Recreational Cannabis: Oh Canada!

Introduction

The Federal Government has set July 2018 as the target date for legalization of recreational cannabis in Canada. Until that time, recreational cannabis production, use and sale remains illegal.

Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts1 was introduced on April 13, 2017. Bill C-45 contains the draft Cannabis Act. The Cannabis Act sets out the framework for the regulation of cannabis for recreational use at the Federal level.2

According to the Federal Government, the objectives of the Cannabis Act are to prevent young persons from accessing cannabis, to protect public health and public safety by establishing strict product safety and product quality requirements and to deter criminal activity by imposing serious criminal penalties for those operating outside the legal framework. Further, the Cannabis Act is intended to reduce the burden on the criminal justice system in relation to cannabis. The highlights of the proposed Cannabis Act are discussed below.

Permitted cannabis products

The following forms of cannabis will be permitted for recreational use once the Cannabis Act comes into force:

  • dried cannabis;
  • fresh cannabis;
  • cannabis oils;
  • cannabis plants;
  • cannabis seeds; and
  • edible cannabis: the regulatory framework for cannabis edibles and concentrates will be made within 12 months of the Cannabis Act coming into force.

Products that combine cannabis with caffeine, alcohol or nicotine will be prohibited.3

Quantity permitted

Possession by adults of up to 30 grams of dried cannabis, or its equivalent, in a public place will be permitted.  Schedule 3 of the Cannabis Act sets out the quantity of other forms of cannabis that are equivalent to 1 gram of dried cannabis.

Adults will also be permitted to cultivate up to four cannabis plants at their dwelling-house. The four plant maximum applies to a dwelling-house regardless of the number of adults living in the house.4 Possession of a cannabis plant that is budding or flowering in a public place will be prohibited.5

Persons between the ages of 12 to 18 are prohibited from possessing or distributing more than 5 grams of dried cannabis.6 However, provinces will have discretion to prohibit possession of any quantity of cannabis by persons under age 18 if they choose to do so.

Minimum age

The sale of cannabis to persons under 18 will be prohibited. The provinces will be free to raise the age limit if they choose to do so.

Locations where cannabis can be used

Bill C-45 will amend the Non-smoker’s Health Act to prohibit the smoking and vaping of cannabis in federally regulated places and conveyances.

Packaging and advertising

The Cannabis Act will contain very stringent promotion and packaging restrictions that are aimed at protecting youth from being persuaded to purchase and consume cannabis.

Advertising restrictions will be similar to those placed on tobacco products. Promoting cannabis in a manner that associates a way of life that includes: glamour, recreation, excitement, vitality, risk or daring will be prohibited. Testimonials and endorsements will also be prohibited.7

Product labels will be permitted that contain factual and accurate information. Misleading claims or text or images appealing to children will be prohibited. Additionally, facilities used for sports or cultural events will be prohibited from advertising or displaying an element of cannabis or the name of a person that produces, sells or distributes cannabis.8

Licensing

Those seeking licenses to sell cannabis products must apply to the Minster of Health for a license.9 Applicants must be at least 18 and cannot be a non-resident of Canada or an organization incorporated or otherwise organized outside of Canada.

A license may be refused if the applicant has been convicted of an offence under the Controlled Drugs and Substances Act or the Food and Drugs Act or has violated another license restriction in the past 10 years.10

Criminal Code changes

The Criminal Code will be amended to decriminalize possession of fewer than 30 grams of cannabis. However, other criminal offences will be created with significant penalties including:

  • providing or selling cannabis to someone under 18;
  • possession by an adult over the possession limit;
  • possession of “illicit cannabis” which is defined as “cannabis that is or was sold, produced or distributed by a person prohibited from doing so under this Act or any provincial Act or that was imported by a person prohibited from doing so under this Act”;
  • Selling marijuana in contravention of the Cannabis Act; and
  • Producing cannabis that is not authorized by the Cannabis Act.11

Amendments related to drug-impaired driving, police powers and road-side oral fluid testing are proposed in Bill C-46, An Act to amend the Criminal Code (offences relating to conveyances) and to make consequential amendments to other Acts.12

Federal powers

The Cannabis Act provides that the Federal government will be responsible for licensing: production, testing, packaging, labelling, delivery, transportation, sale, possession and disposal. Security standards will be established as well as product standards, inspections and recall powers. Particulars of these items are expected to be in regulations that have not yet been released. The Cannabis Act authorizes the Governor in Council to make extensive regulations.

