If necessity is truly the mother of invention, President Trump’s ongoing melee over tariffs on Canadian goods is surely a doorway to innovation.

If nothing else, this looming financial burden for Canada has been a wake-up call for Canadians to realize that we can’t depend on over 70 percent of our exports being shipped to one country, no matter who it is. Doing so is a foolish exercise in dependency and sets the Great White North up to be beholden to a trading partner with a strong hand in determining our destiny.

So, as the initial shockwave clears and Canadian officials scramble to rebound from this weak negotiating position, many ideas have been floated to make trade more diverse. These include reaching out to countries in Europe and elsewhere and a renewed push to eliminate interprovincial trade barriers in order to expand domestic revenue. 

This is because while Canada is a sovereign nation, many Canadians do not realize the incredible level of trade restrictions that exist from province to province, choking domestic trade and limiting the revenue Canada can make within its borders.

While the threat of tariffs on goods entering the U.S. does not have a direct impact on the Canadian cannabis industry for obvious reasons, knocking down interprovincial trade barriers could be a fantastic and welcome opportunity for the sector and this has not gone unnoticed.

“This is something I’ve been discussing for a long time, from my previous experience in beverage alcohol in the Nova Scotian wine industry,” said Jonathan Wilson, CEO of Crystal Cure.

“We’re a giant country, but we forget that within that country there are a whole bunch of borders,” he said. Wilson added that in his experience, there are various instances where it can be easier to get products from international sources rather than from a different province—something that many sectors and companies have agreed with.

“Since confederation, all the provinces and territories have had their own governance [on trade], their own setup, and some are more protective than others. Now you see over 150 years later what it’s done. It’s caused a bunch of bureaucracy and red tape.”

Wilson went on to say that because of this, it has always been the norm for provinces to protect their borders by keeping a very watchful eye on what they deem ok to enter and exit in terms of goods and services.

Deja vu all over again

Reducing or eliminating Canadian trade barriers is not a new topic of discussion. In April 2017, provincial and territorial governments signed the Canadian Free Trade Agreement (CFTA), designed to open up trade restrictions and create more domestic revenue. While it was a step in the right direction, almost half of the 345-page agreement was filled with exceptions and opt-out measures.

At the time, a report released by the Senate, Tear Down These Walls: Dismantling Canada’s Internal Trade Barriers, showed that provincial trade restrictions were costing Canada as much as $130 billion per year. These restrictions included everything from truck tires to alcohol to carbon emissions to many other goods and services.

In 2018, the conversation continued again, sparked by a court case in which a New Brunswick resident named Gerard Comeau went to Quebec to buy alcohol and was fined $240 plus fees when he returned to his province. Comeau fought the fine, and the case eventually went all the way to the Supreme Court, which upheld the existing laws. Nevertheless, the superfluous nature of the restrictions was on full display for the country to see.

Then, as recently as 2023, a report by the Montreal Economic Institute said that interprovincial trade restrictions were costing Canada an added 7% country-wide on goods and services. The report advocated for the removal of these barriers.

How would eliminating trade restrictions help cannabis?

“The first group it would help is the smaller companies, the micro and craft producers: the ones that don’t have the infrastructure, size, or cash flow to get into OCS, BCLDB, any of them,” said Wilson. He added that it would allow for direct sales to consumers, increased competition across the country, which would improve product offerings, and more unique products would see the light of day from coast to coast.

Gord Nichol, the owner of North 40 Cannabis, a micro-cultivator and processor in Saskatchewan, would also agree. He has demand in other provinces but the process of getting approved by the boards in those provinces can be a real challenge.

“A very good example is that multiple retailers in BC have been requesting my product and have been rejected by the board because they prefer to support BC cannabis, which is exactly what we’re talking about, interprovincial trade barriers,” said Nichol.

He went on to say that there are barriers to entry to every province that has a regulatory board and acts as provincial gatekeepers. If Canada could drop all of that, Nichol feels he could sell his entire inventory.

“Let me sell to any retailer I want to, anywhere in Canada. I’ve got retailers in Ontario that would love to carry my product, but I can’t jump through their hurdles to supply six retailers, but I could do it if they weren’t in the way.”

The move would also undoubtedly assist in eliminating the illicit market, which pays no attention to trade restrictions, said Wilson.

“[Provinces] hold on to their monopolies and protect their borders thinking that they don’t want to give up any revenue from controlling liquor, cannabis, whatever, but there’s a tremendous amount of opportunity to not only make sales tax, but revenue from whatever they are sending out. The pie can actually be grown.”

Wilson went on to say that for any of this to happen, at least in the cannabis sector, it starts with the federal government as it created the Cannabis Act. Then, they’d have to get the provinces and territories on board, which has been the hardest part. Tweaks can be made to the existing systems, but for any real change, Canada needs to rethink the idea of provincial and territorial monopolies and realize that there are other, more profitable ways to do things.

Most recently, President Trump continued his warpath on trade with Canada by announcing a 25% tariff on Canadian steel and aluminum, a further wrinkle in the uncomfortable conversation Canada is having with its largest trading partner. Having said that, the upside of this whole scenario is that it has started a deluge of discussion to once again consider removing domestic trade barriers—an idea that seems more and more blatantly obvious as the days go on and the trade threats continue.

Whether or not the cannabis sector will witness any positive side effects from these discussions and implementations remains to be seen, but making it easier for Canadians to get their hands on domestic products and services, especially at a time when Canadian trade is being threatened, seems more important than ever before.

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