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Client Update: Cannabis Act regulations – now we are really getting into the weeds!

Rick Dunlop and Kevin Landry

As we explained in The Cannabis Act- Getting into the Weeds, the Cannabis Act introduces a regulatory regime for recreational marijuana in Canada. The regime promises to be complex.

The details of legalization will be in the regulations which are not yet available to the public. The Cannabis Act sets the framework for legalization, but leaves the details to be “prescribed” in the regulations.

In short, the Cannabis Act says that marijuana will be legal to sell and use recreationally. The regulations will tell us almost everything else.

Regulating a new industry is complicated. There are hundreds of policy decisions that need to be made and incorporated into the regulations before the stated legalization date of July 1, 2018 or sooner. In this article, we outline some of the types of policy decisions that have to be made.

What is going to be in the regulations?

Rules about import, export, packaging, storage, sale, possession and disposal of cannabis. The Cannabis Act provides that these activities will soon be legal in some form, so there are numerous important considerations. For example, what will the packaging and storage rules look like with respect to recreational cannabis that can be ingested.

Licensing procedures for import, export, packaging, storage, sale, possession and disposal of cannabis. Licensing is a complicated process. First, some government body will need to take charge of administering the licenses (passport offices? motor vehicle depots?). Then, databases must be set up to collect information for applicants and licensees. To ensure fair and transparent decision making, rules for maintaining licenses, renewing licenses, revoking licenses and awarding licenses will need to be made and circulated. Decisions need to be made regarding what the licenses will cover – is it sufficient to have one license for everything from import to consumer sales? Or is it better to have separate licenses for each activity? Colorado has created separate licenses for retail stores, cultivation, product manufacturing, testing and transporting.

How to implement the cannabis tracking system in Part 6 of the Cannabis Act. Tracking other controlled substances is crucial to ensuring they are not going to illicit activities (an explicit goal of the Cannabis Act). To overcome these challenges, Colorado has made a requirement for Radio Frequency Identification (RFID) tracking of marijuana in their jurisdiction and has rules about data input at retail stores. Tracking is also important for collecting data, which can be utilized to improve and evaluate the effectiveness of the Cannabis Act; but part of the challenge is determining what to track. Andrew Freedman, Colorado’s former Director of Marijuana Co-ordination, outlined the importance of designing good data gathering metrics in a recent interview:

One of the things we didn’t do as well as we could have is set great baseline data. We were not measuring some things that were really important to us, like, how many kids were being suspended from school for marijuana? We were not measuring that, which meant we didn’t have a way to know if that changed after we legalized. … Making sure you’re measuring things that matter to you so you can change policy along the way is really important.

Composition and strength of cannabis. The appropriate composition and strength of cannabis being sold for recreational use is fraught with debate and converging interests. The Centre for Mental Health and Addiction has stated that “High potency cannabis – that is, cannabis with a high concentration of tetrahydrocannabinol (THC), the main psychoactive component of cannabis – places users at higher risk of mental health problems than low-potency cannabis”. The Canadian Medical Associationadvocates for the legal age to be set at 21, with quantities and potency of marijuana restricted for those under age 25. The rationale for this stance is that brain development only finalizes at age 25.

Procedures for Quality Control. The Cannabis Act aims to “protect public health and public safety by establishing strict product safety and product quality requirements”. So, like alcohol, quality control will be necessary to avoid the equivalent of the “moonshine days.”

Prescribing forms for the purposes of the Act. Simply designing all the standard forms associated with legalization is a gargantuan task. Careful consideration must be made as to what data is collected, how the forms can be accessed and what form licenses will take.

Acceptable display of cannabis. Displaying cannabis must be done in a manner that will keep it safe to consume, but not be open and appealing to youth. For example, in Nova Scotia, tobacco has been regulated under the Tobacco Access Act and regulations. Some restrictions require visible display of door decals or point of purchase identification signs being displayed by vendors. Tobacco products are also not allowed to be visible from outside the store and must be stored in opaque counters or cabinets. The regulations in Nova Scotia are exacting – even dictating the maximum size of signs and lettering as well as what colors may be used. For tobacco there are different considerations and display rules for vendors and tobacconists – which leaves the door open for specialty marijuana purveyors.

Determining prohibited terms, expressions, logos, symbols or illustrations. The Cannabis Act prohibits the use of prescribed terms in promotions or packaging of cannabis and cannabis accessories. The question here is what will the government prohibit? Given the similarities of the Cannabis Act and Tobacco Act, it would not be surprising to see detailed regulations outlining the size of logos and brand elements on marijuana packaging or a requirement to include a health warning in a similar fashion to the Tobacco Products Labelling Regulations (Cigarettes and Little Cigars).

Recall orders. As with any product for consumers, there will inevitably be recalls of marijuana once it is sold to consumer; some recalls have already occurred in the medical cannabis industry. The regulations will have to address what information is disclosed to the public and what systems producers and sellers need to have in order to enable recalls of potentially harmful product.

Fixing penalties, and fines for violations of the Act or regulations, and the cost of licenses. Everything has a cost; licenses to sell and distribute marijuana will be no exception. This is an area of particular interest to many since some provinces like New Brunswick see the newly legalized marijuana industry as significant revenue source. Colorado lists a variety of licensing fees in their legislation ranging from US $200 -US $6,000.

What information about the cannabis the seller or distributor must make available to the public. Food has to display nutritional information, alcohol must display alcohol content, but what information do consumers need to know about marijuana? The Centre for Addiction and Mental Health suggests the THC And CBD (Cannabidiol) content at minimum should be displayed on recreational marijuana. It is also important to consider what information should be kept from consumers. The Tobacco Products Labelling Regulations (Cigarettes and Little Cigars) has exacting requirements, which necessitate the inclusion of health messages and limitation on the size of logos and branding information on tobacco products.

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