Canada’s legalization of recreational cannabis – legislation introduced

In the 2015 federal election, the Liberal Party of Canada ran on a platform that included legalizing recreational cannabis. Following the election, a task force was created to report on legalization and regulation, and a report was delivered in November 2016. On April 13, 2017, Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (the Cannabis Act) was introduced, largely implementing the task force’s recommendations. In a nutshell, it decriminalizes the possession of certain amounts of cannabis and makes allowance for production for commercial use.

The bill introduces a system of licensing and permitting for the production, distribution and sale of “licit” cannabis; any cannabis produced, distributed or sold other than as permitted in the Cannabis Act or any provincial act is considered “illicit.” Good news to those who invested resources to submit applications for licensing under the medical marijuana regime (formerly the MMPR, now the Access to Cannabis for Medical Purposes Regulations [ACMPR]): the bill’s transitional provisions provide that any licence issued, or application in process under that regime will be deemed a licence or application under the Cannabis Act when it comes into force.

The bill does not speak to the mechanics of distribution. Instead, it provides that a person may possess, sell or distribute cannabis if that person is authorized to do so under a provincial act. The bill does note, though, that a person can only sell cannabis under a provincial act if the cannabis was produced by a person authorized under the Cannabis Act to produce for commercial purposes. Thus, we should expect additional information from the provinces regarding the model for sale of cannabis.

Of particular interest to some is whether or not any provincial legislation will allow distribution of medical cannabis by pharmacies – a hot issue when medicinal cannabis regulations were first introduced (currently, medicinal cannabis can only be distributed through the mail). The bill proposes that separate access to cannabis for medical purposes be maintained, and the ACMPR will continue to be in effect. It remains to be seen how, if at all, the soon-to-come provincial legislation will affect the distribution of medical cannabis.

Highlights of the bill are set out below

Licensing

The Cannabis Act provides for a licensing and permit scheme for the production, testing, packaging, labelling, sending, delivery, transportation, sale, possession or disposal of commercial cannabis. Although details will be governed by yet-to-be-developed regulations, it appears the process will be similar to that currently in place under the ACMPR. Requirements will likely relate primarily to safety and security, and provide product standards for cannabis sold.

As set out above, the bill provides that several types of licences and permits issued or applied for under other acts and regulations at the date the new act comes into force will be deemed to be issued under the Cannabis Act. These include producers licences, import and export permits, and security clearances issued under the ACMPR as well as narcotic dealers licences for those that deal in cannabis under the Narcotic Control Regulations.

It is proposed that cannabis can only be imported or exported pursuant to a licence, and only then for medical or scientific purposes.

What can be sold

Only cannabis produced pursuant to a licence can be sold, and products containing cannabis in combination with nicotine, caffeine or alcohol will be prohibited. The government anticipates that on the coming into force of the Cannabis Act commercial products will be limited to fresh and dried cannabis, cannabis oil, seeds and plants. Further regulation may allow for the sale of edibles and other products; however, these are not anticipated to be in place initially.

Packaging & labelling

Packaging and labelling requirements will be determined primarily by yet-to-be-developed regulations. The bill provides that packaging must not be false, misleading or deceptive, and it must also not be appealing to young persons, contain testimonials or endorsements, depict persons or characters, or associate a product with certain lifestyle imagery.

Advertising

The bill permits information-type promotion, restricted to factual and accurate information about cannabis products (ingredients, THC and CBD levels, etc.). Information enabling consumers to tell the difference between brands will also be permitted. Promotion is only allowed where it will not be seen by young persons.

There are proposed restrictions on advertising relating to sponsorships, endorsements and testimonials, price, depiction of persons or characters, lifestyle advertising, and advertising in a way that could be appealing to young persons. The Cannabis Act provides for regulation-making powers and regulations could affect what is permitted or require the inclusion of specific information such as health risk information.

Tax

It is expected the government will amend the Excise Tax Act to tax cannabis. The task force report suggested taxing higher-potency THC at a higher rate, and using revenue generated from cannabis sales for drug prevention, education and treatment goals.

Next steps

The Government of Canada has set a target date of July 2018 for a recreational cannabis market; however, Bill C-45 has only just been introduced and must be passed by both houses. Further, many aspects of the regulatory regime will be determined by regulations that need to be drafted and published. There are therefore no guarantees as to if, when, or how cannabis will be legalized and regulated. Until the Cannabis Act is in force, existing laws remain in place and the provisions discussed above are subject to change.