As a premiere Canadian public affairs firm, and one with particular
sector expertise in medical marijuana and the opening of the new legalized
market in Canada, we are pleased to provide you with our summary and analysis
of today's tabling of the Cannabis Act and the materials provided by government
in support of the new legislation.
Today will be treated as a major milestone in the evolution of the social fabric of our nation, and indeed it is in many ways when one thinks of the rise of social acceptance of marijuana use for both medical and recreational purposes. The issue has essentially gone from a fringe issue to political promise and now a major step in fulfilling that promise in less than a decade. However, today is really the beginning of legalization. This is the stake in the ground as it were, and the start of negotiations - with Opposition parties, the Senate, stakeholders for and against the opening of the recreational market, and most importantly with the provinces and territories which have more potential downside to manage than the Federal government does in this new marketplace.
The costs of managing distribution, establishing and regulating retail, policing the new laws - all rest with the provinces and territories. This has caused no small amount of discomfort and political concern, despite the prospect of tax revenue on what was previously an illegal and black market profit centre.
The Cannabis Act focuses heavily on public safety and security, quality control, new enforcement measures for drugs as well as alcohol inebriation behind the wheel, all while creating the environment for an entirely new sector of our economy and recreational consumption. However, many questions remain unanswered. If we look at this as enabling legislation, there is much room for further defining and refining the next steps through regulation. There will be debate on the Bill, committee work, lobbying by all interested factions, Senate review, development and consultation on the regulations and a new, and intense focus on working with the provinces and territories to develop a workable distribution and retail environment that avoids the mistakes of issues past (alcohol, tobacco).
Below is an overview of the announcement today, the bills tabled, the technical briefing and public documents that came with it.
Summary
Earlier today, the Liberal government tabled legislation to end the prohibition on cannabis and regulate it for recreational use. This was a major Liberal campaign promise from 2015, and has been a long-awaited campaign promise at that. A new Ipsos poll, conducted for Global News, found that 61% of Canadians surveyed said they believe pot should be legalized for recreational use, with that number rising to 73% among millennials (ages 18-34).
Remember, Cannabis will remain illegal as the Bill moves through the legislative process. If it is approved by Parliament, the Bill is intended to become law no later than July 2018.
Legalization comes with two new bills: one to regulate the recreational use, sale and cultivation of marijuana (Bill C-45), and a second that strengthens impaired driving measures (Bill C-46).
Bill C-45 allows people to possess up to 30 grams of dried or fresh cannabis and sets the minimum at 18 years of age, though provinces can set a higher legal age if they choose. Consumers can grow up to four plants at home or buy from a federally licensed retailer. Marijuana grown at home cannot be sold at all. Dried and fresh cannabis and cannabis oil will be available first, with edible products to become available later. The provinces also get to set the rules around where cannabis will be sold. Packaging of cannabis products will also be prescribed through Federal regulation.
Bill Blair, who was appointed to lead the marijuana file, said there is no plan to promote the use of pot. Blair stressed that buying, selling or using marijuana outside the regulatory regime will remain a serious criminal offence with stiff penalties.
In a press conference, earlier today after the Bill was tabled, Blair said Canada consulted broadly with other jurisdictions that have legalized marijuana, including Colorado and Washington states, in order to learn what worked for them and what did not.
Blair stressed that Canada's approach is different in that it is based on a public health framework over a commercial basis. "It has focused entirely on how to reduce the social and health harms associated to cannabis in its production, distribution and consumption," Blair said during the press conference. "And that focus enables us to avoid many of the pitfalls that other jurisdictions have experienced, where the focus was primarily on maximizing revenue."
Further, the Liberal government is framing the decision around the fact that Canada’s current approach to cannabis is not working. According to a government news release from today, the current approach has “allowed criminals and organized crime to profit, while failing to keep cannabis out of the hands of Canadian youth. In many cases, it is easier for our kids to buy cannabis than cigarettes.”
Currently, it is illegal to buy, sell, produce, import or export cannabis unless it is authorized under the Controlled Drugs and Substances Act and its regulations, such as the Access to Cannabis for Medical Purposes Regulations. The current program for access to cannabis for medical purposes would continue under the new Act.
