Cannabis

With the legalization of cannabis, opportunities and legal challenges arise. The full-service team at Stewart McKelvey is suited to assist industry entrants and seasoned participants with a full skillset. We understand more than regulation: we understand the business, from financing to production to corporate governance and beyond.

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Our Work

• Advise cannabis cultivation and production companies in license applications.
• Assist license holders with prospectus exempt issuances of securities to finance the construction of cannabis cultivation and production facilities.
• Advise cannabis companies in regulatory matters relating to issuances of all classes of licenses.
• Act for private lenders and public banks in secured loans involving cannabis facilities and cannabis licenses as collateral.
• Draft receivables purchase agreements on behalf of cannabis producers.
• Act for purchasers and vendors of commercial facilities for conversion into cannabis production facilities.
• Negotiate commercial lease for cannabis production facilities on behalf of landlords and tenants.
• Draft terms and conditions for cannabis packaging machinery producers and facilitate secured purchases of cannabis machinery lines and production equipment.
• Negotiate co-packing and production agreement for cannabis and derivatives among holders of standard processing licenses.
• Draft supply agreements for domestic and international supply and purchase of cannabis.

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Federal Legislation

The Cannabis Act and related regulations create a legal and regulatory framework for controlling the production, distribution, sale and possession of cannabis in Canada. The Act:

• restricts youth access to cannabis;
• prohibits promotions that are designed to encourage youth to use cannabis;
• imposes quasi criminal penalties on people who break the law;
• establishes strict product safety and quality requirements;
• reduces the burden on the criminal justice system;
• provides for the legal production of cannabis and creation of licenses;
• allows adults to possess and access regulated, quality-controlled, legal cannabis.

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What Does The Act Legalize?

• Possession, sale or distribution of cannabis pursuant to the Act and provincial legislation.
• Sale of marijuana for adult use by licensed businesses.
• Consumption of cannabis in locations authorized by local jurisdictions.
• Purchases by Canadians 18 and over through mail or in provincially regulated retail stores.
• The Cannabis Act also created new criminal offences for the sale of cannabis to youth — with penalties of up to 14 years in prison and prohibits “illicit” cannabis of unlicensed producers, sellers and distributors.

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What Types Of Activities Does The Act Regulate?

• The Act regulates importation, exportation, production, testing, packaging, labelling, sending; delivery, transportation, sale and possession or disposal. Each of these cannabis associated activities require a license.¹^,²

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Atlantic Canadian Legislation

The federal government controls medical cannabis, licenses and criminal offences. Provincial legislation clarifies important points in any particular province such as:

• How adult use cannabis can be sold in the province.
• Additional licenses required for storefronts.
• Traffic violations.
• Minimum legal age.

Nova Scotia

1. The Cannabis Control Act, SNS 2018, c 3
2. The Cannabis Retail Regulations, NS Reg 203/2019
   • The Act only permits the Nova Scotia Liquor Corporation to sell cannabis for adult use. No private sellers are permitted except for medical cannabis.
   • 19 is the legal age to use, buy, grow or possess cannabis in Nova Scotia.
   • Federal license holders are permitted to sell to other business holders (wholesale) and to the Nova Scotia Liquor Corporation.

Prince Edward Island

1. The Cannabis Control Act, RSPEI 1988, c C-1.2; and
2. The Cannabis Control Regulations, PEI Reg EC575/18
   • govern areas of provincial jurisdiction, primarily for recreational cannabis use
     • address possession, storage, distribution, purchase, consumption, etc.
     • The Act prohibits youth under 19 from possessing, consuming, or growing cannabis
3. The Cannabis Management Corporation Act, RSPEI 1988, c C-1.3
   • establishes a framework for socially responsible management of the distribution and sale of cannabis and related products; and promotes responsible consumption of cannabis and related products in PEI
4. The Cannabis Management Corporation Regulations, PEI Reg EC460/18
   • sets out the retail distribution and sale of recreational cannabis by PEI Cannabis Management Corporation through the PEI Cannabis stores and online stores

New Brunswick

1. The Cannabis Control Act, SNB 2018, c 2
   • governs the use of recreational cannabis in New Brunswick. It also sets the minimum legal age for buying cannabis at 19 and prohibits consumption outside of a private residence, restricts young people’s access to cannabis, sets criteria for the possession and use of cannabis, and establishes penalties for drug-impaired driving
2. The New Brunswick Liquor Control Act, RSNB 1973, c L-10
   • Amended to include that NB Liquor would operate recreational cannabis retail locations in the province through a subsidiary
3. The Cannabis Management Corporation Act, SNB 2018, c 3
   • establishes the crown corporation responsible for cannabis in New Brunswick. The Corporation will be responsible for regulating various aspects of the recreational cannabis industry such as:
     • prescribing products for distribution and sale
     • arranging agreements with service providers; and
     • establishing an end-to-end tracking system for cannabis purchase and sale
4. The Cannabis Education and Awareness Fund Act, SNB 2018, c 4
   • establishes a fund from the revenues of the Cannabis Management Corporation which will be used for education and awareness programs concerning prevention of cannabis abuse, responsible use, and strategies to reduce adverse health effects of cannabis use. The fund will also sponsor research on cannabis, and implement responsible use policies

Newfoundland and Labrador

1. Cannabis Control Act, SNL 2018, c C-4.1
2. Cannabis Control Regulations, NLR 93/18
3. Cannabis Licensing and Operations Regulations, NLR 94/18
   • In contrast with other Atlantic provinces, Newfoundland allows cannabis to be sold by licensed private retailers, though distribution and regulation will be run by the province’s crown corporation, Newfoundland and Labrador Liquor Corporation
   • Non-medical cannabis can only be legally purchased at stores licensed through the Newfoundland and Liquor Corporation (NLC) or online through NLC’s web portal

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Insights

• Health Canada announces legislative review of Cannabis Act
• Health Canada provides draft guidance on personal production of cannabis for medical purposes
• Final cannabis edibles, topicals and extracts regulations released
• Changes to Canadian cannabis licensing application process

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¹ Client update: The Cannabis Act – Getting into the Weeds
² Government of Canada, “Cannabis Legalization and Regulation”
³ https://www.gov.nl.ca/cannabis/legislation/