Cannabis Regulation in Canada:

Size: px

Start display at page:

Download "Cannabis Regulation in Canada:"

Joella Hamilton
5 years ago
Views:

1 Cannabis Regulation in Canada: Where We Came From, Where We Are and What s Coming Next Jonathan Sherman Cassels Brock & Blackwell LLP Sherri Altshuler Aird & Berlis LLP

2 Canada, In Brief Right Now... Legal market for fresh and dried cannabis and cannabis oil for medical consumers only Coming (as of July 1, 2018?)... Legal market for non-medical consumers as well slide #

3 Current Regulations ACMPR Access To Cannabis For Medical Purposes Regulations Regulations to the Controlled Drugs and Substances Act Regulated activities: Sale, possession, production, etc. of fresh/dried cannabis and cannabis oil Sale of starting materials to patients or their designates Establish and enforce product and process standards slide #

4 Three Primary Sources of Legal Cannabis 1. Produced/sold by licensed producer 2. Grown by authorized individual 3. Grown by authorized individual s authorized designate slide #

5 Licensure Licensed Producers may possess, produce, sell, provide, ship, deliver, transport and destroy marihuana or cannabis oil: LPs must be individuals or corporations Licences are site-specific Licences establish maximum quantities Must notify local authorities Security clearance required for specific personnel and for each officer and director (if LP is a corporation) slide #

6 Licensing Process for LPs 1. Intake and Initial Screening 2. Detailed Review and Initiation of Security Clearance Process 3. Issuance of Licence to Produce 4. Introductory Inspection (as cultivation begins) 5. Pre-Sales Inspection 6. Issuance of Licence to Sell slide #

7 Patients Patients: Must ordinarily reside in Canada Must have a medical document provided by a health care practitioner to a person under their professional treatment. Must register with an LP, providing their medical document slide #

8 Consumer Distribution Mechanism Patient registers with LP Patient Places Order LP ships to Patient Note: shipping is the only authorized distribution mechanism there must be an order for each shipment in a 30-day period, may not sell more than 30 times the daily limit on Medical Document slide #

9 Other Forms of Distribution Other forms of distribution: to other LPs to certain healthcare providers and institutions to Health Canada slide #

10 Imports and Exports Provisions for importation and exportation (if necessary permits are obtained and specific requirements fulfilled) Health Canada published guidance expresses a lack of support for facilitating a regime to service global demand Very limited circumstances, such as, importing starting materials or exporting a unique strain for scientific investigation in a foreign laboratory Despite this guidance, there are several recent examples of Canadian LPs that have obtained export permits Imports permits tend to be limited to starting materials slide #

11 What is coming... Cannabis Act federal regulatory framework for legalization of cannabis for non-medical purposes Brief Background: Campaign commitment Task Force Report November 30, 2016 Bill C-45 released April 13, 2017 Hard target of July 1, 2018 No interim period decriminalization

12 What We Know Cannabis out of Controlled Drugs and Substances Act Access - (Federal) minimum age of 18 (subject to discretion of provinces) - Decriminalization of fewer than 30 g of cannabis - Up to four cannabis plants in a dwelling-house Licensing - Federal powers to license importation, exportation, production, testing, packaging, labelling, sending, delivery, transportation, sale, possession and disposal of cannabis for non-medicinal purposes - Licences issued under ACMPR will continue; LPs will be automatically licensed under the Cannabis Act to produce, distribute and sell cannabis for recreational purposes

13 What We Know... Provincial Discretion - Provincial powers to license sale, possession and distribution Products - Dried cannabis, oil, plants and seeds for cultivation from provincially regulated retailer or federally licensed LP - Not products combining cannabis with caffeine, ethyl alcohol or nicotine - Not edibles yet but government has said that it intends to develop and publish regulations to permit the sale of edibles

14 What We Know... Packaging and Labelling; Selling and Distributing - Factual and accurate information THC and CBD content - Difference between brands - Can t target youth Import and Export - A Tale of Three Treaties Import and export limited to (i) medical purposes, (ii) scientific/research purposes, and (iii) industrial hemp Withdraw? Disregard? Accommodation? - Other considerations? Plant Protection Act, Seeds Act, Health Canada permits, TSX/TSXV undertakings Cannabis tracking system

15 What We Know... Criminal Law Changes - Various changes to the Criminal Code in Canada - Amendments to impaired driving, police powers and road side testing Director and officer liability - Broadens the potential liability faced by corporate directors and officers. - Directors or officers who directed, authorized, assented to, acquiesced or participated in the commission of the offence can be held liable for the offence, even if the person is not prosecuted for the offence. - A person named in a notice of violation will not have access to a due diligence defense.

16 What We Don t Know Yet Quite a lot, including: Retail selling prices Tax rates Licensing requirements and structure Branding and packaging Edibles - Protection of youth likely paramount Distribution structure - Crown corp.? Pharmacies? Retail? Other provincial restrictions on: - Age; areas of use

17 What s next Next steps: federal regulations and provincial laws are required Federal update: - May 2017 Health Canada announced several improvements to accelerate the pace of approvals through a concerted effort to bring more supply online in anticipation of supply constraints Provincial update: - New Brunswick is first to propose a model - Alberta and Ontario are seeking citizen input - Manitoba is rallying provincial support to delay July 1, 2018 deadline - Some provinces seeking federal compensation for costs of roll-out Cities/municipalities will also have a role to play

18 Access to Capital based on Current Environment Canadian cannabis landscape will continue to provide significant opportunity for investors as the industry continues to evolve and mature Initial focus has been on production and LPs, and the supply chain on the medical and recreational side is expected to continue to be the focus Investors interested in ancillary businesses, not just production plays $1 billion in equity financing over the past 12 months Very limited debt financing available - Alternative financing vehicles have emerged and offer streaming and royalty transaction alternatives

19 Access to Capital based on Current Environment Restrictions for TSX and TSXV listed companies with respect to operations in the U.S. The same restrictions do not apply to CSE listed companies which provides an opportunity for U.S. licensed producers to go-public in Canada - CSE is aggressively seeking to expand through cannabis-related listings - As of June 2017, total CSE market cap. was Cdn.$4.19B, $1.62B (~38%) of which was derived from cannabis-related companies - 55% (~Cdn.$161M) of all financings YTD (~$293M) were completed by cannabis-related companies

20 20

Cannabis Legalization August 22, Ministry of Attorney General Ministry of Finance

Cannabis Legalization August 22, 2018 Ministry of Attorney General Ministry of Finance Federal Cannabis Legalization and Regulation The federal Cannabis Act received Royal Assent on June 21, 2018 and will