2017 was a historic year for cannabis in Canada. On the recreational side, the Canadian Government finally made good on its promise to legalize the recreational use of cannabis when it introduced Bill C-45, the Cannabis Act, into the House of Commons on April 13, 2017. We then saw a flurry of legislative activity from April through to the end of the year.
On the medical side, we saw Health Canada make some minor tweaks to the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) licensing system in May. What followed was an explosion of cultivation licenses being handed out by the Federal government over the balance of the year.
Today we recap some of the highlights of a historic 2017 as we get ready for 2018, a year that promises to make 2017 look dull and boring by comparison. Without further adieu , here is your year in review.
Bill C-45: The Cannabis Act was introduced into the House of Commons on April 13 by the Canadian Government. Bill C-45 will govern the rules relating to cultivation, sale and consumption of recreational use cannabis and, ultimately, will likely govern medical use cannabis as well. Bill C-45 touches subjects such as home cultivation, what will be available for purchase, minimum age for purchase, maximum amounts of cannabis to be purchased at one time and advertising and promotion, among other things.
On November 27, Bill C-45 cleared the House of Commons and was sent to the Senate.
Before going to the Senate, two important amendments were made at the House of Commons concerning plant height restrictions and edibles. Bill C-45 initially set a 100 cm height limit on cannabis plants to be grown by recreational users in their homes. This provision was met with significant criticism and was met with concerns about the reality of enforcement. On October 3, 2017, the Standing Committee on Health (“HESA”) approved an amendment removing the 100 cm height limitation. The four plant limit is unaffected by the removal of the height restriction.
On October 3 the HESA also voted for an amendment to allow cannabis edibles and other concentrated forms of cannabis to be available by no later than one year after the time that Bill C-45 becomes law. The Federal government has always maintained that it would introduce edibles, but this amendment set a concrete deadline, which resounded most favourably with those involved or interested in the industry.
The Bill is currently in its Second Reading at the Senate. Once the Bill completes its process in both the House of Commons and the Senate, and both pass an identical version of the Bill, the Bill will receive Royal Assent and become law. The date on which the law comes into force will be the day of Royal Assent unless there is a provision stating that the Act or a portion of the Act comes into force on a specific day or a day fixed by an order of the Governor-in-Council. The Government has repeatedly stated that its goal is to have the law in place by July 1, 2018 at the latest. Whether the Senate cooperates with that timeline remains to be seen and is something the industry will be watching closely when the Senate resumes sitting in late January, 2018.
On November 21 the Canadian Government released its “Proposed Approach to the Regulation of Cannabis” (the “Proposed Regulations”), which are currently under a 60-day consultation period to solicit feedback. The window to provide feedback closes on January 20, 2018. The Proposed Regulations cover a number of areas that are important for business stakeholders, including:
- Licenses, Permits and Authorizations;
- Security Clearances;
- The Cannabis Tracking System;
- Types of Cannabis Products that will be available for sale;
- Packaging and Labelling;
- Cannabis for Medical Purposes; and
- Health Products and Cosmetics.
The Canadian government will consider the feedback received when it drafts the final version of the regulations, which will not be pre-published to the public before they are finalized.
On November 10 the Canadian Government released another consultation document on its proposed Federal Excise Duty Framework on Cannabis Products. The proposed excise duty rate is 50 cents per gram of cannabis, or 5 per cent of the producer’s sale price of that product. An additional provincial rate would apply and the total of federal and provincial duties is proposed to be set at a level of the greater of $1.00 per gram, or 10 per cent of the sale price of a product. Excise duties will be payable by federally licensed producers/manufacturers. The last federal licensee in the supply chain who packages cannabis product for final retail sale will be liable to pay the applicable excise duty. The Government’s period for accepting submissions on the proposals completed on December 7, 2017. The Canadian Government also reached an agreement with the Provincial and Territorial Governments regarding how the excise tax proceeds will be allocated, with 75% of the tax revenues going to the provinces and territories and the federal government’s share being capped at $100 million per year.
