Legalization is less than a month away and restaurants are still trying to figure out exactly where cannabis fits into the food industry.

Written by Jordana Colomby

With legalization just around the corner, questions about how cannabis will weave its way into everyday life are at the top of everyone’s mind. Each province is already discussing how cannabis will be sold, where it can be consumed, and how much it will cost. However, restaurant owners as a group are left wondering how legalization will affect their businesses, especially if they have a liquor license.

Bay Street Bull talked to Chad Finkelstein, a partner at Toronto-based Dale & Lessmann, about the challenges and opportunities facing the food industry in the upcoming year.

What legal hurdles will restaurants face once cannabis is legal?

I think that the first challenge that comes to everyone’s mind is legal liability. What happens if somebody serves alcohol to a customer who is under the influence of a cannabis product? It’s certainly not a new issue, but it’s on everyone’s mind. Establishments that are licensed to serve alcohol have always had a special relationship to customers, under the law. They have this special duty to make sure nobody is over-served. Staff aren’t specifically trained to recognize if someone is under the influence of cannabis in the same way they’re trained to notice signs of drunkenness. I fear that the restaurant or bar which serves someone the drink that pushes them over the edge when they’re already under the influence of cannabis will become the scapegoat.

How can restaurants use cannabis legalization to their advantage?

Once edibles are legalized in 12 months, new opportunities will arise for restaurants.

I don’t think restaurants will be able to incorporate cannabis-infused products into their menus, but there is an opportunity for restaurants with well-known brands to develop their own prepackaged cannabis-infused products. I think we’ll also see lots of opportunities for chefs, whether it’s prepackaged edibles or private events, to use cannabis to their advantage.

 Will legalization have major impacts on the existing food and alcohol industries?

In states like Colorado, California and Washington, where cannabis is legal, alcohol sales have dropped by as much as 14 percent. A number that high suggests people are actually substituting cannabis for alcohol, and from a restaurant’s perspective, that’s a lot of lost sales. You might think that in states where people are consuming cannabis instead of alcohol food sales would go up, but food sales have actually dropped. So, restaurants are losing on alcohol sales because people are coming in under the influence of another substance, but then aren’t buying more food as a result.

What opportunities will there be to franchise the sale of cannabis?

There are opportunities to franchise in provinces that will allow privatization of retail sales. These opportunities are most interesting in B.C. and Alberta, given the size of the provinces. Even though they allow for privatization, they also have restrictions in the form of a cap on the number of licenses any one person can get. The idea is to not have one or two enormous players dominate the market so smaller businesses have an opportunity to participate. In Ontario, we don’t know yet. But, I’ve heard that we’re likely to see draft regulations soon and it seems as though the province is leaning towards the Alberta model.