What’s Up in Weed

April 19, 2017

By: Andrea Hill

I am pleased to bring you this instalment of What’s Up in Weed, rounding up what’s currently happening in the cannabis industry in Canada and abroad.

It’s here!  Cannabis Act officially tabled

• On Thursday April 13, the federal Liberal government tabled Bill C-45, the long-awaited Cannabis Act, which proposes a framework for a recreational cannabis regime in Canada. The Act was presented by the federal Ministers of Justice, Health, Public Safety, and National Revenue, along with Parliamentary secretary Bill Blair.

• I wrote an op-ed for the Globe and Mail about it all!

• The Globe and Mail also wrote a terrific editorial, hailing the legislation as “a monumental move”, representing a “generational reform”. “It is, moreover, a loud declaration by Canada that the so-called war on drugs has failed,” said the Globe.  “What really matters is what Ottawa is doing in terms of harm reduction through regulation, and through tough criminal sanctions for impaired driving and selling to minors.  On that score, the proposed legislation seems to be on the right track.”  Yes, yes, and yes.

• The Act does not supercede the ACMPR – the current medical regime will remain in place for now, pending the federal government’s review once a recreational framework is well established.

• Under the Act, the federal government would continue to oversee the licensing regime. Licensed producers under the ACMPR would automatically be deemed to be licensed under the Act.  However, the Act contemplates a wide range of cannabis-related activities for which licenses and permits may be issued, suggesting that production could be separated from distribution and sale.

• We were promised strict legislation, and the Act delivers: directors, officers, agents, and mandataries can be held responsible for any violation of the Act by a corporate licensed entity, and the Act expressly states that no due diligence or mistaken belief defences are available.

• Only dried cannabis, cannabis oil, fresh cannabis, cannabis plants, and cannabis plant seeds are contemplated as being available to sell under the Act. The federal government has indicated that rules relating to other forms of cannabis, such as edibles, may be set out in regulations which are yet to come.

• We do know one thing about edibles, though: consistent with the recommendation of the Task Force on Cannabis Legalization and Regulation to prohibit products which mix cannabis derivatives with other intoxicants, the Act prohibits the sale of any form of dried cannabis, cannabis oil, or fresh cannabis that contains nicotine, caffeine, or ethyl alcohol. Interestingly, tobacco is not on this list of prohibited additives, although the Task Force suggested that it should be.

• The Act also gives the regulator expanded powers to keep track of the flow of product – through a cannabis tracking system – and to control the balance between supply and demand in the market by both refusing to issue a licence on public interest grounds, and by terminating applications without recourse for the applicants.

• Canadians will be able to grow up to four plants per household, and may grow them either indoors or in a yard or garden. The plants must not exceed one metre in height.  The federal government has suggested that “adults will want to take suitable precautions” to keep home-grown cannabis away from children, noting that those who choose to cultivate cannabis at their residences are still subject to the prohibition on providing it to youth.

• Canadians will also be able to alter cannabis at home – including creating edibles for personal use – provided no dangerous organic solvents are used in the process.

• Much of the picture of a Canadian recreational cannabis regime has yet to be filled in, because important economic aspects of the regime, such as tax structure and pricing controls, if any, have yet to be presented, and provincial governments would be responsible for legislating the details of distribution and retail sale. The Act does, however, set out four requirements of any provincial law authorizing the sale of cannabis:
  • vendors may only sell cannabis that has been produced by a person appropriately authorized under the Act;
  • vendors may not sell cannabis to anyone under 18 (although the provinces may set this age higher);
  • vendors must keep appropriate records respecting their activities in relation to cannabis; and
  • vendors are required to take adequate measures to reduce the risk of cannabis being diverted to an illicit market or activity.

• As part of its overhaul of laws relating to cannabis, the federal government has also introduced new criminal offences related to drugged driving. The threshold level of THC in one’s system that which would trigger consequences for drivers is proposed to be 2 nanograms per millilitre of blood within two hours of driving.

• The new law also recognizes the dangers of mixing cannabis with alcohol. Having 2.5 nanograms of THC per mL of blood along with a blood alcohol concentration of 50 milligrams of alcohol per 100 mL of blood, however, would carry mandatory penalties of $1,000 and escalating penalties for repeat offenders, including imprisonment.  Health Canada’s backgrounder has more details on those offences.  Currently, a person is considered to be criminally impaired if their blood alcohol concentration is 80 milligrams of alcohol per 100 mL of blood.

• Reaction to the proposed law has been mixed:
  • Bruce Linton, CEO of Canopy Growth Corporation, called April 13 “the first day of the rest of reality for Canada” in an interview with BNN. “I think what they’re setting out is a framework that we’re all going to evolve through just like we did for the medical system.”  Canopy issued a press release calling the draft legislation “a major step forward” and saying that it looked forward to continued discussion on the subjects of packaging and promotion.
  • Aphria issued a press release welcoming the draft legislation and lauding the “clear and enforceable rules” it contains, and repeated its call for a strict product-testing regime across the sector, the costs of which would be absorbed by licensed producers.
  • The Hydropothecary Corporation called the bill “a remarkable move by the Government of Canada to take a leadership role on the world stage on the question of legalizing marijuana” and observed that there are many questions still to be answered before the Act is passed.
  • However, some media outlets noted the sombre tone of the Act’s presentation and expressed surprise at its strictness. Maclean’s, for example, was critical of the body language and tone of cannabis legalization discourse adopted, while Vice Media noted the Act’s serious consequences of providing marijuana to minors – up to 14 years in prison.  Global News interviewed a criminal lawyer who suggested that proposed changes to impaired driving laws which would allow police to demand breath samples without any grounds for reasonable suspicion could face constitutional challenges.  During the initial press conference about the Act, Justice Minister Jodi Wilson-Raybould stated that she was confident of the constitutionality of mandatory roadside testing.

• The federal government has stated that it intends to bring the Cannabis Act into force no later than July 2018.

Andrea Hill is a corporate and securities lawyer with SkyLaw Professional Corporation in Toronto. Recognized as one of Canada’s leading legal experts in corporate cannabis law, Andrea writes for the Globe and Mail about cannabis laws, and works with a broad variety of clients in the cannabis space, including publicly-listed licensed producers of marijuana, licence applicants, and ancillary businesses such as tech companies focused on the cannabis industry. For more information about Andrea, visit the SkyLaw website here.

Subscribe to What’s Up in Weed

Click here or enter your email address below to receive our weekly blog by email: