JURISIDICTION OVER THE REGULATION OF CANNABIS (Federal, Provincial and Municipal)

A number pf Stakeholders, including municipal planners, have asked me to review Bill 26: “An Act to Control and Regulate Cannabis”, in preparation of the legal possession and consumption of regulated cannabis beginning July 1, 2018.

The following brief analysis will be of interest both to municipalities, who will be tasked with policing, business licencing and zoning regulation for vendors and also to those who might wish to apply to be legal vendors.

All three levels of government will be involved in the regulation of cannabis.

In addition to decriminalizing, possession of less than 30 grams of cannabis, the federal government will regulate production, quality control, tracking seed to sale, continued regulation of medical cannabis and setting the minimum age for consumption (at 18).

The provinces are in charge of wholesale and retail distribution, retail delivery mode (private, public or hybrid), workplace safety and joint responsibility with the feds for highway traffic safety and impaired driving.

Municipal responsibilities will vary by province, but will include zoning, business licencing, municipal workplace safety, policing, especially re: consumption in public places and impaired driving. The municipalities will either be involved directly or in collaboration with the province regarding rules for retail locations and areas where cannabis may be consumed in public.

Bill 26 “An Act to Control and Regulate Cannabis” was tabled on November 16, 2017. However, most of the salient details had been disclosed in an Alberta Justice Working Paper, following an extensive public consultation process.

Bill 26 amends the “Gaming and Liquor Act” and if fact renames it the “Gaming Liquor and Cannabis Act”. Interestingly, it does not rename the Alberta Gaming and Liquor Commission (AGLC). The AGLC, which has regulated private distribution and retailing of alcohol in Alberta since 199 3 will be given comparable authority for oversight, compliance and retail licensing and enforcement of violations.  The legislation also enables online sales (not through private delivery) and creates restrictions on youth possession and public consumption.

 

Bill 26 Highlights:

-Maintains the federal minimum age for purchase and use at 18;

-Establishes provincial (non-Criminal) offences for possession by persons under 18, of five grams or less of cannabis;

-AGLC mandated to oversee distribution, compliance and enforcement of the retail cannabis system, including regulatory guidelines and licence requirements for private cannabis retailers;

-Bans co-location of cannabis sales with alcohol, pharmaceuticals and/or tobacco

-Province will operate online distribution and sales;

-Establishes restrictions re: public spaces where cannabis can be legally smoke or vaped;

-Establishes authority to augment federal regulations on advertising, labelling and promotion of cannabis and cannabis products.

 

It is anticipated that the distribution and retail systems will operate similarly to how AGLC fulfills it mandate regarding the distribution and retailing of alcohol in Alberta. This should promote a level playing field between large corporate and small craft producers.

Similarly to liquor regulation, AGLC will set terms and conditions on licenses, will inspect                                                                         licensees and address violations.

The ban on co-selling alcohol, tobacco and pharmaceuticals is interesting. It is unclear what level of barrier will be required, if the operations need only be physically separated or if there must be an actual distance in addition to the physical barrier between the selling of the products.

Also, it is clear that although Bill 26 prohibits co-sales of cannabis with certain specified products (alcohol, tobacco and pharmaceuticals), it is unclear what if anything besides cannabis can be sold at that location.

90.09 The AGLC will not issue a cannabis licence unless:

“(a) the business under which the activities authorized by the licence will be carried out is separate from any other business of the applicant, and

(b) the activities authorized by the licence will be carried out in a location where no alcohol, tobacco, pharmaceuticals or other things are sold except cannabis unless the other things sold are cannabis accessories or prescribed things”

 

This is interesting drafting. It initially appeared unnecessary to specify alcohol, tobacco and pharmaceuticals, when the more general “other things are sold” is also prohibited.

Regarding “Cannabis accessory”, reference is made to the federal act. Bill C-45 states in the definition section:

 

Cannabis accessory means:

  1. a thing, including rolling papers or wraps, holders, pipes, water pipes, bongs and vaporizers, that is represented to be used in the consumption of cannabis or a thing that is represented to be used in the production of cannabis; or
  2. a thing that is deemed under subsection (3) to be represented to be used in the consumption or production of cannabis.

(3) For the purposes of the definition “cannabis accessory” a thing that is commonly used in the consumption or production of cannabis is deemed to be represented to be used in the consumption or production of cannabis if the thing is sold at the same point of sale as cannabis

 

This so called “deeming cannabis accessory” is especially broad.

It would appear obvious that the word “Including” in (a) means that the list the follows is not meant to be exhaustive.