Significant provincial powers

The Cannabis Act provides significant power to provinces to regulate recreational cannabis use, subject to the minimum standards set by the Cannabis Act, including the power to:

  • Authorize the distribution, sale and retailing of cannabis;
  • Establish the minimum age for purchase and possession. The Cannabis Act sets out a minimum age of 18 to purchase cannabis, but provinces will be free to increase the minimum age limit;
  • Restricting where cannabis can be consumed;
  • Lowering the personal possession limit; and
  • Creating additional rules for growing cannabis at home.

Ontario’s proposed regulation of recreational cannabis

On September 8, 2017, the Ontario government announced its proposed plan to regulate recreational cannabis in Ontario.13 The key elements of Ontario’s plan includes the following:

  • Minimum age of 19 to use, purchase and possess recreational cannabis in Ontario;
  • Use of recreational cannabis will be prohibited in public places and in workplaces;
  • Cannabis will be sold in stand-alone government operated cannabis stores and through an online order service. Approximately 150 stores will be opened by 2020, 80 of which will be opened by July 1, 2019. Online distribution will be available across Ontario from July, 2018 onward; and
  • Illegal cannabis dispensaries are not, and will not, be legal retailers.

On December 12, 2017, the Ontario government passed legislation to implement their plan.14

Director and officer liability

If a corporation commits an offence under the Cannabis Act, the corporation’s directors, officers or agents who directed, authorized, assented to, acquiesced or participated in the commission of the offence can be held liable for the offence.15

Medical cannabis

Those who hold a licence to possess or produce medical cannabis under the Access to Cannabis for Medical Purposes Regulations (hereinafter “ACMPR”) will automatically be licensed to continue those activities with respect to non-medical cannabis.16 This is significant as it appears those licensed under the ACMPR will have the advantage of already being licensed when the Cannabis Act becomes law.

Pricing and taxation

The Cannabis Act does not provide information on how cannabis will be taxed or what its price may be. These will be important developments to watch in the coming months.

Conclusions

Bill C-45 provides the basic framework for recreational cannabis use in Canada. However, it still leaves many questions unanswered. The Cannabis Act provides significant discretion to the provinces to create their own regulations, subject to the minimum standards set by the Cannabis Act. Additionally, the Cannabis Act reserves significant discretion to be introduced in future regulations that have not yet been released. More clarity will be provided as the federal government releases the regulations that will be made under the Cannabis Act and once all of the provinces enact legislation. The Federal Government anticipates that the Cannabis Act will come into force in July 2018.

If you have questions regarding Bill C-45 or how it may be helpful to your company or cross-border plans, please contact Daniel D. Nauth at 416-477-6031 or dnauth@nauth.com.


1 To view the full text of Bill C-45 click here

2 The current status of Bill C-45 can be found here

3 Cannabis Act, section 34

4 Cannabis Act, section 12

5 Cannabis Act, section 8(d)

6 Cannabis Act, section 8(c)

7 Cannabis Act, section 17

8 Cannabis Act, section 22

9 Cannabis Act, section 17

10 Cannabis Act, section 17(7)

11 Cannabis Act, sections 8-15

12 http://www.parl.ca/DocumentViewer/en/42-1/bill/C-46/first-reading

13 https://news.ontario.ca/mag/en/2017/09/ontario-releases-safe-and-sensible-framework-to-manage-federal-legalization-of-cannabis.html

14 https://news.ontario.ca/mag/en/2017/12/ontario-passes-legislation-to-ensure-safe-transition-to-federal-cannabis-legalization.html

15 Cannabis Act, section 46

16 Cannabis Act, section 158

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