eCaseNote 2017 No. 03

The Implications of the Cannabis Act for Commercial Interests: A First Reading of Bill C-45

On April 13, 2017, Federal Justice Minister Jody Wilson-Raybould tabled Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts, also known by its short title as the Cannabis Act (the “Act”). In brief, the Act will legalize the possession of up to 30 grams of Cannabis for adults in Canada over the age of 18. The Federal government will allow individuals to possess and grow up to 4 plants per residence. However, the production of Cannabis will be highly regulated by the Federal Government through a licensing regime, and the sale of Cannabis will largely be left up to the provinces and territories. For those seeking to enter the Cannabis industry, either as a producer or a retail seller, as well as for those who will undoubtedly interact with commercial Cannabis enterprises – including lenders, landlords, and many others – there still remains many questions about the composition of the Cannabis legal regime. What follows isa very brief overview of how the legal regulation of the Cannabis industry has been laid out in the Act, what the implications of those provisions are, and what questions remain.

The Criminal Prohibition. The age of majority for the possession of Cannabis is 18 years old. The Act makes it a criminal offence to sell to a minor (under 18) or use a minor to commit a cannabis-related offence. It is important, then, for Cannabis retailers to impose strict internal rules about identification as the minimum penalty for selling to a minor is a $15,000.00 fine and/or 18 months in prison. Moreover, individuals cannot possess over 30 grams of dried Cannabis flower, so Cannabis retailers will need to be cognizant of the amount that they sell. Moreover, selling Cannabis without a license is punishable for up to 14 years in jail or a hefty fine, so those seeking to enter the industry should obtain the proper licenses and/or permits well in advance of entering the market.

Production. According to the Act, the Federal Government will impose strict restrictions on the production of Cannabis for retail sale through the use of licenses and permits. The Act allows the Minister of Justice to establish different classes of licenses, and impose various conditions on those licenses, to ensure that purveyors of Cannabis product comply with the rules and regulations

surrounding Cannabis production. For instance, the Act prohibits certain substances from being included in Cannabis product, including nicotine and caffeine. However, the process for applying for licenses or permits, and the different classes of licenses or permits, has not been released by the Federal Government.

The Act also strictly regulates the marketing of Cannabis products to the public, proposing to market only very specific information about the product, and strictly prohibits marketing of Cannabis to youth. The Act specifies that only informational promotion (i.e., information about the potency or availability of product) is allowed for both Cannabis products and related accessories, except at the point of sale where further information may be given to customers. The Act also strictly controls the packaging, labelling, and display of Cannabis product.

Retail Sale of Cannabis. Other than prohibiting the sale of Cannabis to minors, and prohibiting the sale of Cannabis product through a self-service dispensing device, like a vending machine, much of the rules and regulations around the retail sale of Cannabis and related products will be left up to individual provinces. However, it is premature to predict how this model will operate or how the Government of Newfoundland and Labrador will address the sale of Cannabis. For instance, it could be sold through a Crown Corporation (like the Newfoundland Liquor Corporation) or it could be sold through privately-owned retail stores. To date, the Provincial Department of Justice has not announced its intentions for the retail sale of Cannabis, but has promised a robust consultation process which will allow the various stakeholders (including those interested in selling Cannabis products) to have input.

While many of the implications for commercial enterprises have been set out in the Act, there is much that remains to be seen, especially from the Provincial Government on how it proposes to regulate the sale of Cannabis. That being said, it is important for commercial enterprises – including employers, landlords, lenders, and others – to be apprised of the basics of the Act as legal Cannabis enterprises begin to move into the market. Please watch for further eCaseNotes as more information becomes available about the production and sale of Cannabis in Canada and in Newfoundland and Labrador.

The comments contained in this eCaseNote provide general information only and should not be construed as legal advice or opinion. For more information or specific advice on matters of interest, please call our offices at (709) 579-2081.