Cannabis in Canada. The State of the Law. Current as of May 7, 2018

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1 Cannabis in Canada The State of the Law Current as of May 7, 2018 On April 13, 2017, the Canadian Federal Government introduced the first draft of the Cannabis Act setting out the federal regulatory framework for legalization of cannabis for non-medical purposes, including personal possession limitations, minimum age requirements, authorization for personal production and restrictions on the locations for cannabis consumption. Since its introduction, the Cannabis Act has been passed by the House of Commons and has been sent to the Senate for approval. Further details on the federal Cannabis Act and proposed regulations are set out below under the heading Federal Licensing Regime. The Cannabis Act reserved significant discretion for the provinces with respect to the distribution, sale and retailing of cannabis. To date, every province and territory in Canada has tabled legislation outlining their plans for regulating recreational cannabis. Certain provinces have proposed a crown corporation model with a government entity to maintain oversight and control over cannabis distribution whereas other provinces have indicated support for private retailers or public-private hybrid models. Further details on the proposed distribution models of each province and territory are set out below under the heading Provincial Distribution Models. In addition, the Cannabis Act provided provincial and territorial governments with discretion to determine where individuals would be permitted to smoke or vape cannabis. Further details on the proposed restrictions of each province and territory are set out below under the heading Consumption Options. In addition, the Cannabis Act deferred certain considerations to be included in regulations. On November 21, 2017, Health Canada released its proposed approach to the regulation of cannabis. Under the current medical cannabis regime, a licensed producer is required to conduct all activities from seed-to-sale. However, the proposed regulations contemplate specific authorizations to be granted that differentiate between cultivation, processing and sales licenses. In addition, the proposal suggests the implementation of micro-cultivation and micro-processing licenses as well as industrial hemp and nursery cultivation licenses. Further details on the proposed regulations are set out below under the heading Federal Regulations. Currently, cannabis is only available in Canada for medical purposes. Patients with a valid medical prescription must purchase cannabis directly from a licensed producer. Licensed producers are not permitted to have retail outlets and the only form of distribution is through direct mail order. Purchasing cannabis from local dispensaries, commonly referred to as the grey-market, is not currently a legally authorized distribution channel. As of May 7, 2018, there are 104 licensed producers in Canada; however, only 45 licensed producers have a license that permits them to sell cannabis products. In addition, certain companies hold multiple licenses to produce: Canopy Growth Corporation holds ten licenses (three pursuant to joint ventures), of which only seven licenses authorize sales; Aurora Cannabis Inc. holds four licenses, of which only two licenses authorize sales; Emerald Health Therapeutics Canada Inc. holds four licenses (one pursuant to a joint venture), of which only two licenses authorize sales; Aphria Inc., CannTrust Inc., Cronos Group Inc., Maricann Inc., MedReleaf Corp., and Tilray each hold two licenses; and

2 RedeCan Pharm and Zenabis Ltd. each hold two licenses, of which only one license authorizes sales. Health Canada has not proposed to limit the number of licenses that the federal government will be permitted to issue. Under the current medical cannabis regime, patients are only permitted to purchase fresh or dried cannabis, cannabis oil, plants and seeds for cultivation as some patients have a personal production license which permits the production of medical cannabis for personal use. The Cannabis Act will permit consumers to purchase the same forms of cannabis as the current medical regime; however, the Cannabis Act does contemplate introducing a regime for cannabis concentrates and edibles within 12 months of the Cannabis Act coming into force. Further details on the types of products to be available in Canada are set out below under the heading Product Options. Federal Licensing Regime The Cannabis Act would allow adults who are 18 years or older to legally: possess up to 30 grams of legal dried cannabis or equivalent in non-dried form; share up to 30 grams of legal cannabis with other adults; purchase dried or fresh cannabis and cannabis oil from a provincially-licensed retailer; grow up to four cannabis plants per residence for personal use from licensed seed or seedlings; and make cannabis products, such as food and drinks, at home provided that organic solvents are not used. The Cannabis Act provided