But the deeming provision is ambiguous. It appears to attempt to be two-part test to qualify as a deemed accessory:

–commonly used in the consumption or production

–the thing is sold at the same point of sale as cannabis

 

But due to the awkward wording in (3) is “deemed to be represented”, it appears something could be “represented” to be an accessory whether it is commonly used or not.

It would appear that ANYTHING that is sold at the same point of sale as cannabis Is deemed to be represented to be used in the consumption or production.  However, that is both counterintuitive and self fulfilling, that an item can be deemed an accessory simply de facto by it being sold at the same point of sale as cannabis.

The more logical interpretation is that an item must be both commonly used in consumption or production and represented to be so used by being sold at the same point of sale. But this definition would lead to the also self-fulfilling conclusion that if something was not sold at the same point of sale, it cannot be deemed to be represented to be an accessory and therefore by definition could not be deemed an accessory to be sold contemporaneously with cannabis in Alberta.

What appears to be more clear, however, is that in Alberta whatever is an “other thing” or cannabis accessory, it cannot be alcohol, tobacco or pharmaceuticals. It is clear from 90.09 (1) (b) that “other things” are distinct from alcohol, tobacco and pharmaceuticals.

 

I expect some creativity as merchants attempt to satisfy what is a cannabis accessory so that it might sell said accessory in conjunction with cannabis.

 

The province will establish rules regarding hours of operation and location, distance from schools and community centers, the training of staff and controlling the initial growth in the number of retail outlets.

By regulation, the province will regulate the day and hours when cannabis may be sold and regs will be passed:

“authorizing a municipality to pass bylaws in respect of “the hours of sale and use of cannabis on the licenced premises and the areas of the licenced premises where the sale of cannabis may occur”.

This refers to specified classes of licenced premises where sale and consumption may occur (cafes and lounges). That licensing will not immediately be available but presumably will be one day and the legislation specifically authorizes it.

Finally, the Act, prohibits a municipal development authority from issuing a development permit if the proposed development does not comply with the regulations respecting the location of the premises and the distance from other premises.

But it will be the province, through regulation, that determines design requirements and minimum distances between the licenced premises and other licenced premises and also schools, community centers and liquor stores.

The bulk of policing will fall on the municipalities.

Adults will be able to posses up to 30 grams of cannabis

Consumption of cannabis will be allowed in homes and public places that allow smoking but not in cars, hospital property, school property or a child care facility. Cannabis may not be consumed at a retail seller’s licenced location.

When transporting in a vehicle, cannabis must be secured in closed packaging and be kept not within the reach of either the driver or other occupants of the vehicle. There will be zero tolerance for drivers under the age of majority; but those who possess 5 grams or less will receive a non criminal provincial ticket.

Municipalities may create additional restrictions on public consumption using their existing authority re: regulating smoking in public places.

The federal government has proposed strict rules regarding advertising and labelling of cannabis. This largely mirrors current tobacco advertising regulation, which precludes anything that might make it appealing to minors and advertising must contain warnings and accurate product information. Advertising will be restricted to locations where minors are prohibited and there will be limits (by not yet announced regulations) on displays and instore promotion.

Full details on licensing and establishing a cannabis retail operation will become available in January 2018. But the framework legislation makes it clear that anyone who works at a retail outlet will have to be at least 18 years of age and will have received AGLC training to educate customers on the potency of products and the risks associated with cannabis use.   Workers will also have to verify the age of any purchaser and make them show ID if they appear to be under the age of 25.

The AGLC will provide all oversight and regulation regarding the distribution and sale of cannabis. I will have more to say about the requirements to become a retailer or cannabis agent in a subsequent paper.

Municipal police forces will be tasked with all compliance unrelated to the distribution and retailing including legal possession (up to 30 grams), places where cannabis can be legally consumed, legal growing (up to 4 plants) for personal use and drug impaired driving. I will tackle that complicated topic in a subsequent post.

The policing costs will be considerable on municipalities. The federal and provincial governments have not yet finalized a revenue sharing formula between them regarding taxation of cannabis. It is unlikely that municipalities will get a piece of that lucrative pie.

Municipalities can likely cover the costs associated with zoning and business licensing through the establishment of a cannabis business licence fee. But as with municipal finance generally, the municipalities limited sources of revenue will create challenges budgetting the resources needed to provide policing service following the legalization of cannabis.

Municipalities might need to consider imposing a Business Tax pursuant to Part 10, Division 3 of the “Municipal Government Act” on licensees in order to attempt to recoup some of the costs the municipalities will incur as a result of its expanded responsibilities once cannabis becomes legal in Canada.

 

 

 

 

 

 

Comments are closed.