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Opinion: Machiavellianism took control of the cannabis industry

Published on February 28, 2023 by Special to the oz.

Photo: Flickr

“I’m as mad as hell, and I’m not going to take this anymore!” — Howard Beale, from the movie ‘Network‘

By Noah Shopsowitz

Prime Minister Justin Trudeau has effectively turned $1 billion of positive cash flow in the legacy cannabis market into $1 billion in losses, and on the way he has created another $1 billion of un-recyclable garbage waste. I call this “retrograde economics.” Not bad for a PM who used to be a math teacher. He has accomplished this by not curating an intuitive business roadmap, but rather a counterintuitive one.

What do I mean? For example water always flows downhill. That’s intuitive, everyone knows that. To make water flow uphill is counter-intuitive.

The first hurdle that the PM created for Canadians is supply-side economics. It is a term governments likes to use. It is lazy thinking. Understanding that there already was huge demand for cannabis, the Liberals only focused on how to create the buzz for legal weed. This drove his political “Green Rush” tactics and gave an illusion of prosperity and opportunity.

No sound business roadmap was proposed, just promises that resonated at the polls. They drove Trudeau’s success.

What Canadians really did not understand is that his high school economic policy blocked the major pharmacy groups, like Shoppers Drug Mart, London Drugs, and Rexall, which combined would have offered over 5,000 retail locations, seasoned supply chain management, and finance. His government used Bill C-45 to kill the national chains, as it did not represent a large enough voting population. It was blatantly irresponsible, in my opinion, for the Government of Canada to completely bullshit their citizens and put our economic well-being at risk. The years of job losses and hundreds of millions of dollars of losses is the result. Canopy Growth has become the poster child of the PM’s wayward thinking.

Does anyone remember retired senator Art Eggleton, once the chairman of the standing senate committee on social affairs, science and technology? He was the point person making recommendations to the government on the Cannabis Act. Eggleton is a very nice person and was previously the longest running mayor of the City of Toronto. I had a brisk email exchange and some phone calls pre-legalization with him that ended badly. I asked Eggleton why the legislation was silent on sustainability of packaging; that was my business focus. Now this is not a quote, but my impression is that the need to hurry up on the implementation of cannabis reform meant no time for innovation, in fact, no time to consider sustainability that could have been drafted into Bill C-45. What it also might have meant, now that I can see in retrospect, is that Canadian relations with China could be greatly improved as almost 100% of the packaging goods used for Canadian cannabis, are sourced there. What does that mean? It means our good money is being sent to China. Not good for Canadians, but great for a government that would one day need to borrow back those dollars.

Let’s thank the PM for a few few more gaffs. Originally, Bill C-45 pointed to the Consumer Packaging and Labelling Act established in 1970, that was sufficient for every consumer good that was sold in Canada. It is suffice to say that the act has adequately protected consumers. In the act, labels are to be “affixed” to the packages. That would include shrink-wrap labels that are widely in use. If a shrink-wrap label is used, then it can be removed and disposed of. Today, there are an abundance of biodegradable shrink wraps, available. Amendments to Bill C-45 have removed this opportunity for Canadians and replaced it with a law that requires labels to be “stuck on” with an adhesive. Often these adhesives are not recyclable, that makes the packaging not recyclable. Further, if there is a paper label stuck on a plastic package then even if the plastic is recyclable, then the result will have black carbon specs when the paper is heated. This re-made plastic may be good for railway ties or park benches, but surely it would never be suitable for consumer goods. That means that almost 100% of packaging used for cannabis in Canada is non-recyclable and must go into landfill. Way to go Health Canada in protecting Canadians. The only people being protected are themselves and the Liberal government, headed by Trudeau.

One last item. Why is cannabis not selling well at retail. That should be a logical question to ask these days, after Canopy Growth dumped Tokyo Smoke, once the darling of Canadian cannabis retailing. Sorry to say retailing never fit the government’s supply-side economic model. “And the budget will balance itself” … who said that?

Machiavellianism took control of the Canadian cannabis industry and threw all “intuitive” business methods out. It created the unsustainable economic and social reality we are experiencing today in the Canadian cannabis marketplace.

About the author

Noah Shopsowitz is a graduate architect and Canadian business person who was chosen by the Liquor Control Board of Ontario (LCBO) over 400 other applicants to modernize their retail stores as manager of store design in the mid 1990s. Our team worked through many of the problems that face the Canadian cannabis marketplace today. Shopsowitz was mentored by the late Don Watt, the genius who created Loblaws and No Name.