The following are highlights from today’s announcement:
Prohibiting Access to Youth
· Access to cannabis will not be allowed to those under 18 years of age, unless your province sets a higher age limit
· The Act also seeks to “protect young people from promotion or enticements to use cannabis”
· The proposed Act would prohibit:
1) products that are appealing to youth;
2) packaging or labelling cannabis in a way that makes it appealing to youth;
3) selling cannabis through self-service displays or vending machines;
4) promoting cannabis, except in narrow circumstances where the promotion could not be seen by a young person; and
5) false, misleading, or deceptive advertising, sponsorships, testimonials and endorsements or other forms of promotion that could entice young people to use cannabis, and would establish limits on product branding.
· Penalties for violating these prohibitions include a fine of up to $5 million or 3 years in jail, or both.
· The Act would create two new criminal offences, with maximum penalties of 14 years in jail for:
1) giving or selling cannabis to youth; and
2) using a youth to commit a cannabis-related offence
· The Government is also investing in a robust public education campaign to inform youth of the risks and harms of cannabis use. In Budget 2017, the federal government committed $9.6 million over five years to a comprehensive public education and awareness campaign and surveillance activities.
· The Act seeks to avoid criminalizing youth and avoid subjecting them to the lifelong consequences of a criminal record: individuals under 18 would not face criminal prosecution for possessing or sharing very small amounts of cannabis (up to 5 grams). Any violations of the Act by youth would be subject to the Youth Criminal Justice Act. Provinces and territories would have the flexibility to prohibit the possession of any amount of cannabis by youth, thereby permitting police to seize any cannabis in the possession of a youth.
Rules for Adults
· Adults can: possess up to 30 grams of dried legal cannabis or equivalent in non-dried form when in public;
· Share up to 30 grams of dried legal cannabis with other adults;
· Purchase dried or fresh cannabis and cannabis oil from a provincially regulated retailer;
· Grow up to 4 cannabis plants per residence (not per person) for personal use, from licensed seeds or seedlings supplier, with each plant not to exceed 1 metre in height; and
· Make legal cannabis-containing products at home, such as food and drinks, provided that dangerous organic solvents are not used in making them
Importing and Exporting Cannabis
Under the proposed Cannabis Act, it will remain illegal to import into Canada, or export from Canada, cannabis and cannabis products without a valid permit issued by the Government of Canada. As is the case today, permits may be issued for certain limited purposes: medical and scientific cannabis or industrial hemp.
Roles of the Provinces and Territories
Provinces and territories can license and oversee the distribution and sale of cannabis, which will be subject to minimum federal conditions. They could also tailor certain rules in their own jurisdictions, and enforce them through a range of tools such as tickets. These rules may include:
· Licensing the distribution and retail sale in their respective jurisdictions, and carrying out associated compliance and enforcement activities;
· Setting additional regulatory requirements like setting a higher minimum age or more restrictive limits on possession or personal cultivation;
· Establishing provincial and territorial zoning rules for cannabis-based businesses;
· Restricting where cannabis may be consumed; and
· Amending provincial and territorial traffic safety laws to address impaired driving due to cannabis such as providing for 24-hour licence suspensions for adults or zero tolerance for young drivers.
A key takeaway here is that the decisions around where Cannabis can be sold is entirely up to the provinces. For instance, one province may decide to allow for the sale of Cannabis where alcohol is sold whereas another may not. The precise design of retail environments is left up to provinces, and Bill C-45 sets out a few minimum conditions that provinces must follow:
1) Only cannabis obtained from federally licensed producers can be sold;
2) Selling to young people under 18 years of age is prohibited; and
3) Provinces and territories must develop a system that authorizes distributors and retailers
Drug-impaired Driving
Another bill was introduced today, Bill C-46. The first part of the proposed legislation would ensure that a robust drug-impaired driving regime is in place before cannabis legalization occurs. The second part of the proposed legislation would reform the entire Criminal Code transportation regime to create a new, modern, simplified, and more coherent system to better deter drug and alcohol-impaired driving. The legislation would also create three new offences for having specified levels of a drug in the blood within two hours of driving. The penalties would depend on the drug type and the levels of drug or the combination of alcohol and drugs:
The levels would be set by regulation. For THC, the proposed levels are:
Both hybrid offences would be punishable by mandatory penalties of $1,000 for a first offence and escalating penalties for repeat offenders such as 30 days imprisonment on a second offence and 120 days on a third or subsequent offence.
