By Andrew Thomson | UPDATED October 24, 2018 10:40amET
Recreational cannabis is now legal in Canada after a nearly century-long ban.
But as Bill C-45 comes into force four months after passing Parliament, there are plenty of unanswered questions to consider.
- How will Canadians adapt to the patchwork of laws and regulations across the country, from province to province and town to town?
- Are producers and retailers prepared to provide Canadian consumers with a reliable legal supply that can compete with the black market?
- Are police departments and the courts ready for enforcement of what’s legal and illegal, new impaired driving laws, and new sentencing guidelines?
- What about potential complications along the Canada-U.S. border?
- And what are the biggest public health risks once cannabis is legal?
What’s replacing the ban isn’t simply a transition to one set of national rules for the legal use of dried cannabis, fresh cannabis, and cannabis oil.
Instead, a patchwork of regulations and restrictions from province to province about who can smoke weed and where, where it can be grown, and how it can be bought. And cities and towns within the same province or territory don’t necessarily have the same rules.
Bill C-45 makes Ottawa responsible for duty collection and the licensing of cannabis cultivation and manufacturing. The provinces and territories oversee distribution and the retail market.
Is Canada ready for different restrictions depending on where people live and work? Here’s what the minister responsible for legalization, Bill Blair, told Peter Van Dusen:
In Ontario, recreational cannabis won’t be able to be sold in stores yet. But, the province has proposed that cannabis consumers will be able to smoke in public places where cigarettes are permitted.
Meanwhile, Alberta will have rules similar to alcohol. Ingesting cannabis products will be allowed on private property and in publicly-designated areas.
Adults (19 years old in most jurisdiction) will be able to possess up to 30 grams of legal cannabis and grow four plants at home for personal use — except in Manitoba and Quebec, where the latter remains illegal.
The federal government opposed those two provinces, arguing:
Provinces and territories are able to make additional restrictions on personal cultivation but … it is critically important to permit personal cultivation in order to support the government’s objective of displacing the illegal market.
The Senate had rejected an amendment for an outright ban on home cultivation, instead favouring the final say to rest with provincial and territorial governments.
As for taxes paid on cannabis, the federal government will keep 25% of excise revenue, up to an annual limit of $100 million. The rest goes to the provinces and territories.
Ottawa originally proposed a 50/50 revenue split with the provinces, who argue they will bear more responsibility in implementing the legalization of cannabis — from health care to policing.
More on how the excise tax will work:
The federal government confirmed its plan for an excise tax on legalized cannabis in November 2017: $1 per gram up to $10, with a 10% rate on prices above $10. That’s in addition to existing sales tax.
The excise tax, paid by manufacturers, would apply to all legally available cannabis products. That includes flowers, seeds, and seedlings for use by home growers. It also includes the sale of cannabis for medical use, which the NDP opposes as “misconceived, unfair to patients, and damaging to public health.”
Consumers would be responsible for paying GST and HST. Retail products would require a federal excise stamp, similar to what you see on a pack of cigarettes.
So according to Ottawa, one gram of dried cannabis with a price of $8 would see a $1 excise duty, followed by the application of sales tax, for a final retail price of $10.17.
Seeds or seedlings would be taxed on a dollar-per-seed basis. And “a lower rate per gram will be applied for trim in relation to flower.”
While the federal government has been leading the way on legalization, some Indigenous communities have other plans. The Constitution allows Indigenous communities to self-govern, and some want the drug gone entirely.
Senators on the Aboriginal Peoples committee called, without success, for a delay of up to one year to allow Ottawa to negotiate with Indigenous communities on excise tax collection, education, regulation, and health and social services. They also recommended 20 per cent of cannabis production licenses be reserved for Indigenous jurisdictions.
We asked: how much influence should Indigenous governments have on legal cannabis rules?
Bill C-45 has spurred a flurry of commercial activity as cannabis producers look to corner Canada’s legal market – despite heavy federal restrictions on advertising, branding, and packaging.
Canadians spent about $5.5 billion on cannabis in 2017, according to Statistics Canada. That works out to an average price of $7.15 per gram, and a total of nearly 774 tonnes. More than 4.8 million Canadians admitted to smoking cannabis last year, with the biggest number in the 25-to-44 age group.
Cannabis stocks have been among the most actively traded on the Canadian market.
When it comes to putting a price tag on what cannabis means for Canada’s economy, estimates range from $4.3 billion in sales next year (Deloitte) to $8 billion in overall value (TD Bank).
