New Zealand Cannabis legislation: Good, but room for improvement

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OPINION: Even as most New Zealanders focus hopefully on coronavirus restrictions loosening, some are undoubtedly looking ahead to September's cannabis referendum.


As a Canadian business professor who has studied my country's legalisation efforts, I see many similarities in the plan the New Zealand Government proposed two weeks ago.

But I also see room for improvement.

First, let's remember one of legalisation's key challenges. If the new legal industry goes ahead as proposed, it will compete with the existing illegal one. Consumers won't automatically switch suppliers. And anyone or anything banned from the legal industry will stay underground.

So, for example, politicians naturally don't want young adults using cannabis. But setting the legal age at 20 means leaving 18- and 19-year-old users with their current dealers. Is that really the least-bad option?

Canadians have struggled with this issue. The province of Quebec originally set its legal age at 18, but recently upped it to 21. Social conservatives applauded the change. But it sent some 80,000 young consumers back to street weed.

Similarly, New Zealand's 15 per cent THC limit and 14g purchase limit promote moderation. But they might spurn the heaviest users.

In Canada, 20 per cent THC cannabis seems fairly common. And efficiently produced 30g packs are the most price-competitive with black market equivalents.

New Zealand's proposal to legalise dry (smokable) cannabis first and edibles later makes sense. That provides extra time for regulators and producers to prepare for those more complex products.

A guard stands outside a retail shop selling recreational cannabis in North America.
A guard stands outside a retail shop selling recreational cannabis in North America.

Some Canadians complained about similar edibles delays here. But legal producers struggled for nine months just to meet dry cannabis demand. Introducing edibles simultaneously wasn't feasible.

Limiting each grower to 20 per cent of the market is also sensible. But why ban them from retailing, at least on site? Direct "factory outlet" or "farm gate" sales could be very cost-competitive against illegal sources.

Where I live, micro-growers especially have big plans for on-site sales. Like many small vineyards, they're targeting visiting connoisseur-tourists.

As with most Canadian jurisdictions, New Zealand won't let cannabis stores sell non-cannabis products. Unfortunately, that makes legal shops unprofitable in thinly populated areas, leaving those markets to illegal suppliers.

To avoid that, the province of Nova Scotia sells cannabis from its liquor stores. And Newfoundland permits cannabis sections inside some general stores. These approaches minimise operating costs while letting rural consumers access legal products.

Cannabis is grown inside a factory in North America. The sale of recreational marijuana is legal in Canada.
Cannabis is grown inside a factory in North America. The sale of recreational marijuana is legal in Canada.

New Zealand is ahead of Canada in allowing consumption premises. Interesting! Such "cannabis lounges" make sense given your ban on public consumption. But some rules are puzzling:

* Edibles are legal but beverages aren't? Edibles' slow onset and recovery times seem better suited to home use. Conversely, newer beverages reportedly act fast enough for social drinking.

* Smoking and vaping are banned indoors. Will consumers really abstain during bad weather?

* Non-cannabis foods and drinks are required at consumption premises. So why forbid them at other cannabis shops?

As in Canada, government regulators will supervise these rules in New Zealand. But unlike my country, yours will have one Cannabis Regulatory Authority for everything: growers, products, and retailers.

That's an efficient but risky concentration of power. You'd better require the authority to provide lots of disclosure, not just five-year plans.

Canada sadly lacks such transparency. Some provincial cannabis agencies communicate well. But most don't disclose even basic info, like the amount of cannabis sold each month.

Such secrecy frustrates businesses, consumers, and researchers. It obscures legalisation's medical, social, and economic impacts.

I'm similarly concerned by the law's mention of both taxes and levies. More surcharges mean higher prices and less success against black markets.

In Canada, provinces with lower prices generally take more business away from illegal sellers. Meanwhile in the US, California's multilayered taxes hinder legal sales.

I hope your Government will revise these problematic areas, either before the referendum or afterward. But I also congratulate it for providing so many details, so far in advance.

We Canadians got only a vague promise from our prime-minister-to-be, just weeks before his election.

By contrast, you've been given far more information and time for your cannabis deliberations. I'm sure the topic will prompt much discussion over the coming months.

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