provinces and territories the power to: increase the minimum age to purchase and consume cannabis; lower the personal cannabis possession limit; create additional rules for growing cannabis at home, such as lowering the number of plants permitted per residence; and restrict where adults can consume cannabis, such as in public or in vehicles. Accordingly, certain provinces and territories have proposed various regulations in connection to the rules and restrictions set forth in the Cannabis Act, summarized in the chart below. Provincial State of Cannabis Laws re: Minimum Age, Possession, and Personal Cultivation Minimum Age Possession Limit Personal Cultivation Restrictions BC 19 30g Permitted as per the Cannabis Act, however, the plants must not be visible from public spaces off the property and landlords and strata councils will be able to restrict or prohibit home cultivation. Home cultivation of non-medical cannabis will also be banned in any dwellings used as daycares AB 18 30g Permitted as per the Cannabis Act, however renters, condodwellers and those who live in mutli-family dwellings may be restricted from growing cannabis in their homes based on rules established in rental agreements or condominium bylaws SK 19 30g Permitted as per the Cannabis Act, however, landlords to be permitted to establish reasonable restrictions on growing MB 19 30g Personal cultivation not to be permitted ON 19 30g Permitted as per the Cannabis Act QC 18 30g (and a maximum of 150g permitted in home) NL 19 30g Unknown Personal cultivation not to be permitted

3 Provincial State of Cannabis Laws re: Minimum Age, Possession, and Personal Cultivation Minimum Age Possession Limit Personal Cultivation Restrictions NB 19 30g Personal cultivation to be permitted indoors in a separate locked space. Personal cultivation to be permitted outdoors in a locked enclosure at least 1.52m high NS 19 30g Permitted as per the Cannabis Act, however, landlords will be permitted to amend leases to put reasonable rules in place about recreational cannabis and cultivation. Landlords must provide four months notice of this change to the tenant before April 30, 2019 and the tenant may choose to terminate the lease upon receiving such notice PE 19 30g Permitted as per the Cannabis Act, however, renters will require landlord approval prior to cultivating cannabis on rental property YK 19 30g Permitted as per the Cannabis Act NT 19 30g Permitted as per the Cannabis Act NU 19 30g Unknown Criminal Penalties and Related Enforcement Frameworks As part of the proposed framework for regulating cannabis in Canada, the Federal Government introduced new penalties under the Criminal Code (Canada). Penalties for the illegal sale of cannabis, possession of cannabis over the prescribed limit and production of cannabis beyond personal cultivation limits or with organic solvents range from tickets for minor infractions to a maximum of 14 years in prison. The penalty for taking cannabis across Canadian borders would carry a maximum penalty of 14 years in prison. The Cannabis Act also introduced two new criminal offences, one for giving or selling cannabis to a youth, and the other for involving a youth to commit a cannabisrelated offence. Both new offences would carry maximum penalties of 14 years in prison. Bill C-46, An Act to amend the Criminal Code (offences relating to conveyances) and to make consequential amendments to other Acts, proposes new testing powers and penalties for drug-impaired driving. Currently, police officers cannot test for the presence of drugs at a roadside stop. Bill C-46 allows police officers to test oral fluid or demand a blood sample if they reasonably suspect that a driver is impaired by drugs. The proposed new penalties for drug-impaired driving are set forth in the chart below. Certain provinces have also introduced additional enforcement measures as set out below under the heading Additional Provincial Enforcement. Offence Driving with 2 nanograms (ng) but less than 5ng of THC per 1 millilitre (ml) of blood Driving with 5ng or more of THC per 1ml of blood Driving with 2.5ng or more of THC per 1ml of blood and 50 milligrams of alcohol per 100ml of blood Penalties Maximum $1,000 fine First offence Second offence Third and subsequent offences First offence Second offence Third and subsequent offences Maximum $1,000 fine Mandatory imprisonment for 30 days Mandatory imprisonment for 120 days Minimum $1,000 fine Mandatory imprisonment for 30 days Mandatory imprisonment for 120 days

