The Canadian government created a medical marijuana monopoly by issuing only one license allowing a firm to operate. For 13 years, Prairie Plant Systems Inc. was the sole supplier of medical marijuana to Health Canada, which is the Canadian government agency that oversees the program. The government then eliminated the monopoly, creating a competitive market. The licensing law changed in 2014, when other firms could receive licenses and start providing medical marijuana. By early 2015, Health Canada had received more than 1,200 applications for licenses. While many applications were unsuccessful, significant entry occurred rapidly. The industry changed from being a monopoly to being competitive within a year. By early 2018, more than 100 licensed producers of medical marijuana had entered the market. Additional producers of marijuana were poised to enter after the Canadian government passed legislation to legalize recreational marijuana in 2018.
The Canadian government created a medical marijuana monopoly by issuing only one license allowing a firm to operate. For 13 years, Prairie Plant Systems Inc. was the sole supplier of medical marijuana to Health Canada, which is the Canadian government agency that oversees the program. The government then eliminated the monopoly, creating a competitive market. The licensing law changed in 2014, when other firms could receive licenses and start providing medical marijuana. By early 2015, Health Canada had received more than 1,200 applications for licenses. While many applications were unsuccessful, significant entry occurred rapidly. The industry changed from being a monopoly to being competitive within a year. By early 2018, more than 100 licensed producers of medical marijuana had entered the market. Additional producers of marijuana were poised to enter after the Canadian government passed legislation to legalize recreational marijuana in 2018.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Based on the attached case:
Discuss the pros and cons of the creation of a medical marijuana monopoly and later legalization of medical marijuana by the Canadian government in terms the
Transcribed Image Text:Mini-Case
The Canadian Medical Marijuana Market
The Canadian government created a medical marijuana monopoly by issuing only one
license allowing a firm to operate. For 13 years, Prairie Plant Systems Inc. was the sole
supplier of medical marijuana to Health Canada, which is the Canadian government
agency that oversees the program.
The government then eliminated the monopoly, creating a competitive market. The
licensing law changed in 2014, when other firms could receive licenses and start
providing medical marijuana. By early 2015, Health Canada had received more than
1,200 applications for licenses. While many applications were unsuccessful, significant
entry occurred rapidly. The industry changed from being a monopoly to being
competitive within a year. By early 2018, more than 100 licensed producers of medical
marijuana had entered the market. Additional producers of marijuana were poised to
enter after the Canadian government passed legislation to legalize recreational
marijuana in 2018.
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