Ontario’s Bill 174 (“Ontario’s Cannabis Act”) had its third reading and was passed by a vote of 63-27 on December 12. Under Ontario’s Cannabis Act, the minimum age to purchase and consume recreational cannabis is set at 19 years old and all recreational retail will be owned and operated by the provincial government under a newly created subsidiary, the Ontario Cannabis Retail Corporation, which will offer standalone stores and online sales. While at-home cultivation will be permitted, consumption will be initially restricted to private residences only.
Manitoba tabled Bill 11: The Safe and Responsible Retailing of Cannabis Act on December 6, 2017. Under the Bill, the minimum age to purchase and consume recreational cannabis is set at 19 years old. The Province announced its “hybrid model” for retail cannabis sales in early November. Under the model the Manitoba Liquor and Gaming Authority will regulate the purchase, storage, distribution and retail of cannabis, while the Manitoba Liquor and Lotteries Corporation will oversee supply and distribution. Private retailers, who will be selected based on responses to the Government’s Requests for Proposals submitted by December 22, will operate the storefronts in the Province.
New Brunswick tabled three new pieces of legislation on November 9, which will set the framework for recreational cannabis in the Province: Bill 16, Bill 17 and Bill 18. The minimum age is set at 19. Consumption in public will be strictly prohibited, including in vehicles. In terms of retail, Bill 17 establishes the Cannabis Management Corporation and gives it the authority to contract as an agent of the Crown.
Federally licensed producers, Organigram and Canopy Growth, will supply the Province with dried cannabis and cannabis derivatives when the recreational market comes online. In terms of retail, New Brunswick’s Liquor Corporation, known as “Alcool NB Liquor” released a call for tenders for cannabis retail spaces in various locations in New Brunswick, including Greater Moncton, Fredericton, Oromocto, Greater Saint John, Bathurst, Edmundston, Sackville, Shediac, Miramichi, Sussex, St. Stephen, Richibucto, Tracadie, Perth-Andover and Campbellton areas. Applications were due November 10. These storefronts will house stand-alone recreational cannabis retail outlets, which will operate as subsidiaries of NB Liquor. The stores will be coupled with online sales that will either deliver to customer homes or allow orders to be placed online and collected in store
Quebec tabled Bill 157 in November as well, which sets the minimum age to purchase and possess cannabis at 18 years. All retail sales will be conducted through the Societe Quebecoise du Cannabis and the Province has committed to 15 standalone stores open by July 1, 2018 and online sales in the future. Public consumption will be permitted in some spaces, excluding places such as university campuses or schools and parks. Quebec has strictly prohibited at-home cultivation.
Alberta tabled Bill 26: An Act to Control and Regulate Cannabis in November as well. Under the Bill and in the form of proposed amendments to the Gaming and Liquor Act, the Alberta Gaming and Liquor Commission will carry out oversight and compliance functions as well as manage the distribution of cannabis. The Province will also license privately-owned and operate cannabis stores under the authority of the Province. The details on private cannabis retail, including the process and requirements for obtaining a license, are expected in the New Year. Alberta will set its minimum age for purchase at 18. Consumption of cannabis will be permitted in some areas but restricted in areas frequented by youth and other places where smoking is prohibited.
The existing medical system which operates under the ACMPR will continue to operate in tandem with the proposed recreational regime, at least for the foreseeable future. The ACMPR’s federally licensed producers will be very important under the Cannabis Act as they will automatically be deemed to be licensed under the recreational regime if they are already licensed for medical cultivation and sales.
In May, Health Canada introduced improvements to its medical licensing regime to streamline licensing and enable increased production of cannabis in advance of the recreational market coming online. As a result of these changes, the number of these federally licensed producers has nearly tripled over the last year. As at the date of writing, there are 84 federally licensed producers in Canada. All indications point to 2018 being a record breaking year for the grant of cultivation and sales licenses.
2018 is only days away. It promises to be a whirlwind of activity, both in terms of legislation and regulation but also in terms of market activity, whether it be new industry players, new IPOs, consolidations or new products.
Don’t blink, you might miss it.
Thank you and Happy Holidays to all of our readers. Stay tuned in 2018 as we continue to bring you updates and analysis on industry developments as they happen.
– The Minden Gross Cannabis Law Team