Cannabis Act: Risks and opportunities

What your restaurant, bakery or catering service needs to know about the new Cannabis Act: Bill C-45 was enacted on October 17, 2018 to provide legal access to cannabis and to control and regulate its production, distribution and sale. While there are risks, there are also opportunities.

With the potential for increased cannabis-related tourism, the food industry is expecting a boom within the year. Restaurants Canada reminds entrepreneurs, “some Canadian provinces will implement a regulatory framework which permits private enterprises to obtain a license to sell cannabis products from retail outlets.”

As chains like Second Cup had announced it intention to convert a share of its locations to cannabis retail outlets, other franchises “might see an opportunity to effect similar conversions to retail sales and this may provide for marketing opportunities to promote other restaurants under common ownership.”

Risks:

1. While sale and distribution is legal, selling cannabis-infused foods and beverages commercially will be controlled for another year.
2. According to Restaurants Canada, establishments in Canada will be prohibited from selling both alcoholic beverages and edibles from within the same premises.
3. Do not market your goods in a way that is appealing to children and youth under the age of 19.
4. When marketing your cannabis product, Bill C-45 requires vendors to ensure “that it is not associated with a lifestyle that includes glamour, recreation, excitement, vitality, risk or daring.”
5. Bill C-45 states, “it is prohibited to promote cannabis in a manner that is false, misleading or deceptive or that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks.”
6. Ensure that your staff’s contracts and employee handbooks clarify the impact of cannabis legalization. Your substance abuse policies might need to be revised, including accommodations for those who use marijuana for medicinal purposes.

Opportunities:

1. Drinks: Cannabis-infused beverages are climbing in popularity, and consumer research indicates that THC-infused drinks will be a market leader in the next year. As with edible cannabis products, the contents and the price must be clearly labelled, and not marketed toward youth under the age of 19.
2. Snack Bars: The Ministry of the Attorney General of Ontario remarked earlier this year, that the province of Ontario would explore the regulation of licensed lounges or clubs for cannabis consumption. If regulated, this could open up opportunities for restaurant businesses to establish operations in close proximity to existing restaurants, to facilitate the consumption of cannabis on site, while providing patrons with dining and/or snack options from their restaurant’s broader menu.
3. Tourism revenue: Consider marketing your café, restaurant, catering or baked goods towards tourists, as cross-border travellers are expected to increase within the next year.
4. Real estate: Using Denver as a model, a 2017 study found that home prices within the vicinity of a recreational cannabis dispensary rose at a rapid pace since the retail sale of cannabis was legalized. If the same trend holds true for Canada, restaurant owners looking to invest could consider buying a building near a dispensary.