Cannabis Act Focuses on Health and Safety Over Building Commercial Framework
The Canadian government tabled their long-awaited Cannabis Act on Thursday. It’s no accident that they announced this on the second-best day in the calendar to bury a news story. While watching the news conference the discomfort with this file inside the liberal government was unmistakable. Prime Minister Trudeau says he’s not doing this for pot smokers… and that’s obvious when you read the legislation. But the thing is, that’s who he promised it to. Who else cared back in fall of 2015?! So now, like the drunk who on a dare at a party finds himself on the roof of the house about to jump in the pool, Trudeau has backed himself into a corner on this file and had to either climb down as he did on electoral reform, or jump off the roof and hope he lands in the deep end. He’s chosen to jump, but he’s landing on the provinces and has left most of the hard work to them, while imposing a roughly 15 month timeline that will be very difficult to achieve
The government is trying to avoid looking soft, and the tone has changed from “legal and fair access for millions of casual users” and “the war on drugs didn’t work” to “keeping it out of the hands of children and the clutches of organized crime”. The buzz phrase is now “regulated and restricted”. After 18 months and gazillions of $ we have more questions than answers, and hopeful entrepreneurs still must live in a wait and see mode, unless they want to join the 1000+ applicants to be a Licensed Producer of cannabis. The big questions such as where and when you can buy it, and who can sell it, plus myriad questions regarding other business opportunities remain unanswered and will for some time.
Cannabis Act Still Restrictive
Sometime around July 1 of next year Canada’s 94-year prohibition will end, and it will be the third country in the world where it will no longer be illegal to possess, use, give away or grow small quantities of cannabis. It will still be a highly-restricted market and the penalties for operating outside the system will be severe. To many, this is prohibition with a twist and they have a point as the limits seem arbitrary. Adults will be able to carry or possess up to 30g of dried cannabis or equivalent (about $200 worth). If you have more you could go to jail for 5 years less a day. If you have cannabis you obtained illegally (including if you grew more than your four plants) you could go to jail for 6 months and pay a $5000 fine. And, if you’re the neighbourhood pot dealer operating outside the system, where 100% of current recreational users buy it, you can go to jail for 14 years. Overarching all of this are the sometimes-insidious property seizure and forfeiture rules which apply here as well, putting your house at risk if both you and your spouse are complicit.
Under the Cannabis Act, green thumbs will face a limit of four personal plants, which can’t be more than 1m or about thigh-high. As you can see they do grow a bit larger if you let them. If you get caught with substantially more than the 4 plants, you could face that same 14-year maximum. This is an arbitrary limit not based on any science or evidence. Colorado has an arbitrary limit too. Six. Per resident. With no household cap, and no height restriction. But what do they know?
Too Much Police Discretion
For minor transgressions, the police will have the option of ticketing you, which may on the face seem reasonable. However, it logically translates to a mountain of discretion in the hands of the police. This isn’t the system people envisioned and creates an opportunity for abuse. We don’t need police deciding which of our citizens go to jail or have criminal records simply for growing or possessing a plant. Selling to kids is different, and should be severely punished. The law can be fashioned that way without being overly restrictive on the activities of otherwise law-abiding Canadian adults.
Driving under the influence of cannabis will be considered impaired driving as it is today. There are challenges with measuring that impairment because – unlike the almost universally-accepted 0.08% limit on blood alcohol – no objective chemically-determined standard for cannabis impairment exists. Police will have to be trained in recognition of impairment and you can expect many challenges to the planned roadside testing regime. At the same time as the changes to cannabis laws, the law on alcohol impaired driving is being toughened such that a police officer will have the ability to demand a breath sample from any driver any time. This is aimed at catching the least dangerous offenders and is almost surely to attract charter challenges of its own.
The federal government is leaving distribution up to the provinces. Sellers and distributors will have to be authorized to sell cannabis by provincial/territorial authorities, but nothing has been said about how open or restrictive that will have to be. Provinces could potentially make it available for sale between Noon and 1 PM on Wednesdays, during full moons only. Interestingly there is no prohibition of co-locating alcohol and cannabis sales which is widely understood best practice. You can expect most provinces to add that restriction.
Cannabis customers will have to have their bud handed to them by a staff person and no self-service displays or cannabis vending machines will be allowed. No other information about the size, number or nature of the retail distribution chain will be known until the individual provinces announce their plans
What happens if the provinces fail to enact legislation or create the necessary regimes, or do so inadequately remains to be seen and you can expect any perceived lack of fair access to be a magnet for charter challenges. There will be mail order access through federally licensed growers for those without no other options. All of this and the expected dearth of producers on the day of legalization suggest that the illicit market is likely to remain for some time after implementation.
Are There Business Opportunities in the Cannabis Act?
For businesses wanting to get in the game legally right now, there will only be the licensed producer route for the time being, and the products are limited to cannabis plants, flower, seeds and oil. You want cookies? Too bad! Infused Dark chocolate for after your meal. No Way! Cannabis oil based “personal lubricant”? What do you think this is? Colorado? One wonders if the task force even went there, or California or Washington state. The big surprise when adult-use was legalized in those places was the popularity of the derivative – primarily edible – cannabis products. But it’s not just edibles. There are topical creams and sprays, and tinctures, many of which are used medically (medical patients won’t have special status. No cookies for them either!). You also won’t be allowed to mix cannabis with alcohol, caffeine or nicotine, which is probably a good thing until more study is done.
