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‘Warning: Regular use of cannabis can increase the risk of psychosis and schizophrenia.” This caution is highlighted in fluorescent yellow on marijuana packaging by Health Canada and sets out what Justin Trudeau’s Canadian government believes — that cannabis is harmful to your health.

So why, on October 17, 2018, did Canada legalise it for adult recreational use, becoming the first Western country to do so?

I travelled to Canada to see how legalisation was panning out six months into their “experiment”.

I was keen to understand how they have balanced public safety and revenue priorities — namely their twin competing aims of cautiously protecting public health whilst aggressively seeking to shrink their $6 billion cannabis black market and replace it with a viable legal one.

I arrived to promising signs: queues of buyers snaked around the corner of trendy Queen Street West, weeks after Toronto’s first brick and mortar cannabis store, Hunny Pot, had opened on April 1.

“Hi, my name is Shannon, I’ll be your budtender today,” said the shop assistant. Shannon, 30, a former nurse, sported a “don’t worry, it’s legal” T-shirt and wielded an iPad to process orders.

Hunny Pot has a high-tech, minimalist design, like an Apple store, with wall-mounted digital menus itemising the exotically named strains of cannabis flower on offer — such as Ghost Train Haze and White Shark — as well as listing the corresponding potency, which ranges up to 27 per cent THC (the intoxicating ingredient).

The Canadian government has permitted each of its 10 provinces to take their own approach to licensing. Ontario is the most cautious, deploying a lottery system to allocate just 25 retail licences and with online sales wholly restricted to the government-run Ontario Cannabis Store.

Nova Cannabis, just down the road from Hunny Pot, was the third brick and mortar store to open in Toronto, and I pitched up to find the owner, Heather Conlon, looking shell-shocked in her first week of business.

The 50-year-old was one of 58,000 people to enter the licence lottery, and her win has turned her into an instant multi-millionaire.

“My husband and I run a locksmith so running a cannabis business is totally new to us,” she said.

Her marketing strategy was to offer customers a “black market buster” pre-rolled joint for a heavily discounted price of CAD $5.95 (£3.60).

“Our competition is not the other legal shops like Hunny Pot, it’s the prolific number of illegal dispensaries that operate without the same restrictions we have,” said Conlon.

“They can undercut us on price because they don’t pay tax. It’s unfair. I hope they will make arrests and shut the lot of them down.”

But rogue retailers argue it was their defiance over several decades that caused Trudeau to rethink the cannabis laws in the first place and they are angry they have been denied a share of the legal Ontario pie. Other provinces have been more inclusive, allowing illegal operators that complied and closed down before October to successfully re-apply for legal status.

I visited CAFE, to outward appearance a regular coffee shop offering croissants and cappuccinos at the front counter, but actually standing for “Cannabis and Fine Edibles”.

Having shown ID at the back counter, I entered a rear door to a hidden illegal cannabis emporium.

This room within a room was packed with customers queuing to buy cannabis-infused edibles and vape concentrate, both illegal and currently unavailable at licensed stores, but due to be legalised in October.

There was also a much wider range of flower buds on offer, at prices 40 per cent cheaper than Hunny Pot and Nova.

The packaging was colourful and enticing, much like in Colorado, and in stark contrast to the plain white pharmaceutical-type containers of the legal pot. Critically, there were no cautionary health warnings on display, a sure sign the product came from illegal grow houses.

Police had raided the previous week, but CAFE had simply restocked and reopened the following day, using an arcane legal loophole to defy the authorities in a cat-and-mouse game.

Rogue dispensaries may offer more product choice and at cheaper prices, yet Canadians are nevertheless gradually changing their buying habits.

So far, around 30 per cent of recreational users have switched to legal sources in the first six months, according to a government-mandated National Cannabis Survey, though that still leaves illegal outlets with 70 per cent of the market.

Bill Blair, former chief of Toronto Police and now the minister responsible for administering the Cannabis Act, said that despite black market vendors engaging in an unforeseen price war, things were on track.

“We’ve shifted over CAD $250 million (£150 million) from organised crime to the legal economy in six months, which is still pretty good,” he said. “We expect 75 per cent of cannabis to be sourced legally by the end of 2020.”

But Blair acknowledged that legal outlets had struggled to compete because of an unexpected shortage of supply, so I headed to a cannabis cultivation facility called Canveda to find out why.

Michael Arnkvarn, executive vice-president of Canveda’s parent company, MPX International, showed me around their new 12,000 square-foot warehouse, guarded by an alarmed, barbed-wire fence.

We donned surgical-type garb — shoe covers, gloves, gown, mask and hat — to avoid contamination of the precious “green gold” and headed into the facility.

The tour took in their eight grow rooms, each a forest of cannabis waiting to be cut, packaged and sold.

“This unit can produce CAD $12 million (£7.2 million) a year, but we haven’t been able to shift a dollar of it yet,” he said. Why?

“We’ve got our production licence, but we’re waiting for Health Canada to audit us and issue our sales licence. That’s why there’s such a shortage out there — lots of licensed producers are in the same position — stockpiling in anticipation of their sales licence getting issued soon. It’s very frustrating. But once the bottleneck is resolved, the shortage will quickly become a glut.”

Canada’s cautious approach — putting health before profits — has drawn plaudits from around the world. Anne McLellan, chairwoman of the legalisation taskforce and Canada’s former minister of health, public safety and of justice, said it was early days and the country was still in transition.

“Our aims were clear — legalise cannabis but discourage its use. We have austere packaging, a public education campaign and a roll-out that delays legalisation of edibles by at least a year.”

Industry insiders believe it is a matter of time before Health Canada brings in regulations to limit THC potency. So far, it hasn’t happened, perhaps because survey data shows that under-age and high frequency use has remained stable since legalisation. This is despite general use rising from 14 per cent to 18 per cent, with 646,000 people mostly over the age of 45 trying it for the first time.

“The reason for the spike appears to be baby boomers,” said McLellan. “This was not something we expected, but it seems they are more comfortable to buy now because it’s legal. And a good many seem to be using cannabis to replace their reliance on opioids.”

She laughed. “As a former government minister once responsible for enforcing the criminalisation of cannabis, I took a hard line. But now I think, if more cannabis means less opioids, is that not a good thing?”