What’s Up in Weed

September 27, 2018

By: Andrea Hill

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

Hot off the press: Tips on Promoting Pot

I wrote about the restrictions on promoting cannabis for the Globe and Mail’s exclusive Report on Business – Cannabis Pro newsletter earlier this week.  Here’s the scoop:

Simply put, a “promotion” under the Cannabis Act is a representation which is intended to sell something, and which is made directly or indirectly in a way that is likely to influence someone.

Prohibitions on promotion feature heavily in the Act because one of its purposes is to protect public health and safety, in part by protecting people from inducements to use cannabis.

And these rules aren’t just for licensed producers, either: the promotional restrictions in the Act apply to everyone.  That include private citizens, corporations, and even the media.  Naturally, Health Canada has a variety of tools to enforce these rules, including monetary penalties and regulatory action.

That said, here are a few points from recent Health Canada guidance that you should know:

1. The responsibility for compliance falls on the regulated party. Practically speaking, this means that the buck stops with you, and you have to get it right the first time.  Reliance on representations by others will not be a defence, and Health Canada will not be providing examples to help light the way.  For example, a company would still be liable for a prohibited promotion even if the ad was developed by a third party agency which promised it was above board.
2. Compliance will be assessed in hindsight, on a case-by-case basis.  Health Canada will not provide “advance rulings” of draft material, and something that passed muster for someone else might not necessarily be compliant coming from you.  The purpose, content and context of a communication and its intended audience are examples of factors that Health Canada may take into account in considering whether a communication is offside the law.
3. Opinions and scientific reports may be permitted – so long as no one is being compensated for them.  The promotional restrictions in the Cannabis Act do not apply to a scientific report, commentary, or opinion (among other things) in respect of cannabis, so long as no consideration is given, directly or indirectly, in return.  However, these exemptions must be balanced with the fact that anything done with an intent to sell a product or service will be considered a promotion.  So an opinion or report which is animated by an intent to sell something (as determined by Health Canada, not by you) could still be prohibited.
4. Other legislation may apply – for example, labelling cannabis with an “organic” certification will invoke a host of rules around how that term may be applied.

Certain exemptions from the promotional restrictions in the Cannabis Act are available for brand-preference promotion (which includes promotion of cannabis by means of its brand characteristics) and informational promotion (which includes factual information about cannabis).  For example, one such exemption allows for telecommunications where the responsible person has taken “reasonable steps” to ensure that the promotion cannot be accessed by a young person.  What constitutes “reasonable steps”, and which other considerations you should be taking into account, however, are excellent questions for your lawyer.

Another important consideration is that no cannabis-related promotion, even if it is otherwise compliant, may be done in a manner that evokes “a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.”  How this striking requirement will be applied in practice has yet to be seen.

The challenge for anyone looking to tell the public about their cannabis company, therefore, will be to develop effective messaging that threads the various needles of these rules.

• Yesterday afternoon, the Ontario government confirmed that it will allow private-sector retail sale of cannabis through dispensaries, to be in operation by April 1, 2019.
• The news follows weeks of reports that the new provincial government would depart from the previous government’s plan to sell all cannabis through a subsidiary of the LCBO.
• Online sales of recreational cannabis will still be conducted starting October 17, 2018 through the website of the Ontario Cannabis Store, operated by the Ontario Cannabis Retail Corporation (OCRC).  Online purchasers must be at least 19 and will need to sign for their packages upon delivery.
• In addition to running online sales, the Ontario Cannabis Store will be the sole wholesaler for private dispensaries in the province.  Pricing details have not been released yet, although the OCRC has circulated a draft wholesale supply agreement. Having a single wholesaler likely means that licensed dispensaries will be faced with similar wholesale prices.
• Few details about the dispensary licensing process are available yet.  Ontario cabinet ministers Vic Fedeli and Caroline Mulroney, in announcing the news, indicated that the provincial government would consult with businesses, consumer groups, public health organizations, municipalities, law enforcement and indigenous communities in order to get the model right.
• The delay in opening retail dispensaries will also allow Ontario to learn from other private dispensary models in Alberta, Saskatchewan, and Manitoba, Fedeli said.
• Fedeli also had a message for those running dispensaries today, all of which are illegal: “Stop. Stop now.”  The government “won’t want to do business with people running an illegal business”, he said.
• Patrick Ford, the president of the Ontario Cannabis Store, issued a statement saying it welcomed the direction from the provincial government.  He also indicated that the Store’s website was “complete”, and that they would have more information soon about supply agreements and province-wide delivery.

What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission. 

If you have any questions or would like further information, please contact us. The SkyLaw team would be delighted to speak with you.

© Copyright SkyLaw 2017. All rights reserved. SkyLaw is a registered trademark of SkyLaw Professional Corporation.

Subscribe to What’s Up in Weed

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