Cannabis sector lawyer says clearer guidelines needed for producers

The Cannabis Act has been approved by the Senate and the House of Commons has rejected 13 of the Red Chamber’s recommendations, including the prohibition of branded merchandise by marijuana companies and allowing provinces to prohibit home cultivation, but as Bill C-45 nears its official rollout, many details about how the market will be regulated remain unknown.

Trina Fraser, co-managing partner at Brazeau Seller LLP, has been a legal adviser to the industry for five years and was just retained by the Cannabis Canada Council. Earlier this year, the Cannabis Canada Association, Canadian Medical Cannabis Council and Canopy Growth Corporation merged to create the Cannabis Canada Council, now Canada’s preeminent marijuana industry trade association.

“This is really the point at which the majority of the licensed producers have now joined together under this one umbrella, whereas it was kind of disjointed before. I think it's going to have a much stronger voice now that it is much more united and will have a much larger mandate,” Fraser says.

Fraser wants the government to provide clear guidelines for licensing as there is currently a “real lack of clarity and transparency in the decision-making process,” she says.

The process by which a prospective marijuana producer becomes legitimate first involves getting a criminal record check. They then file a security clearance application form, which is submitted to Health Canada, which then passes it on to the RCMP. The RCMP then carry out a more in-depth investigation into the person applying, which includes their work history, family ties, criminal investigations or complaints, and a report is made and sent back to Health Canada. Health Canada then determines whether that person “poses a risk to the integrity of the legal framework for cannabis in Canada,” Fraser says.

One issue with the law is that Health Canada has discretion over granting security clearances for those seeking licences to grow and produce marijuana, which Fraser says denies her the clarity to be able to advise clients. A potential criterion for being denied is whether the person has had any involvement in the illicit market, she says.

Fraser testified before the House of Commons and has made submissions to Health Canada expressing that security clearance tests need to be drafted in a clear way and that prior involvement in the marijuana business should not form the basis for refusal, she says.

Fraser says that as long as someone has no history of violence, connection to organized crime or involvement with other drugs, something like producing cookies or brownies that were sold in a dispensary should not exclude someone from the legal market.

“This is a very unique situation we have here where we have such an established, pervasive illicit market,” she says. “From a very practical perspective, I don't think you're going to do very well at achieving the objective of displacing the black market if you're systematically excluding the black market from the legal one.”

Fraser says the rules seem to have been drafted in a way that prior illicit conduct with cannabis is a good indicator of future illicit conduct.

“I don’t think that’s necessarily the case,” she says.

According to Statistics Canada, the country’s cannabis black market was worth as much as $6.2 billion in 2015. For those in the industry to want to stay legal and tax-paying requires regulations and tax policy that does not push consumers, sellers and producers back to the black market, says Queen’s Law professor Arthur Cockfield.

Cockfield says taxes should be low and should not include excise taxes, such as those that apply to cigarettes and alcohol.

“In the longer run, you could consider raising them, but the first thing is to get this vibrant market away from the mob and then go from there,” he says.

Cockfield also recommends that illegal dispensaries, in operation prior to legalization, be allowed to operate in the legal market.

“If they’re still in the black market, they’re not going to comply with tax law,” he says.

While Cockfield does not want to see marijuana taxed like alcohol and cigarettes, criminal defence lawyer Jordan Gold says the law surrounding driving while intoxicated from marijuana is trying to mimic roadside testing for drinking and driving, even though police are not scientifically capable of doing so.

“They're sort of trying to shoehorn in legislation that fits with the model for drinking and driving, but there are significant differences,” Gold says.

There is no accurate way to determine if someone is under the influence of marijuana, says Gold. Taking their blood and testing for THC is insufficient because, when a person uses marijuana, it stays in their system long after a person has sobered up. For regular users, their blood contains THC for weeks after use.

“If it can stay in your system for a long time, it's impossible to expect people to never drive if you ever use cannabis or if you're a regular user. You can’t drive for fear that you may be arrested and charged and convicted,” he says.

Marijuana retail is regulated at the provincial level, so provinces are developing their own rules, such as Ontario’s Cannabis Act, proposed last year.

Gold says that the mixture of the federal and provincial laws “criminalizes some pretty benign and absurd things.”

The federal law makes it illegal to possess or distribute illicit cannabis, which would be product not obtained from someone not licensed under the provincial act. Gold says Ontario’s act is “very broad” and prohibits selling to a person who looks to be under age 25 without asking for ID.

“So, technically speaking, if you buy cannabis and you look under 25 and the employee forgot to ask for ID, you're now in possession of illicit cannabis and which is a serious crime under the federal act,” he says.

In Ontario, you’re also not allowed to distribute to a person who appears intoxicated.

“If you're at a party and someone’s had a few drinks and you pass them a joint, technically, you've just breached the Ontario Act and the person who is taking the joint is now holding illicit cannabis under the federal act,” he says.

Gold says legalization will represent positive steps away from spending resources policing and prosecuting cannabis offences and criminalizing those who use the drug, although “there are many, many behaviours associated with using cannabis that remain criminal under this bill with serious consequences.”