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Bulletin

October 17, 2018 - An Historic Day for Canada

Fasken
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Health Bulletin

The Cannabis Act (Canada) (the "Cannabis Act"), the federal legislation that legalizes cannabis for adult use (recreational cannabis) came into force today. This is an historic day after many years of regulation in Canada respecting the use of cannabis for medical purposes, beginning with the Marihuana Medical Access Regulations (MMAR) in 2001, the Marihuana for Medical Purposes Regulations (MMPR) promulgated in 2013, and the Access to Cannabis for Medical Purposes Regulation (ACMPR) introduced in 2016, as well as high profile litigation and considerable debate.


As of October 17, 2018, cannabis will no longer be classified as an illegal substance under the Controlled Drugs and Substances Act, but instead will be regulated, in varying degrees, by the federal and provincial/territorial governments and, to a lesser extent,  by municipalities. The federal government, having the broadest overall jurisdiction, has established a general framework for the consumption of cannabis for adult use, as well as for the continued regulation of medical cannabis.  Provinces and territories, however, have been given responsibility for regulating the distribution and sale of cannabis within their own jurisdictions and together with municipal governments, have limited power to impose standards that depart from those set in the Cannabis Act (for example, to establish higher age limits for legal consumption and lower quantity limits for possession of cannabis in public). The stated policy objectives of the new laws include the protection of youth, patient safety and the diversion of cannabis away from the illegal market.

The purpose of this bulletin is to provide a high level overview of the current legislative landscape that governs cannabis for adult use in Canada through:

the comparison of the current and previous legal frameworks; and

providing brief responses to some frequently asked questions ("FAQs").

Transition to the Cannabis Act

Although the coming into force of the Cannabis Act was delayed from its original anticipated date of July 1, 2018 to October 17, 2018, certain of the provincial/territorial rules respecting recreational cannabis remain unsettled. Indeed, while each of the provinces has enacted laws that will come into effect today, in many cases the legislation has left much to be implemented through regulations, many of which are not yet in effect or have yet to be introduced.  In Ontario, the Conservative Government, which was newly elected in the Spring of 2018, very recently proposed significant amendments to the cannabis legislation that had been established by the previous, Liberal government. For example, the proposed amendments would permit to permit recreational cannabis to be consumed in public wherever smoking of cigarettes is permitted (subject to various restrictions) and to permit the sale (albeit delayed) of recreational cannabis through licensed retail cannabis stores. These amendments are expected to passed by the Ontario Legislature in third reading and to receive Royal Assent today.

The uncertainty that exists in various provinces regarding how, exactly, cannabis for adult use will be regulated, exacerbates the growing pains that are being experienced in connection with the implementation of this new legislation, particularly by employers, institutions and other parties who face new responsibilities in unchartered waters.

Cannabis for Medical Purposes

Under the Cannabis Act, medical cannabis will continue to be subject to different rules than cannabis for adult use. The federal government will retain sole jurisdiction over the production and sale of medical cannabis, such that the provinces and municipalities have no jurisdiction to regulate such production or sale (unlike their authority in respect  of the consumption of medical and recreational cannabis, for example).

Licences under the Cannabis Act

Licences held under the ACMPR and the Narcotic Control Regulations to the Controlled Drugs and Substances Act (Canada) ("Narcotic Control Regs."), remain valid (until they expire or are revoked) under the new legislative framework and are deemed to be licences issued under the Cannabis Act.  The transition of these licences to the new legal regime will be the subject of a subsequent bulletin prepared by Fasken.

Unlike under the previous licensing regimes, six separate specific classes of licences are recognized in the Cannabis Regulations to the Cannabis Act (the "Cannabis Regs."), namely, cultivation, processing, analytical testing, sale, research, and "cannabis drug", together with subclasses of sale, processing and cultivation licences.[1]

Other significant changes effected by the Cannabis Regs. include:

Enhanced security clearance requirements (by expanding the scope of individuals required to obtain security clearance, including directors and officers of certain entities that 'control' the licensee).

New record-keeping obligations in respect of 'key investors' (subject to limited exceptions).

New rules governing outdoor cultivation (which was prohibited under the previous cannabis regime).  

The key provisions of the Cannabis Regs. will be covered in a subsequent Bulletin to be prepared by Fasken.

FAQs

The remainder of this bulletin briefly addresses some frequently asked questions regarding the new cannabis regime in Canada.