4 Federal Regulations Licensing The proposed regulations under the Cannabis Act contemplate cultivation licenses for standard cultivation, micro-cultivation, industrial hemp cultivation and nursery cultivation, standard and micro- processing licenses as well as sales licenses for medical or non-medical use. Licenses to sell for non-medical use will be limited to provinces where local distribution models have not been implemented. In addition, the proposal includes generally less cumbersome personnel and physical security obligations than currently contemplated under the medical cannabis regime. Packaging and Labelling The proposed regulations would require packaging for cannabis products to have a single, uniform colour with a standardized font style. Producers will be allowed to use their brand name and logo on the packaging, but they will be subject to size limitations and can only be used once on the principal display. Other graphics, images or alterations to the packaging (such as special coatings, embossing or cut-outs) will be prohibited, though the size, shape and material used in the packaging will not be standardized. All packaging must be child resistant, as well as opaque or translucent and tamper evident. Packaging would also require a list of information about the product, including the name and contact information of the processor, product description, THC and CBD content, potential allergens and the statement Keep out of reach of children. Packaging would also have to include a universal symbol in the form of a stop sign denoting that it is a cannabis product, as well as a health warning message inside a yellow box printed in the largest font on the label. Similar to the warnings on cigarettes, the messages would rotate and include things such as Cannabis smoke is harmful, Do not use if pregnant or breastfeeding and Regular use of cannabis can increase the risk of psychosis and schizophrenia. The Cannabis Act itself prohibits testimonials, lifestyle branding and packaging that is appealing to youth. Further details on the proposed regulations can be found in our December 5, 2017 blog post. Taxes On October 3, 2017, the Federal Government released its proposal for a federal excise duty on the sale of cannabis. The Government of Canada indicated that the total of federal duty rates and provincial-territorial taxes on cannabis products should not exceed $1.00 per gram, or 10 per cent of the producer s sale price of a product. Under the proposal, the proposed federal excise duty rate would be 50 cents per gram of cannabis, or 5 per cent of the producer s sale price of that product. In addition, it was noted that cannabis product sales will also be taxable under the Goods and Services Tax/Harmonized Sales Tax (GST/HST). Under the original proposal, revenues would be evenly split between the Federal and Provincial Governments; however, on December 18, 2017, the Federal and Provincial Governments reached a deal providing that the Federal Government will receive 25% of the revenues up to a cap of $100 million. Under the deal, the Provincial Governments will receive the other 75% of revenues and 100% of the revenues over and above the $100 million federal cap. Provincial Distribution Models Similar to the distribution of alcohol, each provincial and territorial government has been designated the power to determine how cannabis will be distributed within their respective provinces and territories. Alberta Cannabis in Alberta will be sold pursuant to a hybrid public-private model. Retail sales will be handled by privately run stores while online sales will be managed by a government-operated website with an age-verification system to customers are 18 years of age and over. Physical retail locations will be subject to government regulations and the terms of licenses granted by the Alberta Gaming and Liquor Commission (AGLC) and will display point-of-purchase signage and other materials to educate customers about making responsible choices about cannabis. The AGLC began accepting private retail license applications on March 6, Potential retailers and workers will be subject to mandatory background checks and no individual(s) or entity will be permitted to hold more than 15% of all retail cannabis licenses in the province. Retail locations will be required to be a minimum of 100

5 metres away from provincial health care facilities, schools, and municipal school reserves, although municipalities may amend the minimum distance requirements. Retail locations will not be permitted to sell pharmaceutical products, tobacco, or alcohol. British Columbia In British Columbia, cannabis will be sold pursuant to a hybrid public-private model whereby the BC Liquor Distribution Branch (LDB) will operate standalone retail stores and offer online sales under the brand BC Cannabis Stores and private retailers will operate standalone retail stores only. The operating rules governing public and private retail stores will be similar to those currently in place for liquor stores. In urban areas, licensed retailers will not be permitted to sell cannabis in the same stores as liquor or tobacco. Certain exceptions will be established for rural non-medical cannabis stores similar to those currently in place for rural liquor stores which permit the sale of liquor by independently-owned full-service general grocery stores. The LDB will oversee the distribution of cannabis, while the Liquor Control and Licensing Branch (LCLB) will be responsible for licensing and monitoring the retail sector. Pursuant to British Columbia s model, federally licensed