The Liberal government might have won early praise from marijuana firms for its legalization legislation, but if it takes the route its own task force recommended on packaging restrictions, it may be setting itself up for a confrontation with the industry.

In December, the government’s Cannabis Task Force, headed by former federal justice minister Anne McLellan, recommended the government impose a plain packaging standard on legal recreational cannabis — a recommendation that alarmed current producers. But the government’s plans on how to regulate branding and packaging are still hazy.

As it’s written, Bill C-45 bans youth-targeted advertising, testimonials or endorsements, depictions of people or animals, and lifestyle branding that promotes “glamour, recreation, excitement, vitality, risk or daring.”

Branding, labelling and packaging provisions will all be sorted out in the regulations to be drafted after the bill passes, leaving a key policy question largely unaddressed until the bill comes into force — and ramping up apprehension over a few words that could cost manufacturers a lot of money.

And the Liberal government will be walking a narrow line on packaging, straddling its two main policy goals. Push too far on packaging and consumers might stick with the black market. Make it too lax and consumption could rise.

David Hammond, an associate professor at the school of public health at University of Waterloo, said he has “no doubt” the cannabis industry will be “strongly advocating for as few restrictions on advertising and promotion as possible.”

“It’s in their interests,” he said. “They understand it provides them with commercial advantages and increase their sales.”

In April, the Canadian Press reported that a number of high-profile Canadian marijuana producers, including Canopy Growth, Tilray and Mettrum, had started aggressively lobbying against the idea of plain packaging and wrote to Health Minister Jane Philpott warning of the consequences of making it harder for producers to communicate with consumers.

But Hammond said he sees no public health value in branded packaging, which tends to be “more effective on young people than older people.”

“We’re liberalizing and legalizing the cannabis market in one tremendous step,” he said. “You can always loosen things like ad restrictions and allow more branding and promotions. It’s a lot easier to loosen it over time than put the genie back in the bottle.”

He bases that conclusion on the fact that it took half a century to roll back tobacco marketing practices.

“Advertising has a very strong potential (for) shaping social norms, who uses it — particularly increasing appeal to young people. We’ve taken 60 or 70 years to learn those lessons from tobacco and unravel some of that marketing.”

People in the industry warn that, if the rules are too strict, they’ll cause legal producers to get cut out by the black market.

Take, for instance, Hydropothecary — a “premium product provider” in Canada which sells upscale medical marijuana products (its signature line of medical pot is priced at $15 a gram) and already uses branded artisanal packaging that uses animal characters on the packages.

Sébastien St. Louis, co-founder and CEO of Hydropothecary, said strong packaging restrictions could limit the ability of licensed producers to compete with the black market.

“The black market does not have plain packaging,” St. Louis said.

“If [plain packaging] indeed does become the norm, we’ll certainly adhere to those regulations. We’re here to operate legally. But we’re strongly cautioning the government not to be short-sighted when considering public health.

“If Canadians can’t distinguish between a legal, safe, government-controlled product and a product created in somebody’s basement that’s full of nasty pesticides, that’s detrimental to public health.”

Plain packaging is also an incredibly vague notion, leading to different views within the industry.

In an interview with iPolitics earlier this year, Bruce Linton, CEO of Canopy Growth, Canada’s largest publicly-traded marijuana producer, was something of industry outlier in saying he wasn’t too worried about plain packaging — that it probably would just rule out “funky stylized branding.”

“I suspect what it means is it won’t look like the Scoobie-Doobie box with ten colours flashing on it … ‘Plain’ doesn’t mean the absence of information.”

St. Louis said he worries that stringent packaging requirements would tilt the scales toward the illegal market, where consumers can already “buy marijuana in very sophisticated, pre-filled vapour pens with full branding that’s available in a lot of illegal dispensaries across the country.”

At this point, however, he said he suspects the packaging rules will probably end up in the regulatory mushy middle, “somewhere between alcohol and tobacco.”

“That’s the safe bet. I know that’s a wide spectrum, but that’s most likely where we’ll land.”

Christelle Gedeon, an associate at Fasken Martineau, said at an iPolitics Live panel event with St. Louis earlier this week that the government already is “moving toward” tobacco-like regulations and “not looking to balance the needs of business to allow you to have your logo out there, brand out there, associated with lifestyle images.

“It’s similar to how tobacco is now.”

Michael Lickver of the law firm Bennett Jones, which serves clients in the medical marijuana industry, said that the ability to brand and package products is “very important” to companies in a new industry — that it allows them to distinguish themselves from competitors and the black market.

“They were hoping to get a little more leniency,” he said. The industry no doubt would have preferred the legislative model of the alcohol industry to the rules that govern tobacco sales, but the government “views the ad restrictions from the alcohol industry basically as a failure.”

Lickver said if the government eventually decides to bring about plain packaging restrictions, that could open it up to court challenges. The medical cannabis industry was born from Charter of Rights challenges, after all.

“There are Supreme Court precedents on what it means to be a lifestyle brand, which is exactly what the cannabis regulations are looking like,” he said.

“The industry is not shy of charter challenges. Will there be more in the future? If I were a betting man … probably.”

The government’s charter statement on the bill says that the feds considered issues with Section 2, which deals with freedom of expression. It says that the current restrictions on packaging are modeled on a 2007 Supreme Court ruling against cigarette manufacturer JTI-MacDonald, which upheld branding restrictions in the Tobacco Act despite a Section 2 challenge.

“Although the risks associated with cannabis are not identical to those associated with tobacco, they are sufficiently serious to ground a comparable approach,” the government’s charter statement reads. “The restrictions target expression that is of low value, namely, commercial expression that is used to induce people to engage in behaviour associated with health risks (particularly for vulnerable groups including young persons).”

But that doesn’t necessarily fully cover all the packaging issues that could emerge, because the statement covers the bill’s language — not the regulations.

Lickver said he thinks plain packaging is “a bit on the conservative side”; he doubts the Liberals will go that route and will instead end up “somewhere in the middle.” But if the industry wants to push back by lobbying against restrictions, he said, now is their time to do so — and they would have good reasons.

“Tobacco had a really big head start. Everybody knows Marlboro. Everybody knows Joe Camel. We know why: Marlboro Man, Joe Camel existed. They sponsored things. There were commercials, advertisements, and only after the fact was all of that scaled back.”

The tobacco industry, meanwhile, has accused the Liberals of hypocrisy for signalling they will bring down new, harsher plain packaging regulations for cigarettes while (for the moment, anyway) leaving marijuana off the hook.

Ashley Dumouchel, a trademark lawyer at Shapiro and Cohen, said branding restrictions also would shape the industry fight for market share between incumbents and the smaller, craft market.

“Branding restrictions are fought to create a power shift away from large producers and allow smaller producers to compete,” she said. “How a company rises to the top is going to be determined by who stakes their claim early – but also (by) who can be the most creative … who can best overcome the challenges from legislation.”

Regardless of the uncertainty, companies will still rush to register trademarks for future products, even if they lose out initially with strong rules. Dumouchel said that as we get closer to the target date for a legal market — July 1, 2018 — she expects to see a “flurry of trademark applications and domain name applications.”

And Dumouchel also expects the government to take a much softer approach than the task force recommended. The government, after all, has an interest in the industry doing well — if only for the tax revenue.

“I’m not sure the regulations will be as strict as some people think they will be,” she said.