Where Can Cannabis for Recreational Purposes be Consumed?

The consumption of recreational cannabis is regulated by the provincial and municipal governments. On this basis, where recreational cannabis can be used will vary by province and municipality. Despite this variation, there are commonalities among the provincial legislation. For example, each province's legislation includes a prohibition on the smoking/vaping of recreational cannabis in workplaces (although the definition of workplace varies among the provinces). Moreover, interestingly, numerous municipalities have introduced by-laws that impose significant restrictions on consumption of recreational cannabis, over and above those set out in provincial legislation, including, in limited cases, a blanket prohibition on its use in public anywhere in the municipality.

Where recreational cannabis can be consumed not only depends on the applicable jurisdiction, but also on the nature of product and the setting in which the consumer resides. Generally speaking, the consumption of cannabis in oil form is less regulated than consumption by smoking and vaping it and the consumption of cannabis indoors in certain institutional settings, such as a long-term care homes, is regulated differently than it is in other institutions, such as hospitals. 

Are there any restrictions on cannabis "edibles"?

Yes. The sale of cannabis edibles and concentrates remains illegal.  However, the federal government has stated that the sale of cannabis edibles and concentrates will become legal approximately one year after October 17, 2018 (if not sooner in response to political pressure to do so).

The above prohibition does not extend to the consumption cannabis-infused food products, meaning, for example, that subject to any restrictions imposed by the provincial and municipal governments, individuals are permitted to consume edibles they make themselves (i.e. not purchased).  

What are the restrictions on the promotion of cannabis? Can a cannabis company sponsor a charitable event or sports team?

The restrictions that apply to the promotion of cannabis are consistent with the stated policy objectives (referenced above) of the Cannabis Act. Both the  Cannabis Act and the Cannabis Regs. include detailed parameters with respect to what "is" and "is not" permissible from a promotion perspective.  The term "promote" is broadly defined by the Cannabis Act to be: in respect of a thing or service, means to make, for the purpose of selling the thing or service, a representation other than a representation on a package or label — about the thing or service by any means, whether directly or indirectly, that is likely to influence and shape attitudes, beliefs and behaviours about the thing or service. Other significant aspects of the legislation as it relates to promotion include:

Exceptions from the general prohibition for "informational promotion" and "brand promotion" where the prescribed requirements are met, including the requirement that the communication is addressed to an individual(s) 18 years or older.

The range of activities covered by the prohibition on the promotion of cannabis (and related accessories and services), including, among others, communications:

In respect of the price or distribution (i.e. channels of distribution).

By means of testimonial or endorsement.

For which there are reasonable grounds to believe could be appealing to young persons.

The promotion-related prohibitions include, for example, the following:

Communications 

The prohibition on communications extends to all types of communications, including, for example, printed publications (e.g. newspapers and product inserts) and online content (e.g. social media and other online platforms).

Publications, broadcast and other forms of dissemination

This prohibition extends to foreign media, such that the promotion of cannabis in publications, broadcasts and other communications that originate outside of Canada are also not permitted.

The blanket prohibition is subject to limited exceptions, including for example, the distribution for sale of an imported publication which includes the promotion of cannabis.

Sponsorship 

It is prohibited to display, refer to or otherwise use a brand element of cannabis, an accessory or service, or the name of a licensee or service provider, whether directly or indirectly, in the sponsorship of person, entity, event, activity or facility.

Specified Facilities.  

Facilities used for sports or cultural events may not display (whether as part of the facility's name or otherwise) a brand element of cannabis, an accessory or service, or the name of a licensee or service provider.

 

Can cannabis be imported and exported?

Cannabis for medical and scientific purposes and industrial hemp continue to be regulated through the use of permits issued by the Canadian Government. Import and export permits issued under the ACMPR will remain valid under the Cannabis Act until they expire or are revoked.

The importation and exportation of recreational cannabis is not permitted.

What's Next

Each of the provincial/territorial governments will continue to roll out new legislation to fill in any gaps in its existing legal frameworks, by finalizing and passing regulations to its cannabis legislation.

As always, Fasken is available to assist with understanding and implementing these reforms.


 

[1] These subclasses narrow the activities licensed under the broader licence. While neither the ACMPR nor the Narcotic Control Regs. recognized such classes or subclasses of licences, licences issued under the authority of those statutes specified the scope of the activities to which the licence applied.

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