producers will supply cannabis to the LDB who will be the sole wholesale distributor of non-medicinal cannabis to public and private retailers. The LDB expects to open the first BC Cannabis Store and to offer online sales to the public by the end of summer The LCLB will launch an online application portal for individuals and businesses interested in applying for a non-medical cannabis retail licence in spring While non-medical cannabis retail license applications will be open to the public, British Columbia is the first province to introduce restrictions on the vertical integration of cannabis businesses. Specifically, no retail licenses will be issued, renewed, transferred or amended to or for: (i) a person who has arranged, or agreed to arrange, with another person to sell the cannabis of a licensed producer to the exclusion of the cannabis of another licensed producer; (ii) a licensed producer or the licensed producer s agent; or (iii) a person who is associated with, connected with or financially interested in a licensed producer or a licensed producer s agent if that person is likely to promote the sale of such licensed producer s cannabis. Manitoba Manitoba announced plans to establish a hybrid retail and distribution model with both private and public actors. Four applicants have been conditionally approved to receive retail licenses pursuant to the province s RFP process. Subject to final approval, the private retailers will have the right to sell cannabis to recreational users, while the Manitoba Liquor and Lotteries Corporation will take on the responsibilities involved with regulating the licensing, purchasing, storage, supply, and distribution of cannabis throughout the province. Licensed private retailers with physical storefronts will also have the opportunity to get a license to establish their own online retail platforms. However, the Province of Manitoba will allow each municipality to decide if private cannabis retail stores will be permitted to operate in their communities. New Brunswick New Brunswick announced its intention to allow NB Liquor to control the distribution of cannabis in the early stages of legalization. The initial plan is to have 20 freestanding, crown-controlled stores in 15 communities across the province as well as a platform in order to purchase cannabis online. Newfoundland and Labrador Newfoundland and Labrador will allow for the sale of cannabis through private retailers. The licenses will be issued to approved sellers by the Newfoundland and Labrador Liquor Corporation (NLC), and online platforms will be developed to satisfy demand from more remote locations across the province. The NLC may also establish its own retail locations to sell cannabis products in areas that are not otherwise serviced by private retailers. Nova Scotia Cannabis will be sold by the Nova Scotia Liquor Corporation (NSLC) both in existing NSLC locations and via an online platform. Nova Scotia is the only province that plans to sell cannabis in the same location as alcohol products. In places where cannabis is sold, signs will be posted about the dangers of using cannabis and alcohol together, there will be no cross-promotion of cannabis and alcohol, and cannabis products will be sold

6 in a separate area where they won t be visible from the rest of the store and where youth under the age of 19 won t be allowed. Recreational cannabis will be sold at nine NSLC stores located in provincial population hubs, with one location being a stand-alone store. Ontario Ontario is creating a new provincial retailer, to be overseen by a subsidiary of the Liquor Control Board of Ontario (LCBO), the Ontario Cannabis Retail Corporation (OCRC). Approximately 150 standalone, OCRC-controlled stores will be opened by 2020, 40 of which are set to open as of July 2018, with another 40 scheduled to open by July As well, individuals will be able to purchase cannabis through an OCRC-controlled online distributor as of July Further details on the Ontario distribution model can be found in our September 8, 2017 blog post. Prince Edward Island Cannabis will be sold through the Province of Prince Edward Island s Liquor Control Commission at four retail store locations that are distinct from the province s alcohol retail stores. The province will also permit online orders for home delivery. Quebec The Province of Quebec announced that the distribution of cannabis in Quebec will be organized through its liquor board, the Société des alcools du Québec or Quebec Alcohol Corporation (SAQ). The original plan is to open 15 stores across the province and to create an online platform. Saskatchewan The Saskatchewan Liquor and Gaming Authority (SLGA) will be responsible for regulating the wholesale distribution and retailing of cannabis and will issue licenses to private retailers and wholesalers throughout the province. There are 51 retail permits available in 32 communities electing to proceed with all, or a percentage of, the allowable number of retail establishments within their community. Licensed retailers will