The proposed legislation would enact some new and higher mandatory minimum fines, and some higher maximum penalties. Currently, the mandatory minimum penalties for impaired driving are:
· First Offence: $1,000 mandatory minimum fine
· Second Offence: mandatory 30 days imprisonment
· Third Offence: mandatory 120 days imprisonment
The proposed legislation would increase the mandatory fines for first offenders with high blood alcohol concentration readings:
· A first offender with a reading of 80 to 119 mg of alcohol per 100 ml of blood would be subject to the current mandatory minimum fine of $1,000
· The mandatory minimum fine for a first offender with a reading of 120 to 159 mg of alcohol per 100 ml of blood would be raised to $1,500
· The mandatory minimum fine for first offender with a reading of 160 mg or more of alcohol per 100 ml of blood or more would be raised to $2,000
The proposed legislation would also reform the entire Criminal Code for transportation-related offenses as follows:
· Repeal and replace all transportation offences with a modern, simplified and coherent structure;
· Authorize mandatory alcohol screening at the roadside where police have already made a lawful stop under provincial law or at common law;
· Facilitate investigation and proof of blood alcohol concentration;
· Increase certain minimum fines and certain maximum penalties;
· Eliminate and restrict defences that encourage risk-taking behaviour and make it harder to enforce laws against drinking and driving;
· Clarify Crown disclosure requirements; and
· Permit an earlier enrolment in a provincial ignition interlock program
Mandatory Alcohol Screening
The proposed mandatory alcohol screening provisions would authorize law enforcement officers who have an “approved screening device” at hand to demand breath samples of any drivers they lawfully stop, without first requiring that they have a suspicion that the driver has alcohol in their body. The result of a test on an approved screening device would not, by itself, lead to a charge. It would lead only to further investigation, including a test on an approved instrument at the police station.
The government claims that research shows that many impaired drivers are able to escape detection at check stops, and that this authority would help police detect more drivers who are over 80 mg of alcohol per 100 ml of blood and reduce litigation regarding whether or not the officer had a reasonable suspicion.
This new provision is a major shift and will likely be questioned from a constitutionality perspective. "I will, as I do with all justice pieces of legislation, be tabling a charter statement. I am confident of constitutionality of mandatory roadside testing," Justice Minister Jody Wilson-Raybould said today. "This is not a device or a tool that doesn't exist in other places in the world. In fact, mandatory roadside testing in many countries has significantly reduced the number of deaths on highways. I think that is of paramount concern," she said.
Packaging and Advertising
The proposed legislation provides authority to government to bring forth regulation on what Cannabis packaging should look like, and all details will be set out in federal regulations.
Rules around advertising will remain to be seen. However, at the technical briefing today it was mentioned that rules will be similar to that of Tobacco products, which is awaiting the outcome of Bill S-5, An Act to amend the Tobacco Act, Non-smokers Health Act.
Taxation
Minister of Finance will bring in controls regarding Cannabis. There is nothing currently in the Cannabis Act regarding how Cannabis will be taxed.
Conclusion
There is much that will remain to be seen. The next few months will be very eventful on the cannabis front as the Act is debated, regulations are developed and provinces and territories develop their potential distribution and retail schemes. The Liberals have stated their desire that the Bill become law no later than July 2018.
We look forward to continuing to work with you through the coming challenges and like you, are excited to play a direct role in shaping a brand new marketplace that combines the best of what our clients need, good public policy and good politics into a positive, safe environment for recreational marijuana companies and stakeholders to flourish to meet the existing market demand, the future prospects and international opportunities that come from the Canadian experience. We look forward to discussing the ramifications of the legislation with you over the coming days and working on strategies together to ensure the final version and its regulations work well for all. For more information please contact us at (416) 961-6611, or:
Brett James (Principal, Federal Lead) bjames@sussex-strategy.com
Paul Pellegrini (President) ppellegrini@sussex-strategy.com
Joseph Ragusa (Principal, Ontario GR) jragusa@sussex-strategy.com
Rodrigue Gilbert (Senior Associate, Federal) rgilbert@sussex-strategy.com
Morva Rohani (Research Associate, Federal and Provincial GR) mrohani@sussex-strategy.com
Liam Daly (Associate, Federal) ldaly@sussex-strategy.com
