The government’s proposed pot packaging rules don’t give cannabis companies enough freedom to market their products, handicapping them against black-market competition, one business professor says.

Big tobacco, meanwhile, is crying foul over the draft guidelines, saying marijuana producers are being given more leeway than their cigarette-making counterparts.

With recreational marijuana to be legalized on Oct. 17, critics are taking aim at Health Canada’s initial guidelines for packaging and branding marijuana. The rules require cannabis companies to use plain packaging, similar to cigarettes, that displays a health warning on a bright yellow background.

The packages may display just one branding element – it can’t be larger than the government warning – along with the product’s name. The child-resistant packages must be opaque or translucent and use a single, uniform colour with a standardized font style.

“They’re making the packaging overly restrictive and that will have the side effect of making it harder for the legal product to compete with the illegal stuff,” said professor Michael Armstrong of the Goodman School of Business at Brock University.

Putting cannabis in plain packaging sends the signal to consumers that they’re paying for an inferior product, said Armstrong, who teaches a course on quality.

“We as consumers partly judge products by their appearance,” he said. “If we see a plain label, we think that’s kind of a low-end product.”

A spokesperson for Canada’s largest tobacco company says there’s a huge discrepancy between what’s being proposed for cannabis packaging and the rules for cigarette makers.

“We’re upset on a number of fronts,” said Eric Gagnon, head of corporate and regulatory affairs at Imperial Tobacco Canada, a subsidiary of British American Tobacco.

Gagnon noted cannabis companies will be allowed to put a logo on packaging, choose the format and add colour – things cigarette makers aren’t allowed.

Health Canada released this image displaying how recreational cannabis would be packaged under its proposed guidelines. (Health Canada photo)

Tobacco companies have blamed strict packaging rules, in part, for fueling the rise of contraband smokes.

“Like any other consumer good, if you remove the branding element and a way for consumers to differentiate between a legal and an illegal product, it’s very easy to copy a legal product,” Gagnon said.

The rate of contraband cigarette use has steadily spiked across Ontario – more than one-third of all cigarettes are now bought illegally – with Southwestern Ontario singled out as having the highest year-over-year increase, according to research commissioned by the Ontario Convenience Stores Association (OSCA), an industry umbrella group.

“The government has said publicly they want to take marijuana out of the hands of criminal organizations, but they seem to be OK to give the tobacco industry to illegal traffickers,” Gagnon said.

Armstrong says the tight restrictions on marijuana packaging also limits the producers’ ability to communicate information about their products with customers.

The labels will display quantitative information on things like THC content – the psychoactive compound in pot – but details about the drug’s effects, aroma and how it was grown won’t be allowed.

“That limits their ability to sell themselves,” Gagnon said.

Canada will become the first G7 country to sell recreational pot on Oct. 17, when it will be sold at LCBO-run stores and an affiliated online service in Ontario. Buyers at Ontario Cannabis Store locations, where all products will be kept out of sight, will have to show identification before they’re allowed into a separate part of the store to order product.