have the option to sell cannabis both in-store and online. The selection process for cannabis retail permits closed on April 10, 2018 and the application process for cannabis wholesale permits began in April Northwest Territories The N.W.T Liquor Commission will be responsible for the distribution and sale of cannabis throughout the territory. Cannabis will initially be sold through existing liquor stores, but the proposed legislation provides for the possibility of cannabis-only stores in the future, regulated by the N.W.T Liquor Commission. In communities without a liquor store, consumers will be permitted to order cannabis through the current mail order system used by the N.W.T Liquor Commission for alcohol. In places where cannabis is sold, signs about the health risks of using cannabis must be posted. Failure to post the required signage could result in fines. The territory has also proposed that communities in the Northwest Territories have options for restricting or banning cannabis by holding a plebiscite, similar to the options available to communities for restricting or banning liquor. Under the proposal there would be two types of communities, prohibited and restricted. Prohibited communities would have a ban on possessing, consuming and transporting recreational cannabis in the community, and restricted communities would place limits on the quantity or types of recreational cannabis that could be possessed, consumed or transported in the community. Nunavut The Nunavut Liquor Commission (NULC) will oversee the territory s cannabis system. The NULC will have direct control over cannabis but is proposing to establish an agency model whereby the Minister will be permitted to appoint one or more agents to sell cannabis on behalf of the NULC. This proposal would see the NULC outsource cannabis sales to third parties, including private retailers, who would be subject to strict oversight from the NULC on matters such as type of cannabis sold, product price, reporting, sales locations, and messaging. The NULC is proposing to allow itself or its agents to sell cannabis through physical stores and online sales. The NULC does not plan to open a physical location in Remote sales would also be permitted, either online or by phone, so that adults can purchase and ship cannabis to their communities.

7 Yukon The Yukon Liquor Corporation will be the sole authority responsible for importing, warehousing, transporting and distributing cannabis in the Yukon. The Cannabis Licensing Board will be responsible for issuing retail licenses to private cannabis retailers. Product Options Upon implementation of the Cannabis Act, individuals of age in their province or territory will be able to purchase fresh or dried cannabis, cannabis oil, plants and seeds for cultivation from approved distributors, and if not available within a province, then directly from a federally licensed producer. Current legislation is unclear on the sale of hashish, as it does not directly fall within any of the permitted categories of cannabis products. The Cannabis Act allows for an individual of legal age to possess up to 30 grams of dried legal cannabis in public. For the other permitted products, the Federal Government provided a conversion chart to establish possession limits. As such, one gram of dried cannabis will be equal to: 5 grams of fresh cannabis, 15 grams of edible product, 70 grams of liquid product, 0.25 grams of concentrates (solid or liquid), or 1 cannabis plant seed. As previously noted, consumers will not be permitted to purchase edible or concentrated forms of cannabis until a year following the Cannabis Act has come into force. The Federal Government has stated that it needs more time to properly regulate the distribution of such forms of cannabis products. Consumption Options While consumers product options will generally be standardized across the country, each provincial and territorial government has the authority to determine where individuals will be permitted to consume cannabis. Alberta In Alberta, individuals will be permitted to consume cannabis in their homes and in certain public spaces where smoking tobacco is allowed, but consumption in cars will be prohibited, with the exception of those being used as temporary residences, such as a parked RV. Public smoking or vaping of cannabis in Alberta will be prohibited in any place where tobacco is restricted as well as hospitals, schools, child care facilities, playgrounds, sports field, zoos and outdoor pools, among others. Consumption of cannabis at cannabis retail outlets will be prohibited. Though cannabis cafes and lounges will not be permitted initially, Alberta s legislation gives the authority to regulate these forms of establishments should the province decide to allow them at a later date. British Columbia British Columbia will generally allow adults to use non-medical cannabis in public spaces where tobacco smoking and vaping are permitted. However, to minimize child and youth exposure, smoking and vaping of nonmedical cannabis will be