Canadians celebrated the legalalization of recreational marijuana use in October 2018. (Getty Images)

Cannabis sponsorships, currency rates are two factors that could boost business in Canada

The Canadian live entertainment market packed houses across the country over the past year. Venue operators say there are two pressing issues that could turn uncertainty into tailwinds further boosting the marketplace: the slow rollout of Canada’s cannabis regulations, products and advertising since legalization last October, and persistent pressures from a weak loonie (slang for the Canadian dollar) that is costing venues big bucks.

CANNABIS INFUSION?

Canada legalized cannabis last October but regulations regarding cannabis-infused products and marketing remain unresolved.

Edibles and other cannabis products such as beverages won’t hit store shelves until mid-December at the earliest. Meanwhile, it’s illegal to smoke indoors at public venues, so facilities have extended their no smoking policies to include marijuana as well as tobacco and e-cigarettes.

Several venue operators told VenuesNow they are waiting to see how regulations are implemented that oversee advertising and marketing cannabis products before including the new category as a money maker.

“We’ll pay close attention to it. It’s legal in this country and not an insignificant industry, the trick is of course it’s in its real infancy,” notes Nick Eaves, chief venues and operations officer, Maple Leaf Sports & Entertainment, which owns and operates Toronto’s Scotiabank Arena. “Everyone needs to understand it better to see what may be appropriate.”

Kevin Donnelly, senior vice president of venues and entertainment, with Bell MTS Place and the Burton Cummings Theater in Winnipeg, Manitoba, says some folks are putting a toe in the water. “You can have awareness campaigns that are thinly veiled ads, ‘Don’t be high and drive!’ signs sponsored by a retailer, but not a ‘Come to my shop and buy,’” he said. “There are workarounds being discovered but it would be better to be clear and overt. It’s an ad, it’s a legal product like beer…the industry and regulations haven’t caught up with where the mindset is at with the public.”

Even after December’s expected introduction of more cannabis products such as edibles, Donnelly added, “We’re not looking to add THC-infused beverages to the product list at the bar.”

Cheech and Chong, who have made a career out of “high” comedy and pot jokes, are looking to create a buzz with their current tour across Canada. The duo will play Budweiser Gardens in London, Ontario, on September 28. 

“They’re funny guys, I’m sure there will be a lot of jokes and humor around pot usage and the laws,” said the venue’s general manager, Brian Ohl, adding, “All that (cannabis-related product), even CBD oil, we can’t sell it. We’re not licensed by the government; the number of licenses is limited. You can’t set up a tent in the parking lot and sell it legally.”

RATE WORRIES

While venues are taking a wait and see approach on generating revenue from cannabis marketing initiatives, executives say they are taking a hit from the greenback’s continued strength against the Canadian dollar.

The exchange rate is little changed from a year ago but as of Aug. 21 the loonie was about 25% lower against the U.S. dollar than five years ago when they were near parity. The current level makes it more expensive for Canadian venues to make guarantees for some U.S. acts or pushes prices higher to lure the performers across the border.

Scotiabank’s Eaves noted, “There’s no question that a weaker Canadian dollar versus the U.S. dollar puts pressure on our business. Even though we pay performers in Canadian currency, they evaluate that into the U.S. dollars they’re accustomed to receiving. That’s an uncontrollable headwind. The fact we’ve attracted the acts we have in spite of a weak Canadian dollar is further affirmation of the ongoing strength of our market.”

That may be the case for Canada’s largest market in Toronto, but it’s a different story in smaller markets. 

“We typically see a rebound from this level,” said Donnelly. He said that when the loonie is this weak against the U.S. dollar, American artists often opt to stay stateside: “Acts can play a second night in Minnesota instead of picking up a new market in Winnipeg. A Canadian tour for some artists means Toronto, Montreal, and Vancouver. When (the U.S. dollar’s) weaker, more people come to Winnipeg and Edmonton, a stronger (Canadian) dollar means more opportunities for smaller markets.” 

 

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