These all represented opportunities for small, innovative, craft manufacturers to build brands, expertise and products that could be world leaders. While Canadians can’t (legally) access these, competitors south of the border are building these very things, taking away any potential advantage Canada might have had in this sub-sector. The lack of inclusion of the ancillary and derivative products is one of the big disappointments of this Cannabis Act.
No Advertising to Kids. And No Sex!
Those who produce products under the Cannabis Act will have several restrictions on packaging, advertising and other important branding elements. Communication of price/availability information, or of anything young people might find attractive, or using any kind of endorsement or real or fictional character, or any kind of “lifestyle” promotion such as glamour, luxury, risk, daring or even sex are all out. The government was smart enough to make the rules apply inside and outside Canada.
The only options for brand preference promotion are direct mail sent to over 18’s, or advertising in a place where young people are not allowed to be (where would that be?). At point of purchase, advertising will be limited to price and availability. Cannabis related brands won’t be able to get naming rights on sports facilities, or sponsor events. You won’t see the CannGrowth Centre any time soon. This is still a highly restricted promotional environment and if the licensed producers, and the retailers for that matter, can’t advertise there remains risk of a “race to the bottom” where producers compete on merely strength and price.
No Plain Packaging Requirement
While much feared “plain packaging” rules aren’t part of the Cannabis Act, packaging and displays face similar restrictions to promotion regarding use of lifestyle or under 18 messaging, or using endorsement or likenesses. No claims regarding efficacy or performance can be made. This could get worse, because of the next point…
Minister has huge discretion.
The interpretation of the Cannabis Act and the details of the rules are left to the Minister to establish. Types and numbers of licenses, costs, taxes, etc. are all unknown and always subject to change. They can eliminate or limit various classes of license. Applicants and key personnel must pass a security clearance and Health Canada can demand virtually any information about an applicant. Applicants can be rejected if the Minister believes that granting a license would cause harm to public health or safety, or result in diversion. Anyone who has been convicted of a drug-related offence in the past 10 years can’t be an applicant (ouch Mark Emery!).
Will the Cannabis Act Succeed?
If you define success as adults having access to legal cannabis without repercussion, then you can’t argue the Cannabis Act will enable that. Mr. Trudeau will have kept his promise, technically. But in terms of its two stated primary objectives, failure is likely. Kids in Canada are among the highest users of illicit cannabis. Moving some of this market to government controlled shops won’t change a thing. The only way to make it more difficult for kids to access cannabis is to truly eliminate the black market using the “carrot” of choice, quality, and easy access to lure recreational users away from their current preferred brands and dealers. By choosing a public health over a commercial framework, this legislation uses the “stick” approach almost exclusively which is surprising given that it has been in place for a century and is an abject failure.
“Organized Crime” is Not the Problem
The continued reference to “organized crime” by Bill Blair and others is quite frankly, insulting to the informed citizen. The average person’s picture of organized crime likely differs greatly from the definition of a “criminal organization” in the Criminal Code. Section 467.1 (1) defines it as “a group, however organized, composed of 3 or more persons…”. The clear majority of people currently growing and selling illicit cannabis are otherwise law abiding people, but according to Blair are “gangsters” and technically members of organized crime. This is ridiculous. This constant talking point panders to the ill-informed, is insulting, and unhelpful.
Missing: Pardons, Research, Hemp, Craft Production, Taxes
Why are hemp regulations a thing?
We make rope and clothes out of it (among other things). We also make rope and clothes out of nylon. Are nylon regulations a thing? Hemp got caught up in the prohibition frenzy 100 years ago primarily due to the laziness of politicians and the greed of William Randoph Hearst. That it remains restricted today is ridiculous. Industrial hemp (that containing small amounts of psychoactive elements) should be unrestricted.
Pardons for Minor Cannabis crimes
The government has said nothing yet about pardons for the hundreds of thousands of people with criminal convictions for what will soon be legal. Righting only part of the wrong is immoral. Pardons for all non-violent and minor offences are an important part of the admission that prohibition has been wrong. This is the part of these things that governments too often get wrong, and pressure should be put on politicians to fix this omission.
Research of Many Kinds is Vital
There is no mention of support for research. The Israelis are 20 – 30 years ahead of us in this area. There are almost no studies of cannabis’ underway in Canada. All manner of research must be supported and funded by various levels of government. Outside the Cannabis Act they have talked about making funds from cannabis related taxes available for research among other things and this promise must be kept as there are too many unknowns about this plant because of the restrictions on studying it until now.
Taxes Must Be Right
The rates of taxation and any price regulation are still unknown but must be done right otherwise the illicit market will remain viable. Washington state learned that lesson the hard way and made adjustments that the various levels of government here no doubt know about. Whether Canada repeats the mistake remains to be seen.
For a full text of the proposed legislation of the Cannabis Act click here.