Areas of
Practice

Government announces legislative review of Cannabis Act, one year late

Thursday, September 22, 2022 @ 5:22 PM | By Elizabeth Raymer


The federal government’s legislative review of the Cannabis Act was announced on Sept. 22, a year later than promised, though under the terms of the Act the review must be completed 18 months after it begins.

Three objectives were identified by the government three years after passage of the Act: to better address the illicit marketplace in cannabis; “to empower the industry to deliver for patients,” and to remove obstacles to the purchase of medical cannabis; and to address past injustices due to criminalization of cannabis possession, said member of Parliament for Beaches-East York Nathaniel Erskine-Smith, who moderated the government’s Sept. 22 press conference.

Jean-Yves Duclos, minister of health, and Carolyn Bennett, minister of mental health and addictions and associate minister of health, announced the launch of the review, along with the appointment of Morris Rosenberg as chairman of the expert panel that will review the legislation.

Rosenberg, a lawyer by background, is a former federal deputy minister of justice, health and foreign affairs. He holds an LL.L. from the Université de Montréal and an LL.M. from Harvard University.

“He also has an informed understanding of the relationships between the government of Canada, provinces and territories, and Indigenous peoples,” Health Canada said in a statement, adding that the four other members of the expert panel will be announced in coming weeks.

The panel is intended to provide independent and expert advice to Ministers Duclos and Bennett “on progress made towards achieving the Act’s objectives, and will help identify priority areas for improving the functioning of the legislation.”

“It is stated in the Act that the review should focus particularly on the health and cannabis consumption habits of young persons, the impact of cannabis on Indigenous persons and communities, and the impact of the cultivation of cannabis plants in a housing context.”

The panel is expected to broaden the focus to include:
  • Economic, social and environmental impacts of the Act;
  • Progress towards providing adults with access to strictly regulated, lower risk, legal cannabis products;
  • Progress made in deterring criminal activity and displacing the illicit cannabis market;
  • Impact of legalization and regulation on access to cannabis for medical purposes; and
  • Impacts on Indigenous peoples, racialized communitie, and women who might be at greater risk of harm or face greater barriers to participation in the legal industry based on identity or socioeconomic factors.

The expert panel will engage with various stakeholders, including provincial and territorial governments, Indigenous peoples, youth, marginalized and racialized communities, cannabis industry representatives and those who access cannabis for medical purposes.

Public consultations will be held until Nov. 21, and the public may share their views via an online questionnaire or through written and mailed feedback.

The review was meant to have started three years after the Cannabis Act came into force, in October 2018.  

Torkin Manes partner Matt Maurer, who is co-chair of that firm’s cannabis law group, noted that the review was “long overdue” and said it was “disappointing that a lot of the action items are things that could have been undertaken a long time ago in the run-up to the review.”

As examples, Maurer gave: the selection of the other four members of the expert panel; the commencement of engagement with various stakeholders; and the commencement of any studies to be done in connection with the review.

“Instead, what we have is the start of a process that will compile information (likely over a lengthy period of time) before the information is then applied and recommendations are then made thereafter,” he told The Lawyer’s Daily in an e-mail.

The review could result in changes to potency of cannabis sold, and to packaging restrictions, as well as tax regulations, Duclos told reporters at the media briefing.

The cannabis industry has long complained of stringent packaging requirements, which cannot appeal to youths, depicts people, characters and animals, or evoke “glamour, recreation, excitement (and) vitality.”

Maurer says he doesn’t expect the packaging requirements to change much, but calls it “a bit absurd that alcohol, which is arguably more dangerous to youth than cannabis, can have all sorts of advertising that is appealing to youth and cannabis products have exceptionally restrictive advertising regulations.”

“That is not to say that cannabis companies should be able to target youth with their advertising, but the regulations are so restrictive that it makes it difficult to meaningfully differentiate between competitors when it comes to packaging and advertising.” Some cannabis producers reportedly play it safe by selling their product in black jars, leaving it to retailers to explain the differences between the products.

As well, “there has been frustration in the industry since the Cannabis Act was passed, if not before, when it was being debated, that certain products which have essentially no psychoactive effects would not be made widely available,” Maurer said.

For example, he noted, if a consumer wishes to buy CBD topical cream for pain relief or other purposes, it must be purchased through a provincial or territorial government agency responsible for selling cannabis products, or through provincially or territorially licensed cannabis retailers. But many believe “that there is no logical reason that products such as these could not be readily available in pharmacies, grocery and health product stores,” he added.

“Pushing those products into a heavily regulated supply chain only limits accessibility and necessarily drives up the price for consumers.”

Duclos said he didn’t yet know when CBD and related products would be available through pharmacies and the like.

Other issues producers have struggled with include excise tax regulations, which believe “it adds an unnecessary, meaningful cost to the production of their products,” Maurer noted.

Distribution at cannabis stores has been uneven, with store owners often competing with each other in neighbourhoods, while elsewhere municipalities have decided not to allow “pot shops.” But this is provincial and territorial matter, “as the Cannabis Act effectively delegates the rules surrounding sale and distribution to the provinces and territories,” he explained.

“The clustering of stores, where that has occurred, is due in large part to the nature of the application process,” whereby most stores (in Ontario, at least) applying for licences were required to submit a lease or other document demonstrating a legal right to utilize the real property as part of the application process.

“The location of potential cannabis stores are not made public until they enter the ‘public notice consultation’ phase of the application,” Maurer commented, “and as such, business owners scrambled to find leases in desirable neighbourhoods and often had no meaningful way of finding out how many competitors were in the area until well after leases had been signed and build out costs had been incurred.”

As for the rise and fall of the cannabis industry’s fortunes, Maurer says the “cannabis companies themselves are as much to blame for staff layoffs and facility closures as the government is.”

Regulations governing the industry were known from the outset, he said, and many companies undertook "very aggressive business strategies" that entailed expansion into multiple facilities across Canada and internationally, in Africa and Europe.

“These companies happily spent money hand over fist in an attempt to grab a large portion of the market share and increase their share prices," he added. “In the end, it seems that the companies that are doing the best are those that not only had a thoughtful business plan, but stuck to it when peer pressure to grow … in the industry was rampant.”

If you have any information, story ideas or news tips for The Lawyer’s Daily on business-related law and litigation, including class actions, please contact Elizabeth Raymer at elizabeth.raymer@lexisnexis.ca or 905-415-5888.