Oh Cannabis! Canada Legalizes Recreational Marijuana: What Might that Mean for the U.S.?

On October 17, 2018, Canada became the second major country in the world (after Uruguay) to allow the sale of legalized recreational marijuana to all adults age 19 and older (18 and older in Quebec and Alberta). To celebrate the new law, a large gathering in Toronto came together to watch a giant “bud” drop at the stroke of midnight. One hour later, 1300 miles from Toronto, the Winnipeg Police Department made the first arrest for driving while toking. 

Celebratory gatherings around Canada have been larger than Trump rallies and dispensaries holding grand openings sounded like campaign honk-and-wave events as ecstatic drivers voiced their support. Enthusiasm has been so high that some areas were experiencing long lines and supply shortages.  Customers at one location in Montreal waited in line for seven hours only to be turned away when supplies were exhausted. Online purchasers also experienced long delays in ordering; they may also wait longer to receive their product as Canadian postal workers are considering a strike.    

There are several conditions to the new Canadian law. First, the law allows each province to set rules on how the drug will be distributed. Some provinces will establish government-run distribution stores, while others will license private stores to sell the drug. Adults will be allowed to possess up to 30 grams of marijuana or grow up to four plants. For reference, 30 grams is equivalent to about 60 joints. Canadians with previous pot possession convictions will receive a pardon if they were convicted of possessing 30 grams or less of the drug. 

One major consideration is how this legalization will affect costs and the black market for marijuana. The cost of a legal gram of marijuana in Canada ranges from US$4.00 to US$14.49; the black market price averages around US$6.00. Black market sellers, in response to the legalization, and in true entrepreneurial spirit, were reportedly offering two for one joint sales to help maintain customer loyalty. Considering these prices, New Mexico might want to rethink its reimbursement rate (currently at $12.02 per gram) for medical cannabis in their workers’ compensation fee schedule. Is marijuana another drug we might have to import from Canada to get a lower price?

What all this means at the border is a little hazy. Marijuana is still illegal federally and it will be illegal to transport marijuana across the border, even if you are transporting to a state, like Washington, where the state has legalized recreational marijuana. Individuals caught smuggling marijuana into the country can face substantial fines and imprisonment. Additionally, Canadians who admit to using drugs that are illegal in the U.S. can be barred from entering the U.S. Therefore, border enforcement will need to be a joint effort between Canadian and U.S. Border agents.    

This legalization begs the question: will the U.S. be far behind? 

President Trump signaled earlier this summer that he would support relaxing laws around marijuana, including bipartisan legislation recently introduced in Congress. The STATES Act, sponsored by Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA), would exempt legal, state-licensed marijuana producers and distributers from the Controlled Substances Act. 

Additionally, marijuana is a budding industry in the United States, garnering roughly $9 billion in sales last year. Comparatively, sales were smoking in Canada on the inaugural day of legalization; retailers in Ontario Province reported over 38,000 orders totaling US$572,000 in sales revenue in just the first few hours of operation. Neighboring Quebec reported 42,000 retail and online orders, seeding hopes for high tax revenues.  

As of now, it is unclear how exactly recreational marijuana will impact the work place or how it might affect employee health benefits. Health leaders in Canada have expressed concern about potential long-term negative health effects and employers wonder about the erosion of drug-free work places and increased injuries due to marijuana impairment. Most health and policy experts note that believing marijuana will not have an impact is just a pipe dream.  

There is no question that current pot policy in the U.S. is a little, shall I say, dopey. States have openly flouted federal marijuana laws and the feds have sent mixed signals regarding enforcement. Congress does not want marijuana laws to be enforced, but then refuses to change the laws they do not want enforced. Courts have been mixed on how they view state laws that conflict with federal laws. Overall, it is plenty for state and local policy makers to weed through.  

This author predicts that sometime before the 2020 elections (perhaps 4/20/20) there will be a “joint” session of Congress, the Democrats and Republicans will become best “buds” and legislation will advance to crack the “grass ceiling” while “Purple Haze” plays in the background. 

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By: Brian Allen, Vice President of Government Affairs at Mitchell

As the Vice President of Government Affairs at Mitchell, a workers’ compensation pharmacy benefit manager, Brian is in the unique position to see firsthand how a drug formulary impacts injured workers as it is implemented and managed over time. In every state where a formulary has been approved and activated, Brian has seen a reduction in the use of opioids and other dangerous medications