Canada’s federal, provincial and territorial governments have launched discussions to incorporate recreational cannabis into a nationwide trade deal, Marijuana Business Daily has learned.

However, the talks – which began in December – are expected to be delayed as resources are directed toward fighting the current COVID-19 pandemic.

Efforts to incorporate nonmedical cannabis into the Canadian Free Trade Agreement (CFTA) would ensure regulated cannabis companies do not face barriers when operating in other provincial markets.

The CFTA entered into force in 2017 – before Canada legalized adult-use cannabis.

Various internal trade matters were discussed, including the agreement’s application to trade in recreational cannabis, MJBizDaily confirmed.

Some details of the planned meeting were recently disclosed in partially redacted ministerial briefing notes prepared by the federal government.

The December discussions to determine the scope and timeline were expected to precede formal negotiations.

At the conclusion of the negotiations, a protocol of amendment would be used to incorporate any changes in the trade deal, according to the notes.

“Negotiations to cover trade in recreational cannabis under the CFTA represent an important opportunity to ensure Ontario cannabis products and companies do not face unnecessary barriers when operating in other provincial markets,” Robert Gibson, director of communications for Victor Fedeli, Ontario’s representative on the committee, told MJBizDaily.

Canada currently has 355 federal license holders, almost half of which are located in Ontario.

“At this stage, CFTA parties are collectively considering key timelines and milestones for the trade in recreational cannabis negotiations,” Gibson said.

Fedeli is the province’s minister of Economic Development, Job Creation and Trade.

The 14 parties on the Committee on Internal Trade – the 10 provinces, three territories and the federal government – are joined by Health Canada as well as Global Affairs Canada, which is engaged in the talks to ensure trade compliance with any additions to the CFTA.

Provincial barriers

Parties are expected to conduct internal consultations with stakeholders in their respective jurisdictions, meaning cannabis industry officials should have an opportunity to present opinions.

George Smitherman, chair of industry group Cannabis Council of Canada, said incorporating marijuana into Canada’s internal free trade accord would represent further recognition of the sector’s significance in the broader economy.

“It’s a powerful acknowledgement that the sector has established itself in all of the regions of the country,” he said.

“That’s important because, associated with cannabis over time, there’s going to be significant community and economic advancement. It’s really important that all regions of the country are participating in that.”

He said the negotiations could possibly present an opportunity to address issues involving excise stamps.

Cannabis industry experts contacted by MJBizDaily said they’re hopeful the CFTA improves issues involving uniformity of surtaxes.

Some provinces ban certain products, such as vaping devices, while others have imposed extra taxes to discourage such use.

But some experts say those measures end up insulating illicit businesses against competition from regulated sources.

Delay expected

Government sources predicted the ongoing pandemic might well delay the pending negotiations.

“The federal, provincial and territorial governments are currently directing resources toward the current COVID-19 pandemic. Work on incorporating nonmedical cannabis into the CFTA may be delayed,” Richard Squires, Newfoundland and Labrador’s internal trade representative, told MJBizDaily in a statement on behalf of all CFTA parties.

“CFTA members continue to be committed to this goal and will be adjusting timelines for the work plan.”

Newfoundland is currently chair of the committee.

The press secretary for Alberta’s Minister of Economic Development, Trade and Tourism, said internal trade barriers cost Canada’s economy tens of billions of dollars every year.

“That being said, cannabis is a unique industry in Canada, and we will be negotiating with other provinces on this issue.”

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].