banned in areas frequented by children, including schools, community beaches, parks and playgrounds. Use of cannabis in any form will also be banned for all occupants in vehicles and boats. Local governments will be able to set additional restrictions, as they do now for tobacco use. In addition, landlords and strata councils will be able to restrict or prohibit non-medical cannabis smoking at tenanted and strata properties. Manitoba Manitoba will not permit the consumption of cannabis in any public places. New Brunswick New Brunswick will not permit the consumption of cannabis in any public places. Newfoundland and Labrador Newfoundland has proposed that cannabis will not be permitted to be consumed in public and individuals will only be able to consume cannabis products in their homes or on private property. Nova Scotia In Nova Scotia, public consumption of cannabis will be restricted by the Smoke-free Places Act. Smoking of cannabis will be prohibited in all indoor public places and workplaces and in many outdoor spaces, including schools, daycare grounds, bar and restaurant patios, and within four metres of an entrance air intake. The Smoke-free Places Act is currently being amended to

8 add more protections from second-hand smoke, including playgrounds, sport and recreation venues, parks, and beaches. Ontario In Ontario, consuming cannabis will only be permitted in the home, subject to landlord or building regulations. The Province of Ontario has indicated that it will continue to consider the licensing of cannabis consumption lounges. Further details on the Ontario Cannabis Act, 2017 can be found in our November 2, 2017 blog post. Prince Edward Island Prince Edward Island will only permit the consumption of cannabis in private residences and yards attached to private homes. In rented or shared spaces where smoking is permitted in designated areas, cannabis may be consumed in those designated areas. Quebec The Province of Quebec has indicated that individuals may smoke cannabis in all locations where smoking tobacco is currently permitted. Saskatchewan In Saskatchewan, the consumption of cannabis in all public places will be prohibited. Consumption of cannabis will also be prohibited in schools and daycares. Northwest Territories Individuals will be permitted to smoke cannabis in the Northwest Territories in private residences, subject to landlord or building regulations. Consumers will also be permitted to consume cannabis in the Northwest Territories in certain public areas, including on trails, highways, roads and streets, and in parks when not in use for a public event, but provides that municipal governments may enact bylaws that restrict smoking cannabis in certain areas. Consumers will be prohibited from smoking or vaping cannabis in areas frequented by children and crowds, in vehicles, and in any place where smoking tobacco is not permitted. Nunavut Nunavut plans to permit the consumption of cannabis in private homes and in some public spaces where smoking tobacco is allowed. The territory plans to prohibit smoking or vaping cannabis where tobacco is restricted and in certain other areas including vehicles, school grounds hospital or health centre grounds and playgrounds. Yukon The consumption of non-medical cannabis would be limited to private privately owned residences and adjoining property, where permitted by the owner, while providing the potential to allow consumption in other spaces in the future. Additional Provincial Enforcement As previously noted, certain provinces introduced additional enforcement measures in connection with their local cannabis regulations. Alberta, Manitoba, Ontario, Québec, New Brunswick, and Saskatchewan intend to augment, supplement, or vary certain proposals set forth by the Federal Government. British Columbia British Columbia s proposed compliance and enforcement regime contains extensive provisions aimed at protecting children and youth, prioritizing public health and safety, limiting the black market and keeping roads safe. British Columbia plans to increase training for law enforcement in the area of drug-impaired driving and toughen provincial regulations to give police more tools to remove drug-impaired drivers from the road and deter drug-affected driving, including creating a new 90-day Administrative Driving Prohibition for drug affected driving and expanding the current zero tolerance restrictions for the presence of alcohol for drivers in the Graduated Licensing Program to include zero tolerance for the presence of THC. In addition, British Columbia plans to establish a community safety unit that will target illegal sellers of cannabis and impose fines on retailers of up to double the retail value of the cannabis found in their stores. Alberta Alberta has proposed that youth possessing more than five grams of cannabis will face criminal charges, while youth possessing less than five grams of cannabis will be subject to seizure, notification of parents or guardians, and other administrative penalties including fines and tickets.

