The Cannabis Act: An overview

by Dentons
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Dentons

On April 13, 2017, Canada’s Liberal government introduced Bill C-45, the Cannabis Act (the “Act”). The tabled legislation provides federal guidelines for legal access to cannabis for non-medical purposes and establishes controls to regulate the production, distribution, and sale of cannabis. The legalization of cannabis was a fundamental element of the Liberals’ 2015 election campaign, and the Canadian public has been eagerly waiting to see what form the legislation would take. We are therefore pleased to provide you, our valued clients, with the following overview of the proposed Act and its highlights:

Roles of the provinces and territories

Undoubtedly, one of the most impactful takeaways from the proposed Act is the considerable authority granted by the federal government to the provinces and territories to regulate many aspects of the recreational cannabis industry. Under the proposed Act, the provinces and territories will each be required and authorized to develop a system of controls to authorize distributors and retailers, and will have the power to:

  • Determine how and where cannabis will be sold;
  • Lower the personal possession limit;
  • Issue licenses for the distribution and retail sale of cannabis;
  • Establish zoning regulations for businesses operating in the cannabis industry;
  • Designate public areas where cannabis can be consumed; and
  • Increase, at their discretion, the federally-imposed minimum age requirement of 18 for purchasing cannabis.

Only cannabis obtained from federally-licensed producers can be sold to the public, meaning the federal government will continue to act as authority for the regulation and licensing of cannabis producers. Licensed producers who already grow and distribute medical cannabis will be well-positioned to obtain the licenses required to enter the recreational distribution and retail sales sector.

Importing and exporting of cannabis

Under the proposed Act, it will still be illegal to import cannabis into or export cannabis out of Canada without a properly-issued permit. Licenses and permits authorizing the import and export of cannabis will be issued only in respect of cannabis for medical and scientific purposes, or in respect of industrial hemp.

Focus on public safety and security

The proposed Act has been drafted with a significant focus on the reduction of social and health harms associated with the production, distribution and consumption of cannabis, for example:

  • Most notably, the proposed Act would create two new criminal offenses: (i) for giving or selling cannabis to youth, and (ii) for using a youth to commit a cannabis-related offence. These two offences each hold a maximum prison sentence of 14 years;
  • The federal government announced the adoption of Bill-46, which focuses on drug-impaired driving and modifications to the Criminal Code regarding transporting drugs; and
  • The proposed Act also creates three new offences related to exceeding specified drug levels in a person's blood within two hours of driving.

As a result of the adoption of the proposed Act, in addition to establishing a system to authorize distributors and retailers, the provinces and territories will need to modify their traffic safety laws and regulations to create new restrictions on operating motor vehicles under the effect of cannabis.

Packaging and labeling

The proposed Act includes broad restrictions for the packaging and labeling of cannabis products, including the following:

  • Packaging and labeling cannot appeal to young persons;
  • Packaging and labeling cannot set out a testimonial or endorsement, cannot contain depictions of a fictional or real person, and cannot associate the cannabis product or one of its brand elements with positive or negative emotions, or with a way of life that includes glamour, recreation, excitement, vitality, risk or daringness; and
  • The information contained on the packaging and labels cannot be false, misleading or deceptive.

It is likely the federal government will pass regulations in the coming months to further clarify the rules around the packaging and labelling of cannabis products.

Possession of cannabis

An individual will be allowed to possess up to the equivalent of 30 grams of dried cannabis, and can share up to the equivalent of 30 grams with other adults. An individual will also be allowed to grow up to four cannabis plants at home for their personal use; however, it will be illegal for a person to sell any cannabis cultivated personally. Individuals can also create cannabis-containing products at home (as long as certain dangerous solvents are not utilized) using cannabis cultivated personally or purchased legally.

Pricing and taxation

The proposed Act does not detail how cannabis will be priced or taxed. The Minister of Finance is expected to outline that information in the future.

Conclusion

The federal government has a set target date of July 2018 for the adoption of the proposed Act. Until the formal adoption of the proposed Act, and in large part due to the controversial nature of the recreational marijuana industry, it will be the subject of ongoing review and debate in Parliament which could lead to amendments to the proposed Act. As a result, until the completion of the final form of the proposed Act (together with the associated regulations to be implemented therewith), the creation of the provincial and territorial systems, and the requisite adjustments to associated legislation (including the Criminal Code), there is much that is still unknown.

One of the biggest challenges will be how quickly the provinces and territories propose and adopt their own legislation and regulations regarding the many aspects of the cannabis industry. The proposed Act will certainly have a major impact on a vast array of Canadian industries, including the pharmaceutical and agricultural industries. As additional information is provided by both the federal, provincial, and territorial governments, we will continue to keep you updated as the circumstances evolve, and encourage you to reach out to us with any questions you may have in respect of the proposed Act or the regulation of cannabis in Canada.

 

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