consume cannabis that are not yet legal in Canada through product formulations, so you can do meter-dose inhalers, nebulizers, all these are potential future dosage forms that could potentially come into the market. But a patient would actually prefer to use the cannabis if it's for immediate symptoms through an immediate release mechanism such as smoking or vaping, and other symptoms that might not be as immediate of a need would be through an edible or an oral capsule associated with it that potentially can be used.

I should point out that edibles are not allowed in Canada as of yet, patients can make their own edibles if they want, regulations have stated that edibles will be allowed within the next year or two, and we look forward to seeing what that looks like because I think that there is a subset of patients and subset of consumers that will be looking at getting cannabis that way and it will be potentially a safer alternative than vaping or smoking if they don't need that immediate effect.

Nadine:

Mm-hmm (affirmative).

Michael:

It's important as we go forward through legalization that we don't neglect the medical patients. The medical patient has real needs and has the right to use their cannabis for the conditions they choose or their doctor helps them choose for them. There's a lot of talk in place about restricting the use of where people can vape and people can smoke, and it's important for us at Terrasana to speak up and say that there should be different rules for the medical patients than for patients that are using recreationally.

The reason why I say that is a medical patient is using it for an ailment, and forcing a medical patient and saying, "You have to use this at home, you can't do this outside" if you have kids at home, if you have other people at home, and you're going to subject them to secondhand smoke, that's not necessarily the best thing to do, and you don't have to subject everybody else around you to the medicine that you're using.

Recreationally, this is an option and a choice that you're going to have to make. So we need to make sure that we have more options and places for medical patients to be able to consume their medicines, and not put the same restrictions on them as everybody else, especially to be able to take it from a privacy perspective, and going forward.

Nadine:

Like Nobody's Business is a presentation of Toronto Metropolitan University's Ted Rogers School of Management. For more information about TRSM visit ryerson.ca/tedrogersschool. Thank you for listening.