The Legalization and Marketing of Marijuana in Canada

By Chris McEvenue July 13, 2017

OK. I admit it. I did inhale! As a teen in the 70s, the lure of the illicit weed, along with peer pressure, was more than I could resist. Now, as Canada embarks on being the first of the G7 countries to legalize marijuana, I wonder: how different may my experience have been if weed were legal then? That’s just one of the considerations for legislators grappling with mapping out the best plan for legalizing recreational use of the drug. Will legalization discourage and reduce the use of marijuana by teens under the age of majority? Most detractors fear the opposite. Beyond that, there’s the matter of how the drug will be controlled. For instance, who will distribute it to the public and in what form/format? Will it be priced at or below the price of illegal sales? The questions the issue raises are endless.

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$8 Billion in Revenue changes hands

If the legalization of pot is such a volatile issue, why is our government of the day pursuing it? In a word: revenue. It is estimated that $8 billion changes hands annually in Canada in marijuana sales. That’s a huge number of untaxed transactions, representing as much as $5 billion annually lost to federal and provincial coffers. New sources of tax revenues are not easy to identify without alienating potential voters but since Canadians have been very accepting of tariffs aimed at the weak-willed, this could be seen as another “sin” tax, like that levied on tobacco and alcohol – the burden being borne by those who imbibe. Within the government’s policy paper, the rationale for legalization of marijuana is couched with the following: reducing the burden on the criminal court system, to keep it out of the hands of children, reducing the proceeds that support organized crime and enacting laws that more severely punish those who provide it to minors. All lofty and admirable goals, to be sure, but what about the revenues? How will they be used?

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This is an incredibly complex challenge for the government, but what we have yet to hear, and what fascinates me, is what type of marketing and advertising will be available to the manufacturers? There is a nine-member government task force to look specifically at this issue. As a marketer, I feel that the use of plain packaging would do a disservice to the industry. Manufacturers, currently selling marijuana as a prescription product, are planning to re-market it under the new laws. They point to the fact that “no two highs are alike” and that users will want to find the brand that best meets their needs. This would necessitate them communicating those differences in order to properly target their audience. Some have compared selecting the right brand of marijuana to selecting the right wine or whiskey. The mind reels at the headline opportunities these brands can use to get at their “tastes great, less filling” messages. If this advertising requires a form of regulated review, how will manufacturers validate their claims of “more mellow”, “munchie-free” or “majorly buzzworthy”? That’s a challenge we agencies would love to take on.

The mind reels at the headline opportunities these brands can use to get at their “tastes great, less filling” messages.

To my way of thinking, there’s a strong argument for branding of marijuana being a disincentive to purchasing from the black market. As consumers who are targeted, we are incentivized to select a brand, and in this case, the reasons should include quality, consistency and safety, which are key elements the black market cannot offer. It could be argued that, although now more restricted, the advertising and branding of alcohol has all but eliminated black market alcohol sales or private distilling, except for the hobbyists.

Our government has pledged that all revenues will be directed to public health and addiction issues, which, if they keep that promise, could be a huge boon to the Canadian health infrastructure. And, how successfully it is implemented in Canada will be an experiential model for other countries. The learning will be immense and I, for one, can’t wait to see how we do.

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