August 27th, 2019 | Jim Hickey, Managing Director, Sterling Backcheck

Cannabis legalization in Canada

Cannabis legalization in Canada

Myths, perceptions, facts and what it means for your organization


The federal Cannabis Act (Bill C-45) went into effect on October 17, 2018 and made Canada the second country in the world, after Uruguay, to formally legalize the cultivation, possession, acquisition and consumption of cannabis and its by-product.

Under the Cannabis Act, only producers licensed by the government are allowed to grow the product. As of early October 2018, there were at least 117 such licensed producers ¹

As of January 2019, on-line sales of cannabis for recreational use were well underway across Canada, via the provincial or territorial governments. Most provinces also had storefront operations selling cannabis, either operated by the government or private enterprise.

Demand continues to be high, and licensed producers have found it challenging to meet the supply needs of retail stores. Black market operators are all too happy to fill in the void. According to the National Cannabis Survey conducted by Statistics Canada in the first quarter of 2019, 38% of users continue to obtain cannabis from the black market. Statistics Canada also reports that Canadian households spent almost $5 billion on illegal cannabis in 2018, compared to $743 million in legal sales.

Perceptions – Social Stigma

So how did the public react to the legalization? While the path to legislation has been long, public opinion is not something that will change overnight.

In an interview conducted by Reuters, Peter Donolo, political strategist at Hill + Knowlton and communications director for former Liberal Prime Minister Jean Chretien, states: “Canadians are accepting of legalization, but I don’t think they’re celebratory.”

Others have high hopes for Canada’s legal marijuana industry. A forecast by Cowen and Company financial analyst Vivian Azer indicates that retail sales of cannabis should reach C$3.6 billion ($2.7 billion) in 2019 (including taxes), according to the Reuters article.

Further, the Reuters article states, Azer forecasts illicit sales going down to 11% of the total sales by 2025 from 90% last year, and by 2025, recreational cannabis revenue in Canada will reach C$10 billion ($7.5 billion), while medical marijuana will total C$2 billion ($1.5 billion).

Medical cannabis is another aspect of the evolving industry, the landscape of which is changing with the approval from Health Canada. Funding for scientific research is increasing as is the inclusion in provincial health programs and the potential for coverage by insurers.


One of the biggest myths with the legalization of marijuana is that the black market will disappear, and all production will be controlled by the government. This is not the case, as the black market is thriving. The overwhelming majority of cannabis sales across Canada during the fourth quarter of last year were on the black market, some 79%, according to an article in The Star, citing data from . While that is better than the 90% tally in the previous quarter, legal pot has a long way to go before it outsells its illicit counterpart. According to Statistics Canada, it is 36% cheaper to purchase from an illegal dealer than at the legal store.

What does this mean for your organization?

Marijuana use is becoming easier by the day. Concurrently, details of the law are yet to be defined. Most provincial laws allow for consumption, purchase, possession and growth for individuals 19 years of age or older; then there are also a few reducing that age to 18. Each province limits the number of licenses. While there is also a legal limit set for driving, what remains to be defined is the legal limit in a workplace setting.

One would assume that laws similar to alcohol would apply, but unlike alcohol, there is currently no consensus on safe limits for consuming cannabis. The effects of cannabis on individuals vary widely depending on the THC content (the active ingredient in marijuana), frequency of use and other factors such as combined use with alcohol and other drugs. So, setting the acceptable threshold continues to be a challenge. Setting a zero-tolerance policy is also problematic as it jeopardizes those that use cannabis to relieve the symptoms of disability.

From the HR perspective, due to the vast growth and increased competition in the industry, there is a constant tug of war for talent. Companies are struggling to recruit and retain talent. They are having to discover new methods to find, hire and deploy outstanding talent. In this scenario, creating a workplace that addresses employee concerns helps establish a company culture that is both inclusive and empowering.

According to a survey completed by over 650 HRPA members, almost 46% of respondents believe that their current workplace policies do not address potential or new issues that could come about as a result of the legalization of marijuana (only 11% said they had a policy in place). The following were the top five areas of concern cited for the workforce in the HRPA survey:

  1. Employees operating motor vehicles
  2. Disciplinary procedures
  3. Decreased work performance
  4. Employees using heavy machinery
  5. Attendance

Next steps

It’s obvious that there are still quite a few unknowns when it comes to handling cannabis in the workplace. It seems like the biggest direction companies need to receive is from the government. Once a clear definition for what is considered “cannabis impairment” has been set, organizations can then use that to guide their policies.

However, one thing remains clear: internal policies need to be changed while leaving some room to play. You can always revisit policies, when they are built to remain compliant and encompass new regulations when required. In a recent blog published by Sterling’s US team, we discuss ways that your company’s employer policy can be drafted to include hiring protection as well as accommodation of authorized medical marijuana users. While some of the recommendations made are specific to each US state, general recommendations can be drawn on setting some ground rules that are of importance to your organization, your employees and your industry.

As you’re working on creating new policies, Sterling Backcheck can share industry best practices based on our experience. Do you have any questions? We would love to hear from you. Please contact us for information on background screening solutions geared for your own industry.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.