'We made some terrible mistakes': What Canada can learn from Colorado's cannabis legalization experience

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When cannabis stores open across Canada later this year, it will look very different than in Colorado

On a blustery New Year’s Day four years ago, throngs of people in toques and jackets lined up in parking lots and on sidewalks across Colorado waiting for the end of prohibition. At 8 a.m., more than two dozen marijuana dispensaries opened their doors for recreational sales. By the end of the first week of sales, locals and tourists alike had reportedly spent US$5 million on weed.

With that, Colorado became, in 2014, the first jurisdiction in the world to allow the legal sale of cannabis for recreational use. Uruguay had technically been the first to legislate away prohibition. But Colorado had gone beyond mere legalization, creating a fully regulated retail system, monitored, tested and taxed by the state.

When cannabis stores open across Canada later this year — which industry watchers suggest could happen anytime between September and November — it will look very different than in Colorado. There won’t be gummies, brownies or CBD-infused drinks on the shelves, at least for the first year and dried bud will be sealed away in bland packaging, rather than beckoning from large glass jars. Still, there’s much to learn from Colorado’s experience.

“Originally we made some terrible mistakes,” said John Hickenlooper, the governor of Colorado, in an interview with the Financial Post. “We didn’t regulate the number of doses you can put in one brownie. So some people would take a normal size brownie and they put four doses in it. I didn’t know there was such a thing as OD-ing on marijuana. But it turns out there is.”

For everyone from the governor down to the dispensary worker, Jan 1, 2014 was a leap into the unknown. That the state was transitioning from an existing regulated medical marijuana system — as is the case in Canada — at least gave it something to build on.

Brooke Gehring, whose company FGS Inc. owned four vertically integrated medical dispensaries in 2014 — the company has since scaled back to two — had been planning for the shift to recreational since the day after Colorado’s legalization plebiscite passed in November 2012. By mid 2013, she had doubled the growing capacity in her 35,000 square foot facility in Denver, and had begun working with regulators on the state’s new seed-to-sale tracking system.
“It feels like legalization is opening a door, but it just really opens all of the other issues that also need to be discussed,” said Gehring. “What type of packaging, what serving sizes, what products and the labelling are going to look like. All of these things we thought we knew form operating our medical marijuana business were literally changing overnight.”

The first week of January was a scramble for the 30 plus dispensaries holding recreational licenses. Gehring’s stores had enough marijuana, grown for medical purposes then transferred, in a one-off move allowed by regulators, to the recreational system. But her dispensaries began running short of other products.

“The main thing we found wasn’t so much that you couldn’t get product, it’s that you couldn’t get product cheap,” said Dave Cuesta, now the chief compliance officer for Native Roots, the largest dispensary chain in Colorado. At the time, in 2014, he was working as an investigator for the Marijuana Enforcement Division. “You could walk into a store that sold both med and rec, and you were paying $30, $35 for an eighth on the med side, and it was $60 or $70 on the rec side. People were just adjusting their pricing (to manage supply).”

It took nearly a year for prices to stabilize, said Cuesta. Even with five or so dispensaries opening each week across the state, the real price correction didn’t begin until October, when non-vertically integrated companies were allowed to apply for independent growing and retailing licenses.

By December 2014, there were more than 300 recreational stores open, and monthly sales were topping US$35 million, up from US$14.7 million in January, according to the Denver Post. Taxes and fees collected by the state on cannabis sales in December alone equalled US$6.9 million.

A marijuana bud is selected for a patient at a marijuana dispensary in Denver.

Meanwhile, lawmakers and regulators were busy working out kinks in the legal framework. After an increase in the number of children hospitalized for marijuana poisoning after accidentally eating edibles — and the death of young man who leapt from a window after consuming them — lawmakers brought in tighter controls around packaging and dosing. In August, the government introduced an emergency rule that edibles had to be divisible into smaller servings containing no more than 10 milligrams of THC each.

“We figured out pretty quickly, that those were gaps in our regulatory framework, and we got pretty much all of them done that next year,” said Hickenlooper.

The state spent heavily on education campaigns discouraging youth consumption and driving while high. Although these were not without some PR flubs, such as the “Don’t Be a Lab Rat” campaign which placed giant, human sized rat cages around Denver, featuring ominous slogans such as, “Scientists can’t wait to see the negative effects it will have on your brain.”

Youth cannabis use did not, however, notably increase. According to a 2016 report by Colorado’s Department of Public Health and Environment, 21 per cent of high school students reported using marijuana in the previous month, which was “not statistically different” from the 20 per cent seen in 2013, or the between 20 and 25 per cent seen from 2005 to 2015.

What did increase, particularly in that first year, were calls related to cannabis poisoning, mostly from edibles consumption. From 2013 to 2014, the number of calls received by the Rocky Mountain Poison and Drug Center related to marijuana exposure jumped from 127 to 222.

Other problems, such as high driving, also appear to have increased slightly, although the data is unclear. Colorado’s Department of Transportation says the number of vehicle fatalities where people tested positive for more than 5 nanograms of Delta 9 THC per millilitre of blood, the legal limit, rose from none in 2013, to 19 each in 2014 and 2015, and 51 in 2016. Although the department admits “the cases of drivers testing positive for Delta 9 could be the result of improved data collection.”

“I still tell other governors to wait a couple of years. Because with something like this I’m very worried about unintended consequences that we can’t perceive with the information that we have today,” said Hickenlooper, who originally opposed legalization, and still has concerns about things such as insufficient Breathalyzer technology.

“That said, most of the things I feared most, haven’t occurred. We didn’t see a giant spike in teenage consumption. We didn’t see a spike in any consumption. The only place we’ve seen a slow but consistent increase in consumption is among senior citizens.”

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