But will the black market see any loss? A C.D. Howe Institute report claims Canada’s legal cannabis producers will only meet 60 per cent of demand in the first six months of legalization. Co-author Anindya Sen (University of Waterloo) discusses his findings with Martin Stringer:
A highly-regulated cannabis sector won’t necessarily benefit the black market, according to Ottawa lawyer Trina Fraser, who has been working with industry players in advance of legalization. Watch her interview with Peter Van Dusen:
Bruce Linton, CEO of Canopy Growth Corporation, told CPAC that Canadians should trust his brand and its competitors to shift cannabis from illicit dealing:
The government said no to a Senate amendment requiring corporate transparency from cannabis producers that receive federal licences. This would include the names of directors and officers, who holds controlling interest, and parent corporation or trust, and the names of shareholders.
Conservative Senator Claude Carignan promoted the measure as necessary “to prevent the involvement of organized crime in the cannabis industry through the use of tax havens.“
Here’s what Bill Blair told Peter Van Dusen this week about the business of weed:
But the parliamentary budget officer concluded last year that:
- The government may have little fiscal space to apply tax without pushing the price of legal cannabis significantly above the illegal market price.
- At the outset of legalization, fiscal revenues from regular retail sales taxes (HST/GST/PST) are expected to be modest – in the hundreds of millions of dollars, rather than the billions of dollars. About 60 per cent of sales tax revenues will accrue to provincial governments, and the remaining 40 per cent to the federal government.
- As the legal cannabis market matures, the potential for government to capture fiscal revenues will grow. Production costs for the legal industry are expected to decline, creating space for government to collect a portion of the cost savings without increasing the legal retail price. Further, a potential consumer shift to more value-added cannabis products could create a larger tax base. Finally, as the legal market becomes more entrenched, more Canadians may opt into the legal market, resulting in higher revenues.
As for cannabis packaging, what are the requirements? Find out more in this short explainer:
Advertising executive Rebecca Brown and marketing professor Michael Mulvey discuss the regulations and what consumers can expect:
Not everyone agrees with the rules. David Clement of the Consumer Choice Center tells Martin Stringer why branding and marketing restrictions need to be relaxed:
The government rejected a Senate amendment to ban cannabis companies using branded merchandise to market their products.
Outburst host Glen McInnis takes us to Smiths Falls, Ont., where Canada’s best-known cannabis company has become the town’s largest private-sector employer — leaving residents with mixed feelings about the future of their community.
David Sharpe, an Indigenous Bay Street financier, explains why he’s investing approximately $100 million into First Nations-run cannabis ventures — and how bringing this business on reserve can serve reconciliation.
Watch PrimeTime Politics and The Big Five: Cannabis and the Law
Do law enforcement agencies have enough resources to monitor the new rules for home cultivation, possession, and consumption? Are police ready to enforce new impaired driving laws The view from two chiefs:
Will cannabis legalization bring more impaired drivers to the road?
The government rejected a Senate amendment to make “social sharing” with someone less than two years younger a ticketable offence instead of indictable — and instead of no penalty at all, as the Senate social affairs committee decided in adopting 40 earlier amendments. The measure was aimed at those who share cannabis with those not of legal age, and would be limited to 5 grams.
Will harsher sentences for cannabis-related offences lead to more appeals and delays in the court system? Lawyer Paul Calarco discusses that along with other outstanding legal issues as the Cannabis Act comes into effect:
What about cannabis and the workplace? We hear from lawyer Karin Pagé about what employers and employees need to know:
And is the federal plan for pardoning past offences the right one? Public Safety Minister Ralph Goodale defended the government’s approach with Peter Van Dusen:
Watch PrimeTime Politics and The Big Five: Cannabis and the Border
Will tourists, business travellers, and even shoppers see trouble at the Canada-U.S. border with cannabis legal in one country but still banned by the other (at least at the federal level)?
Immigration lawyers Warren Creates and Len Saunders share their thoughts:
And Bill Blair defends the Canadian government’s approach:
The U.S. Customs and Border Protection statement said: “Officers are thoroughly trained on admissibility factors and the Immigration and Nationality Act, which broadly governs the admissibility of travelers into the United States. Determinations about admissibility and whether any regulatory or criminal enforcement is appropriate are made by a CBP officer based on the facts and circumstances known to the officer at the time.