9 Alberta will implement a zero tolerance approach for drivers in its Graduated Driver Licensing (GDL) program, with respect to alcohol, cannabis, or other illegal drugs. In addition, provincial sanctions for drivers in Alberta with a blood drug concentration or blood drug/alcohol concentration over the limits outlined above will include: immediate license suspension for 90-days; vehicle seizure; remedial education; and participation in a one-year ignition interlock program. Drivers who do not participate will remain suspended for the year. Further legislation will be introduced establishing provincial offences for public consumption infractions and consumption of cannabis in vehicles. Municipalities may create additional restrictions on public consumption using their existing authorities. Saskatchewan Saskatchewan will implement a zero tolerance approach for all drivers 21 years of age and under as well as all drivers in its Graduated Driver Licensing (GDL) program with respect to alcohol, cannabis, and other illegal drugs. In addition, provincial sanctions for drivers in Saskatchewan with a blood drug concentration over the prescribed limits will include immediate license suspension for 3 days, vehicle seizure, and remedial education. Saskatchewan also plans to introduce legislation to prohibit the possession of any amount of cannabis by a minor. Possession of smaller amounts, by a minor, will be addressed primarily through ticketing and seizure of the cannabis, in accordance with provincial laws. Possession of more than five grams will be a criminal offence subject to the Youth Criminal Justice Act. Manitoba Aside from the age limitations and personal cultivation prohibition identified above, the Province of Manitoba has proposed a variety of additional cannabis-related offences and enforcement measures, including penalties for: using fake identification to purchase cannabis; operating a motor vehicle if there is cannabis in or on the vehicle, unless the cannabis is stored in the trunk, an exterior compartment, or similar place not readily accessible; consuming cannabis in a motor vehicle; and a 24-hour roadside license suspension if a police officer believes, on reasonable grounds, that as a result of being under the influence of cannabis a person is unable to safely operate a motor vehicle. Ontario Ontario passed the Cannabis Act, 2017 which establishes a zero tolerance approach prohibiting young (age 21 and under), novice (G1, G2, M1, and M2), and commercial drivers from having drugs in their system, as detected by a federally approved oral fluid screening device. The penalties under the Cannabis Act, 2017 are as follows: for young and novice drivers, penalties would range from a three day license suspension and $250 fine for the first occurrence to a 30 day license suspension and a $450 fine for third and subsequent occurrences; for commercial drivers, each occurrence would result in a three day license suspension and fines would range from $250 for a first occurrence to $450 for third and subsequent occurrences; and for drug-impaired drivers who either fail or refuse to submit to a roadside standardized field sobriety test a $550 fine. Other penalties, such as mandatory education or treatment programs may also apply for repeat youth, novice, and commercial offenders. Quebec Aside from the prohibition on personal cultivation identified above, Quebec proposed several possessionrelated cannabis offences. A minor under the age of 18 who possesses five grams or less of dried cannabis would be liable for a $100 fine. Adults who possess more than 150 grams of dried cannabis in a place, other than a public place, would be liable for a fine of $250 to $750 for a first offence and $1,500 for subsequent offences. Anyone found to be in possession of any amount of cannabis on school, childcare, daycare or detention centre grounds would liable for a fine of $250 to $750. Individuals storing cannabis in a place that is easily accessible to minors, or not under lock in the case of a private residence where certain health or social services are being offered, would be liable for a fine of $250 to $750 for a first offence, with fines doubling for subsequent offences. Quebec has also proposed a zero tolerance approach to impaired driving. Police officers who conduct a roadside stop would be able to immediately suspend a driver s license for 90 days upon receiving a saliva sample testing positive for any amount of cannabis.

