Client Update: The Grass is Always Greener in the Other Jurisdiction – Provincial Acts and Regulations under the Cannabis Act

By Kevin Landry

New Brunswick’s Working Group on the Legalization of Cannabis released an interim report on June 20, 2017. It is a huge step forward in the legalization process and the first official look at how legalization might look in a particular Province. It is also a useful springboard into this article discussing Provincial acts under the Cannabis Act.

As discussed in our last articles, The Cannabis Act – Getting into the Weeds, and Cannabis Act regulations – now we are really getting into the weeds!, the Cannabis Act permits provinces to make their own rules when it comes to legalization as long as their legislation meets four criteria set out in subsection 69 of the Cannabis Act:

• Only marijuana legitimately produced under the Cannabis Act may be sold;

• Cannabis may not be sold to persons under the age of 18;

• Provinces are required to keep appropriate records respecting activities in relation to cannabis; and

• Provinces must take adequate measures to reduce the risk of cannabis being diverted to an illicit market or activity.

This means that, similar to alcohol, Canada might soon have nuanced sets of rules governing recreational marijuana in each province – adding to the complexity of legalization efforts.

Some provinces see it as an economic opportunity, while some communities are concerned with the enforcement costs (e.g. impaired driving). Many provinces have stated that they have begun to consider their legislative response and have sought consultation; at this point, only New Brunswick has released an interim report outlining how legalization may look despite the looming legalization date of July 1, 2018 (or sooner).

The devil, as always, is in the details. The following are some of the issues that the Provinces have to consider when formulating their legislative response:

Provincial Decisions on Marijuana Legalization

Age. The Cannabis Act permits the sale of recreational cannabis to persons 18 and older. Provinces have discretion to raise the age if they desire. The Canadian Medical Association (the “CMA”) supports a legal age of 21 for marijuana use, with quantities and potency of marijuana restricted for those under age 25. New Brunswick’s Working Group on the Legalization of Cannabis interim report has recommended a legal age of 19 citing consistency with alcohol laws as a strong influencer of the decision.

Where can Marijuana be Sold? Although the Cannabis Act says that promoting and selling cannabis to persons under 18 is prohibited, Provinces may decide other aspects of the sale of cannabis, such as: who is permitted to sell cannabis, the hours that sellers can remain open, and whether sales are going to be handled by government owned institutions such as provincial liquor commissions or private enterprises. New Brunswick’s Working Group on the Legalization of Cannabis interim report has recommended a crown corporation model over private and mixed public/private sales models. The decision is not surprising given Marijuana’s potential tax revenue is immense, and given that Ontario annually makes $1.8 billion in tax revenue from liquor sales; provinces understandably see immense revenue opportunities in marijuana.

Price. A controversial and polarizing issue: how much will legal marijuana cost to buy? Hailed as a government cash cow in Colorado where government tax revenue from marijuana eclipsed $200 million in 2016, there is significant interest from government finance departments in charging a premium for this new commodity. However, opponents argue that the higher the price, the more likely an illicit market will continue to exist. New Brunswick’s Working Group on the Legalization of Cannabis interim report also contemplates preventing bulk purchase discounts and incentive programs.

Tax Breaks. Will some jurisdictions be giving tax breaks or incentives for producers, sellers, or wholesalers to set up shop? None have said so thus far. The federal government also has not yet revealed the exact taxation scheme for recreation marijuana, but a 2016 report by CIBC World Marketscorrectly points out that there is a “sin-tax” placed on similar goods such as alcohol or cigarettes.

Tourism Hotspots. 18 million tourists visited Canada in 2015, a majority of whom were Americans. With potential cannabis tourism dollars on the line, which provinces or municipalities are willing to reinvent themselves as the Amsterdam of the North? Some would argue, that the front runner is Vancouver which is already host to a variety of cannabis culture hot spots such as the New Amsterdam Café – a smoke friendly establishment operating since 2000. While not every province has been as accepting of marijuana in the same fashion as British Columbia, there might be newfound temptation for provinces to permit smoking cafés or other amusements in order to entice visits from tourists.

Unified or Secular approaches to Governance? There is talk in the Atlantic Provinces of creating a unified approach to cannabis regulation across the Atlantic region, or so said the newly elected Premier of Nova Scotia, during the May election campaign. A unified regime might lead to licenses that span several provinces, which would be enticing for start-ups; however, as evidenced by personal property and security regimes, there are challenges in keeping consistency across jurisdictions even if the intent is to have uniform laws.

Enforcement. Increased costs associated with policing and governing legalized marijuana, particularly impaired driving offenses, are front of mind for some municipalities like Charlottetown. Police will require training in order to test for marijuana impairment, and police forces will require new equipment and procedures, but paying for it will eat into the budget of many already strained communities who, as of yet, have no claim to the revenues created by legalized marijuana.

Public Health. Reducing the harms and risks of legalized cannabis is paramount to most Provincial governments. Targeted public education ads and focused school education programs are both contemplated in the New Brunswick Working Group on the Legalization of Cannabis interim report.