Feds spell out ‘strict legal framework’ for cannabis sales, regulation

Feds spell out ‘strict legal framework’ for cannabis sales, regulation
Torys LLP lawyer Eileen McMahon says 'In effect, we’ve gone from prohibition to strict regulation.
The federal Liberal government has released its long-awaited suite of bills that will legalize recreational marijuana consumption and sales in Canada as of July 2018, promising a “strict legal framework” for the production, sale, distribution and possession of marijuana.

The bills were introduced in the House of Commons on Thursday by Justice Minister Jody Wilson-Raybould, public safety minister Ralph Goodale, health minister Jane Philpott and foreign affairs minister Chrystia Freeland, with a press conference scheduled for later in the afternoon.

Highlights of the bills include restricting sales to people age 18 and older (although provinces and territories would be able to increase their own minimum age); allowing adults to possess up to 30 grams of dried cannabis, and to grow up to four cannabis plants for each residence; restricting any cannabis possession, production and distribution outside the legal system, including imports or exports without a federal permit; and continuing the existing program for access to medical marijuana as it currently exists. Selling marijuana to minors would be a criminal offence.

Eileen McMahon, chairwoman of intellectual property and food and drug regulatory practices for Torys LLP in Toronto, said she wasn’t surprised by the details of the announcement.

“It’s common in a regulated environment for a lot of the details to appear in the regulations as opposed to the draft legislation,” McMahon told Legal Feeds, adding that the government had signaled that a lot would appear in the regulations, which are planned to be published in final form before July 1, 2018.

“In effect, we’ve gone from prohibition to strict regulation,” she said. “It will be a regulated supply chain.”

McMahon’s colleague, Cheryl Reicin, said she thought the ministers were smart to discuss the strict regulation of the sale, possession and use of the drug, including a crackdown on impaired drivers. “Politically, it offers assurances,” said Reicin, who is chair of the life sciences group at Torys and based in Toronto and New York.

Although import and export of cannabis are prohibited under the draft law, Reicin notes that “We’re developing a significant market in Canada around cannabis funding — it’s the most robust in the world.” Israel, she says, “has been on the forefront of medical marijuana” and has been coming to Canada for its cannabis funding. “Canada’s showing some real leadership.”

Although the government provided some answers today, there remain many unknowns. For example, says McMahon, what will be the social impact of a province or territory raising the age limit from what is set out in the legislation? “It means the provinces and territories, etc., need to be mindful now of these issues” in preparation for the regulations coming into effect.

Reicin says there are “just a slew of risks and unknowns and high expectations.” On the one hand, the federal government is following through on its plan to enact the legislation quickly; but how will sales be taxed? Will producers be able to advertise their brand? (The government is “signaling plain packaging,” McMahon comments.) Will lower-cost providers, such as in South America, eventually be able to enter the Canadian market? Will the United States eventually change its legislation to allow Canadian providers to sell there?

“If Canadians are first to market, they might get the expertise and the benefits,” Reicin says. And current licence producers of medical marijuana may have an advantage going forward, as they have already been operating in a regulated environment.

“There is reason to believe that those already licensed in the medical marijuana space are going to reap the benefits of that licensure,” says Emily Larose, a partner in Cassels, Brock & Blackwell LLP’s litigation group and a member of its Life Sciences team in Toronto.

“While Health Canada may well direct resources towards speeding up the licensing process to meet the recreational market, existing licensed growers and producers who have established growing operations, production facilities, distribution networks and financing will likely have a valuable head start.”

And is the July 1, 2018 deadline for bringing marijuana into the market as a recreational drug realistic? McMahon thinks so. “From everything I’ve seen, [the government is] working very hard towards that timeline.” The draft legislation “makes it clear that we’re moving from prohibition to tight regulations,” governing recalls, quality of products, licensing and more, she says, adding that it is comforting to be receiving clarity.

The Task Force on legalizing marijuana for recreational use identified a number of issues that need to be addressed to ensure public confidence in the safety and viability of marijuana legalization, Larose notes. “To address this, federal and provincial governments are going to have to focus on things like restricting access by minors and the implications for impaired driving, product advertising, product labeling and educational programs.”

Although Larose doesn’t rule out the July 2018 deadline being met, she calls it “optimistic.”

“Even with the introduction of draft federal legislation, a lot remains to be sorted out by way of federal regulations, rules and procedures,” she says. “There is also a lot of work for the provinces to take on in terms of development and implementation of rules regarding sales and distribution. Direct mail purchasers from licensed producers may well be possible by July 1, 2018, but legally operating storefront purchases could take a little longer depending on how quickly the provinces are able to move.”

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