Business
Canada business leaders note ‘lost opportunity’ for cannabis in Trudeau-Scholz meeting
Olaf Scholz’s recent trip to Canada is raising eyebrows among Canadian business executives over what wasn’t discussed during talks between the German chancellor and his Canadian counterpart, Prime Minister Justin Trudeau.
Cannabis and mainstream business leaders said Canada missed an opportunity last week to highlight its regulated cannabis industry and promote international trade when Scholz visited the only large country in the world to have legalized marijuana.
Germany announced its intention earlier last year to regulate the distribution and sale of recreational cannabis and, this summer, kicked off the preparatory phase. A draft law is expected to be published this year.
Industry officials said the circumstances created a unique opportunity for the Canadian prime minister to back the multibillion-dollar industry, which has struggled to tap into international markets.
But a spokesperson for the Office of the Prime Minister confirmed cannabis was not discussed between the German leader and Trudeau during Scholz’s trip last week.
“It didn’t come up? Shocking. It’s shocking,” George Smitherman, CEO of the Cannabis Council of Canada, which represents dozens of businesses, said in an interview with MJBizDaily.
“Canada has a chance to align with Germany, and we’re not advancing that? That’s crazy,” added Smitherman, a former deputy premier for Ontario who also was the province’s energy and infrastructure minister.
Smitherman said opportunity abounds between Canadian and German cannabis businesses.
Germany is suffering through an energy crisis because of the war in Ukraine, and cannabis cultivation can be incredibly energy intensive, he said.
That, plus the fact that Canada already has more cannabis cultivation capacity than it will ever need, puts Canada in a position to ramp exports.
Canada has so much excess cannabis, it has destroyed more than 1 billion grams since 2018, and inventories are still overflowing. (That cannabis is thought to mostly be unsellable, but the production capacity remains in place.)
“You might have thought that the combination of these two, the symmetry if you will, the rationale for having Canada and Germany collaborating could be an extension of the energy cooperation,” Smitherman said.
“I’m a former energy minister. I was looking at it from that standpoint.”
Canada is already Germany’s top supplier of medical cannabis, and business leaders say that could easily be expanded.
Canada’s Chamber of Commerce said the country missed an opportunity to promote the legal sector internationally.
“As the first G-7 economy to legalize recreational cannabis, Canada has a narrow first-mover advantage and should promote the legal sector internationally,” the business group said in a statement to MJBizDaily.
“Although cannabis was not on the agenda for German Chancellor Scholz’s short visit to Canada earlier this month, the Canadian Chamber’s National Cannabis Working Group believes Canada should actively work towards securing future meetings with countries like Germany to share industry best practices and to facilitate business opportunities, including the export of medicinal cannabis.”
Canada is top supplier
Canada was the top supplier of medical cannabis flower and extracts to Germany last year, according to data provided by Germany’s Federal Institute for Drugs and Medical Devices (BfarM).
In 2021, Germany imported 6,493 kilograms (14,315 pounds) of cannabis from Canada, or 31% of its medical and scientific marijuana imports.
Denmark was the next closest, with 3,726 kilograms, or 18% of the total amount imported.
Business leaders estimate the opportunity to be in the hundreds of millions of dollars.
Germany is expected to overtake Canada as the largest federally regulated medical marijuana market in the world in 2022.
Economic driver
Despite massive losses at a small number of producers, cannabis has been a driver of economic growth in Canada.
The industry has added roughly 43.5 billion Canadian dollars ($37 billion) to the country’s economy and sustained 151,000 jobs since legalization in 2018, according to a report by accounting firm Deloitte.
Industry leaders have said the Canadian government could be doing more to help struggling cannabis producers make inroads into foreign markets.
“That the (Prime Minister’s Office) confirmed that is really kind of a smoking gun for just how leadership attention and interest in Ottawa has diminished over their own prized initiative,” Smitherman said of the absence of cannabis as a topic in the Scholz-Trudeau discussions.
“If I was prime minister, and I was meeting with the German Chancellor, I might actually be saying, ‘You know, chancellor, us two leading G7 nations, the legalizers of cannabis, we have a chance to be the foundation for countries in favor of a $100 billion industry that’s emerging, what can we do strategically to align that? For instance, could Canada offer Germany supply arrangements?’”
Smitherman said the federal government’s “neglectful leadership model” is being replicated in several provinces and “is an extraordinary threat to the public health goals and to the livelihoods of many Canadians.”
‘Incredible lost opportunity’
Nathan Mison, CEO of Alberta-based Diplomat Consulting, called Scholz’s visit an “incredible lost opportunity.”
He said a majority of Canadians want the cannabis sector to be promoted as an economic opportunity, citing data from Ontario-headquartered pollster Abacus Data.
Mison, co-chair of the National Cannabis Working Group for the Canadian Chamber of Commerce, believes the federal government should treat the cannabis industry like it does mining.
“When we’re looking for positive opportunities for our cannabis sector, what an incredible opportunity to treat cannabis sector regulation the same way we exported Canadian mining rules around the world,” he said.
Mison said 55 countries are weighing cannabis regulation, and it’s in Canada’s best economic interest to be involved in that process, where possible.
“We should be looking to trade opportunities for Canadian businesses to understand how to operate in emerging jurisdictions.”