“Generally, any arriving alien who is determined to be a drug abuser or addict, or who is convicted of, admits having committed, or admits committing, acts which constitute the essential elements of a violation of (or an attempt or conspiracy to violate) any law or regulation of a State, the United States, or a foreign country relating to a controlled substance, is inadmissible to the United States.
“A Canadian citizen working in or facilitating the proliferation of the legal marijuana industry in Canada, coming to the U.S. for reasons unrelated to the marijuana industry will generally be admissible to the U.S. however, if a traveler is found to be coming to the U.S. for reason related to the marijuana industry, they may be deemed inadmissible.”
The Immigration and Nationality Act instructs border officials to deny entry to anyone “determined (in accordance with regulations prescribed by the Secretary of Health and Human Services) to be a drug abuser or addict.”
A drug abuser or addict is defined as current used of a controlled substance under U.S. federal law. And cannabis remains a Schedule 1 controlled hallucinogenic substance.
And yet, some U.S. states have legalized cannabis. We hear more on the experience south of the border from Andrew Freedman, Colorado’s former director of marijuana coordination:
Watch PrimeTime Politics and The Big Five: Cannabis and Health
Statistics Canada estimates 4.9 million Canadians (aged 15 and older) spent between $5.0 and $6.2 billion on cannabis in 2015, with consumption pegged at 697.5 tonnes and a price range between $7.14 and $8.84 per gram.
The parliamentary budget officer said this about usage:
- “When the average legal price is less than or equal to the average illicit price, almost all consumption (98 per cent) is projected to shift to the legal market in 2018. However, as the legal price increases above that of the illicit price, the market share of legal cannabis progressively decreases. One, two and three dollar legal price premia are associated with declining estimated legal market shares of about 65, 56, and 42 per cent respectively.”
- “The impact of price on consumption may be even more pronounced among young users. They are likely to be more sensitive to higher prices than the user population as whole, Therefore, higher prices may cause a disproportionately larger decrease in youth consumption compared with the rest of the user population.”
Statistics Canada estimates 5.4 million people will seek to spend anywhere from $816 million to $1 billion on legal cannabis in the final three months of 2018. Another 1.7 million Canadians will continue to purchase illegally, anywhere from $254 to $317 million, the agency believes. The figures, if they come pass, mean illegal sales will comprise nearly one-quarter of the total cannabis market.
An Angus Reid Institute poll released in September claims 57 per cent of Canadians believe C-45 will “fail to prevent kids from using even more pot once it is legal,” versus 17 per cent who feel the legislation will effectively encourage youth consumption. Nearly half (48 per cent) don’t believe organized crime will suffer at all from legal cannabis. Still, 62 per cent supported legalization (a slight decrease from previous polling) – 46 per cent among 2015 Conservative voters.
Governments across Canada are spending millions on public education and awareness about the health effects of cannabis, with youth a special target.
Who do public health experts think? We heard from David Hammond (University of Waterloo) and Amy Porath (Canadian Centre on Substance Use and Addiction):
CPAC’s Andrew Thomson spoke with Rohit Khanna (Catalytic Health) about how legalized cannabis might affect the opioid crisis — and the need for accurate online information to help Canadians make informed choices:
Ottawa mailed more than 15 million postcards to homes across Canada, in more than a dozen languages — part of a $62.5 million budget over five years for public education and awareness. Another $46 million was set aside for advertising.
Health Canada has also taken to YouTube, Facebook, Instagram and Snapchat, along with running video message at junior hockey games. The government claims more than 60 per cent of young adults reported exposure to its drug-impaired driving ads.
Provinces and territories will implement their own campaigns; all three levels of government share responsibility for education.
Bill Blair on the federal government’s approach to health and education:
Experts point to the major health risks of cannabis use as:
- Cognitive, psychomotor, and memory impairment
- Hallucinations and impaired perception
- Impaired driving
- Psychosis and other mental health problems
- Reproductive problems
- Pulmonary and bronchial problems
(Canada’s Lower-Risk Cannabis Use Guidelines)
Cannabis is also used as a therapeutic tool. But the Canadian Medical Association has called for a phasing-out of medicinal cannabis with recreational use now legalized. The CMA argues there is a lack of clinical research and regulatory oversight for the drug.
Health Canada has announced the system will continue, and has even made Shoppers Drug Mart a licensed producer.
James O’Hara, the president and CEO of Canadians for Access to Medical Marijuana (CFAMM), talks about the future of medical cannabis now that recreational use is legal:
We asked Canadians: Should medical marijuana be phased out after legalization? Here’s some of what we heard: