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Cannabis plants grow in a production facility in Simcoe, Ont., on April 13, 2021. Canada’s cannabis industry is hoping a long awaited review of the legislation that permitted the use and sale of pot will help the sector stave off more financial difficulties.Tara Walton/The Canadian Press

More than 300 days past the legislated date, Ottawa has said it will begin its review of the Cannabis Act in order to assess the effects of legalization on health outcomes.

Announced at a news conference Wednesday by Health Minister Jean-Yves Duclos and Minister of Mental Health and Addictions Carolyn Bennett, the review will look at what the act has meant for public health, focusing on the consumption habits of young people and the impact on Indigenous communities.

The review is expected to take 18 months and will consider more than just health issues; it will also assess financial, tax, regulatory and criminal-justice matters.

While the industry’s financial viability will be considered by the five-member review panel, “the main focus is the safety and the health of Canadians,” Mr. Duclos said. “This is a priority. Everything else is secondary to securing the health and safety of Canadians.”

Morris Rosenberg, a former president and CEO of the Pierre Elliott Trudeau Foundation, will chair the panel. Mr. Rosenberg, a lawyer, was deputy minister of Health Canada from 2004 to 2010 and also served as deputy minister of justice and deputy attorney-general of Canada. Health Canada is still recruiting the other four members of the panel.

The review was supposed to take place last October, three years after legalization. Mr. Duclos said the delay is a result of Health Canada " triple-checking” with leaders in public safety, public health and the cannabis industry.

“We decided to wait a few more months to make sure that we did three things better,” he said. “First, independence. Second, scope. And third, the engagement. This is an independent committee and it has the freedom and capacity to do anything it wants in terms of this legislation. If you look at the legislative scope of the review, it was a lot more narrow, but we heard from many experts, leaders in the field. It was the right thing to do to broaden it out.”

Omar Khan, the senior vice-president of corporate affairs at cannabis retailer High Tide Inc., said “it’s unfortunate that the review itself has been delayed by a year, because during that year, the cannabis industry in Canada has gone through turbulent times. We’ve seen industry layoffs. We’ve seen many businesses fold and go bankrupt.”

In a series of tweets after the government’s announcement, Mr. Khan said some in the cannabis industry can’t afford to wait another 18 months. “Let’s hope Health Canada can expedite the process and that Innovation, Science and Economic Development Canada can get the long-promised cannabis strategy table running soon so that urgent challenges facing the industry can be addressed.”

For George Smitherman, the chief executive officer of the Cannabis Council of Canada, the national industry association, the announcement comes at a critical time. Companies continue to face pressure from the illicit market, as well as excise taxes, provincial distributor markups and regulatory fees.

“I’m working with a sector that has no capacity for games,” Mr. Smitherman said. His association has long called for a broad scope for the review that includes the impacts of the act on the financial viability of licence holders.

Mr. Duclos said Thursday that the review will indeed look at the excise tax.

Dan Sutton, the founder and CEO of B.C.-based TantalusLabs, said in an interview that the excise tax – a minimum of $1 per gram or 10 per cent of the selling price – anticipated a price of at least $10 per gram, which has never been met. With some producers selling their cannabis for as little as $4 per gram, that $1 minimum can represent almost a quarter of sales.

“Excise tax policy was based on an estimate that has now been proven by four years of market data to be inaccurate,” Mr. Sutton said. ”There’s actually nobody that I’m aware of, including private businesses, small craft businesses, large-scale producers, that is consistently generating break-even income. So the entire private sector is operating at a loss.”

Many in the industry are also hoping the review will include an increase in THC concentration limits for edibles and other cannabis products. Edibles are currently limited to 10 milligrams per item – widely seen as a barrier to attracting cannabis users, who can access more potent products from the illegal market.

High Tide’s Mr. Khan said his company often loses customers for this reason. “They just walk out the door.”

Charlie Bowman, the chief executive officer of Ottawa-based cannabis producer Hexo Corp., said the review should find ways to tout the health benefits of cannabis. Currently, the advertising and promotion of cannabis products is tightly controlled.

Moreover, he said, the government should standardize how data is collected and how testing is conducted within the industry, such as tests for THC content. There is still no single standardized methodology for such tests.

“The government and producers should be focusing on helping customers understand the product and use it correctly,” Mr. Bowman said. “Credibility comes from having good data.”

With files from Vanmala Subramaniam

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