The Canadian cannabis industry is preparing for potential change in government while also managing a current federal government that is largely in limbo as the Liberals choose a new leader. 

A change in government could mean a significant reset and subsequent delay in any ongoing issues the industry has been trying to communicate to the federal government, says the CEO of one cannabis company. 

Realistic expectations

Emma Andrews, the CEO of Nextleaf Solutions, which manufactures cannabis extracts like oils, capsules, and vape pens, says she is preparing for a three to five-year time period following the upcoming election before the industry can expect to see changes to the kind of big-ticket items industry have focussed on over the years. These include excise tax reforms and changing the THC potency limits, such as the 10mg THC limit for edibles.

In an online “fireside chat” on Friday, January 24, Andrews spoke with Shadd Dales, host of The Dales Report, which covers the publicly traded side of the industry. When asked where she sees the industry going in the coming years, especially with an expected change of government soon, Andrews said she is captaining the ship at Nextleaf by focusing on realistic expectations.

“You cannot hope for the best in this industry and be, you know, skating towards where you hope the puck is going to go,” Andrews told Dales. “You have to be very clear about your immediate opportunity, yet have kind of an opportunistic lens about where things could shift. But you can’t count on that. I’ve seen businesses fold for that reason.

“So for us it’s understanding that yes there’s a leadership change. There’s likely to be an election soon which would potentially change the party in power, which means that there’s a delay or prolonged ability for that [future new] cabinet to evaluate anything that’s coming from industry in regards to requests for excise tax relief or just to listen to us as an industry, so I’m projecting at least kind of a three to five-year timeline before we can ever anticipate any momentum, change, or regulatory reform that could have dramatically affected the industry, whether that’s THC potency limits, whether that’s excise tax, but a patience-game to let the new cabinet sit, settle, assess, and follow protocol.”

Navigating proposed regulatory changes

The current shift in government could also mean more immediate challenges for the sector, with a large package of proposed regulatory changes expected to be finalized later this year. A package which is now in potential limbo with the possibility of an early election.

If the election is called after the summer, it’s possible the package could still go through—if not, it could be delayed well into the next government. The recent discussion around harmonizing the excise tax into one single national stamp would also likely be, at best, seriously delayed by this current upheaval in government with Trudeau stepping down. 

If the Liberals do not form government again later this year, the shift could also mean a change in priorities, including spending, which could have an immediate and long-term impact on the industry. Less funding for agencies connected to cannabis, namely Health Canada’s various cannabis-touching files and departments, can mean longer processing times for applications, amendments, or general correspondence. 

For Hugo Alves, the CEO of Auxly Cannabis Group, the current situation means lowering expectations for any immediate changes while also preparing to work with any possible incoming ministers, whether there is an early election call or one later in the year as scheduled. 

Even if the Liberals manage to hold off an early election call, Alves says he sees the federal government focusing most of their attention on US/Canada relations, with cannabis-industry issues taking a back seat. 

“The way I see it is if there is a vote of no confidence that passes, then you’re really into a kind of caretaker government pending a May election, and I would expect there to be very little activity outside of Canada US/relations issues,” explains Alves. “If the vote of non-confidence doesn’t pass for whatever reasons, and there’s an October election, then I still think what you’ll really get is US/Canada relations kind of items dominating where the government spends their time.” 

“I just don’t see the government focussed on anything other than US/Canada relationships,” he continues, “and resolving government leadership until a new government is installed. So that’s the way we are planning it. Just business as usual. In terms of the way Auxly operates, I don’t think we’ll change anything until there’s a reason to do so.”

Future optimism

On the retail front, Omar Khan, Chief Communications and Public Affairs Officer at High Tide Inc., which owns and operates the largest chain of cannabis stores in Canada, says he is optimistic that if the next government in Canada is Conservative, they will be more receptive to industry concerns than the current Liberal government. 

While Khan emphasizes that as a retailer, they engage primarily with provincial governments rather than the federal government, he says his optimism about a potential Conservative federal government is informed by his experience with various conservative governments at the provincial level. 

“I am cautiously optimistic, based on my experience dealing with provincial conservative governments, that they’ll take a constructive approach when dealing with industry,” says Khan.

“We do generate taxes for governments at different levels and, more importantly, we generate a lot of employment, which also generates even more taxes. And I think they understand that. 

“So I’m cautiously optimistic that if there is a federal Conservative government… that they’ll take a similar approach,” he continues. “They are not going to shout from the rooftops ‘rah rah cannabis’, but I’m cautiously optimistic that if they do get in, they will want to work with industry because I think they understand that we are job creators, we’re contributing immensely to Canada’s GDP, a lot of middle-class families, their livelihoods depend on this industry surviving and thriving. And I think they’ll understand that.”

With that said, Khan also acknowledged, like Andrews and Alves, that a potential change in government can mean a big reset in terms of getting new ministers up to speed on industry issues and getting enough wind in the sail for cannabis-industry related issues with these various ministries. 

“Whenever there’s a change of government, even when there’s a change of ministers, things tend to slow down, they need to be briefed and get up to speed.”

That will include issues like excise reform, he adds, but there are other excise-related issues the industry can focus on. 

“In terms of tax reform, I think the hope would be there would eventually be some tax reform that would correct the windfall that has gone to the provincial and federal governments at the expense of industry, but in the interim, you can look at more low hanging fruit.”

“Maybe in the interim you would look for lower hanging fruit, including how those tax proceeds could be used to help the cannabis industry and promote the objectives of the (federal) Cannabis Act.”  

The Canadian Parliament is currently prorogued to March 24, 2025.

Prime Minister Justin Trudeau announced on January 6 that he would step down as soon as the Liberals elected a new leader, who will be announced on March 9.

NDP Leader Jagmeet Singh has said he would vote to topple the sitting government in late March once the House returns following the Liberal leadership race. Other opposition leaders have shared similar sentiments, but an early election is not guaranteed, and it’s possible that Singh will hold off. 

Under Canadian law, the next election is set for no later than October 20, 2025, but an election called in March or April could lead to an election as early as May.

Related Articles

What could an early election mean for the cannabis industry and pending regulatory changes?

December 23, 2024

Once a prominent topic, cannabis has taken a back seat in this year’s federal election

September 17, 2021

Could a new Conservative government in Canada address cannabis industry concerns?

January 8, 2025