10 New Brunswick Aside from the personal cultivation restrictions identified above, New Brunswick has proposed a variety of cannabis-related offences and enforcement measures, including penalties for: entering or attempting to enter a cannabis retail outlet if under the age of 19; storing cannabis in a private dwelling, unless the cannabis is stored in a secure place that is inaccessible to a person under the age of 19; and consuming cannabis in a motor vehicle, whether in motion or not. Individuals found to be in contravention of any of the above offences, would be liable for a fine of between $140 to $570 for a first offence. Penalties for subsequent offences would increase in the event that the individual was previously sentenced to the maximum fine allowable for that offence. Nova Scotia Persons under the age of 19 can be fined or criminally prosecuted for possession of cannabis in Nova Scotia. Nova Scotia has also indicated that if a person under the age of 19 is found with less than five grams of cannabis, the cannabis will be seized, their parents or guardians may be notified, and they will be fined in accordance with the current regulations relating to underage possession of alcohol. Restorative justice may also be an option. However, possession of more than five grams of cannabis by a youth under the age of 18 will be prosecuted as a criminal offence, consistent with the manner in which current drug possession laws are enforced. The province of Nova Scotia will establish fines for persons who sell or distribute cannabis to a young person, involve a young person in an offence, sell or distribute a cannabis accessory to a young person, sell cannabis illegally, operate an unauthorized store that sells cannabis, purchase cannabis from someone other than the NSLC, and knowingly sell or distribute cannabis to an individual who is, or appears to be, intoxicated. Cannabis use of any kind in vehicles, including motorized boats, will be prohibited by the province. Drivers cannot be impaired while driving, passengers cannot use cannabis in any form in a vehicle, and cannabis must be stored in a closed, fastened package and out of reach or not readily available to anyone while being transported in the vehicle. This is in line with Nova Scotia s restrictions on alcohol in vehicles. Through amendments to the Motor Vehicle Act, the province is implementing administrative sanctions, such as license suspensions, to ensure road safety. There will also be a zero tolerance approach for drivers in the province s Graduated Licence program. Prince Edward Island Provincial legislation will prohibit youth from possessing or consuming cannabis and will allow police to confiscate and destroy cannabis found in the possession of people under the age of 19. Prince Edward Island will ensure the Highway Traffic Act mirrors alcohol impaired driving roadside suspension penalties and will incorporate changes to align with the federal legislation. In addition, a new summary offence will be created in cases of impaired driving with a minor in the vehicle. Northwest Territories In addition to facing potential charges under the Criminal Code, drivers in the territory could have their driver s licences suspended if they fail a Standardized Field Sobriety test, fail an evaluation by a Drug Recognition Expert, or refuse to do the test or evaluation without a reasonable excuse. In addition, the territory is proposing that certain types of drivers can have their drivers licence suspended if they are found to be driving with any amount of alcohol or prohibited drugs in their system, specifically drivers under the age of 22, drivers who have a learners driver s licence or a probationary driver s licence, and drivers who driver certain types of commercial vehicles. The territory is also proposing that cannabis in vehicles must be unopened or stored in a place that is out of reach of the driver and any passengers, and that the Registrar of Motor Vehicles be given the authority to release some motor vehicle and driving-related records to law enforcement agencies when required for law enforcement purposes. Nunavut Nunavut proposes to create new offences and administrative penalties to discourage driving while impaired by cannabis, similar to the Traffic Safety Act provisions for alcohol. This would include licence suspension for drivers who fail roadside tests or refuse to take the tests. The penalties would increase for repeat offenders.

11 We Can Help The federal and provincial regulatory frameworks relating to cannabis are complex and rapidly evolving, with further changes expected as additional provinces introduce and pass legislation in advance of legalization. As such, the Canadian recreational cannabis regulatory landscape is far from settled and subsequent shifts will impact a variety of market participants, including individual consumers. For more information on how Cassels Brock can assist your business, please contact: JONATHAN SHERMAN jsherman@casselsbrock.com ROWAN GROENEWALD rgroenewald@casselsbrock.com MICHAEL WEIZEL mweizel@casselsbrock.com 2018 Cassels Brock & Blackwell LLP. All rights reserved. This document and the information in it is for illustration only and is subject to changes in the law and its interpretation. It does not constitute, and is not a substitute for, legal or other professional advice. For advice on the matters discussed in this document, please consult legal counsel. Cassels Brock & Blackwell LLP Toronto Vancouver Calgary casselsbrock.com