Authored By: Matt Maurer & Whitney Abrams

www.mindengross.com

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Canada

The federal government has politically committed to bringing the Act into force by no later than July, 2018. Between now and then, the federal government will be drafting regulations wherein much of the new law will be encoded.

Additionally, there will be much work for provincial and municipal governments across Canada over the next year and a half. The federal government has left important aspects of legalization such as retail sales, distribution and consumption to the provincial and municipal governments. Provinces and municipalities will also have the opportunity to alter some existing benchmarks set out by the Act, including the ability to raise the minimum age for consumption and the ability to lower the maximum amount that can be possessed in public.

Upon coming into force of the Act, adults over 18 in Canada will be allowed to legally purchase, possess, share, cultivate and alter limited amounts of cannabis for recreational means. Until the Act passes through the House of Commons and the Senate and is declared into force, cannabis for non-medical purposes remains illegal.

The Act is dense, spanning 226 sections and six schedules. Below are some of the highlights of the Act.

Possession, Sales and Distribution

Adults will be permitted to possess up to 30 grams of dried cannabis, or the equivalent amount in fresh or oil form in a public place. A public place includes any place to which the public has access as of right or by invitation, any motor vehicle located in a public place or any place open to public view. Possession of a fresh cannabis plant in public is strictly prohibited.

Accordingly, 30 grams will be the maximum amount that someone can purchase at one time from an authorized distributor. Despite this federal maximum, the provinces and territories are free to lower that number through their own legislation if they wish to do so.

The distribution, sale, and consumption of cannabis and cannabis accessories will be governed by the provinces and territories. Sales of cannabis and cannabis accessories to persons under the age of 18 is prohibited by the Act, but the provinces are territories are again free to increase this federally mandated minimum age if they see fit to do so.

The Act does not yet provide for the sale of edibles. However, the federal government has stated that once the appropriate regulatory oversight has been put in place, and unique health risks and harms associated with edibles are understood, regulations will come into force permitting the commercial sale of edible products. In particular, the government is concerned with standardizing serving sizes, potency, and health warnings, and ensuring that proper child resistant packaging is available. However, notwithstanding that the commercial sale of edibles will initially remain illegal, adults are able to alter cannabis that they themselves have purchased into an edible form without contravening the Act.

Although the Act does not yet allow for the sale of edibles, it nevertheless contains a restriction on selling any substances that contains nicotine, caffeine, or ethyl alcohol and dried or fresh cannabis, and/or cannabis oil.

The Licensing Regime

The issuance of licenses and permits will be handled by the Minister of Health (the “Minister”). The Minister will also be the federal power that will authorize import, export, production, sale, testing, packaging, labelling, sending, delivery, transportation, possession and disposal of cannabis for recreational purposes. The specific details of many of these aspects will be fleshed out in the regulations which have not yet been completed or disclosed. Standardized security requirements for facilities, safe product standards, mandatory inspections and recall powers are also expected to be included in the regulations.

The Act has also proposed the development of a cannabis tracking system as part of the licensing regime which will allow the government to collect information from cannabis producers, distributors and retailers across Canada.

Once the Act comes into force, existing federally licensed producers (“LPs”) under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) will be grandfathered as licensees and immediately gain rights to produce, distribute and sell cannabis in the recreational market.

The ACMPR will continue to remain in force to provide access to individuals using cannabis for medical purposes. The federal government intends to monitor and evaluate ACMPR patients across Canada throughout the first five years of the Act coming into force. If necessary, the government will then re-evaluate whether access to cannabis in Canada should remain a two-tier system.

It is the expectation that possessing cannabis under the ACMPR for medical purposes will still have benefits for existing patients over and above what might be set out in the Act. These potential benefits include increased possession limits, tax benefits, the ability to claim cannabis under medical plans and lower costs of cannabis though lower taxation rates.

Personal Cultivation

The Act permits the cultivation of four plants per “dwelling house,” provided that they are limited to a height of one meter. This four plant limit applies regardless of the number of adults living in one house. There is no ability for an adult who grows less than four plans to transfer their unused allotment to another person.

Under the Act people are not restricted to growing cannabis plants indoors and the Act explicitly contemplates that people will be able to grow in their gardens, yards and greenhouses. The provinces may lower the number of plants that may be grown per household and municipal by-laws could potentially place restrictions on the ability for personal cultivation to take place outdoors.

Advertising and Promotion

Although many of the particulars regarding advertising and promotion will be spelled out in the regulations, the Act itself contains prohibitions on the advertising and promotion of cannabis. It is prohibited to promote cannabis, cannabis services or cannabis accessories under the Act if it:

communicates information about price or distribution (other than at point of sale);

appeals to young persons;

includes testimonials or endorsements;

depicts persons, characters, or animals;

is used as sponsorship of a person, entity, event, activity, or facility; or

presents brand elements in a way that evokes “glamour, recreation, excitement, vitality, risk or daring”.

These prohibitions are subject to an exception which provides that brand elements of cannabis are able to be produced on a thing that is not cannabis or a cannabis accessory, so long as it is not associated with a way of life such as one that includes “glamour, recreation, excitement, vitality, risk or daring.”

Under the Act, it is also prohibited to promote cannabis in a false, misleading or deceptive manner that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks.

This vague terminology was borrowed from section 22 of the Tobacco Act. The phrase was interpreted and defined in the context of the Tobacco Act in the 2007 Supreme Court of Canada case, Canada (Attorney General) v. JTI-Macdonald Corp. In attempting to give the words meaning, the Supreme Court held that

(a) even advertising that does not appear on its face to connect a lifestyle with a tobacco product is prohibited if it subliminally connects a tobacco product with a lifestyle;

(b) the phrase “evokes a positive or negative emotion or image” should not be read so broadly as to encompass every perceptual impression but should be interpreted in a way that leaves room for true information and brand-preference advertising (which is permitted under the Tobacco Act); and

(c) that the words “such as one that includes glamour, recreation, excitement, vitality, risk or daring” are not to be read as restricting the “way of life” that is covered by the prohibitions but rather ought to be read as mere illustrations of lifestyle advertising.”

Ultimately, the Supreme Court held that bans on lifestyle advertising must catch not only clear associations, but subliminal evocations. The Court noted that “such advertising crosses the line when it associates a product with a way of life or uses a lifestyle to evoke an emotion or image that may, by design or effect, lead more people to become addicted or lead more people who are already addicted to increase their tobacco use.” The regulations are likely to define the terms related to lifestyle advertising in order to avoid any further confusion.

Informational promotion and brand-preference promotion are both permitted under the Act subject to any additional regulations. Notably, business-to-business promotion is completely exempt from restrictions, which is in line with the overarching public safety objective of the Act.

Importing and Exporting

The Act only authorizes the import and export of cannabis to and from Canada with an import /export certificate issued by Health Canada. The Act restricts import and export to situations where cannabis is to be used for medical or scientific purposes.

Penalties

The Act contains significant penalties for some offences. At the upper end, there are offences that carry a sentence of up to fourteen years in prison including: unlawful sales of more than 30 grams of cannabis, unlawful sales of illicit cannabis (i.e. cannabis not cultivated by a licensee under the Act), and unlawful sale to children under 18 years old.

Other offences have a wide range of penalties and may be pursued either by indictment or by way of summary offence. Some offences, including the personal cultivation of more than four plants per household, may result in tickets and fines and no criminal record at all. Other administrative monetary penalties are set out in the Act. Interestingly, the government has devised a system whereby a person’s record for certain cannabis related offences will not form part of the database of other criminal offence convictions.

Conclusion

Although Bill C-45 provides a framework as to how the final version of the Act will appear, the Act may still change as it makes its way through the legislative process. The regulations made under the Act will provide clarity for a number of things not yet addressed, including taxation. Additionally, with provinces and territories in control of distribution, sales and consumption, the differing political landscapes of the provinces across the country will most likely result in varying systems of distribution, sale and consumption across the country.

Cannabis Law Journal Links & Notes

Bill C-45 Open Parliament.ca https://openparliament.ca/bills/42-1/C-45/