AP Photo/Ted S. Warren, File
When Craig Jones, executive director of The National Organization for the Reform of Marijuana Laws in Canada (NORML Canada), started reaching out to the provinces about a year ago to see what steps — if any — they were taking to prepare for the possibility of cannabis legalization, no one wanted to talk to him.
It could have been because they were worried about “painting a bullseye on their forehead” if the Harper government got re-elected, Jones, formerly the executive director of the John Howard Society, posited in an interview Wednesday.
He hopes they’ve been working on it since. Should Prime Minister-designate Justin Trudeau’s Liberal government decide to remove cannabis from the Controlled Drugs and Substances Act, the provinces would stand to become the principal beneficiary in terms of tax revenue — as with alcohol and tobacco — but would also be forced to take on the responsibility of regulating their new cash cow.
“I’m really hoping that, in the background, they’ve been breaking their heads over what’s the best model for cannabis regulation,” he said. “It’s happening in the United States. And if it happens in the United States, it happens eventually in Canada…The role of a public service (is) to look over the horizon, to see what’s coming, and to plan for it.”
If statements made by several provincial governments this week are any indication, they haven’t been that proactive.
Ontario Finance Minister Charles Sousa told reporters Monday, “The federal government hasn’t even been formed. Once that is established, once they start to proceed, we will be at the table, we’ll listen…We do know it’s complicated and we know that it’s going to involve a lot of different ministries, activity, jurisdictions, and looking at what happens in other parts of the world.”
Cheryl Oates, a spokesperson for Alberta Premier Rachel Notley, told iPolitics marijuana legalization isn’t a priority of their government at the moment.
“We haven’t turned our minds to the issue of legalizing marijuana at this time,” she wrote in an email.
A spokesperson for the B.C. Ministry of Justice said something similar.
“At this time, it is too early to speculate on the specifics of any future legislation, or its implementation. Marijuana control is a federal responsibility and B.C. will continue to monitor — and would look forward to participating in — any consultation the Government of Canada may conduct around proposed changes,” they wrote.
Trudeau hasn’t exactly gone into much detail on the policy implications either. On the campaign trail in late September, he said the Liberals didn’t book any of the tax revenues in their platform.
“We are going to get working on it right away. The fact of the matter is, we didn’t book for tax revenues from marijuana, because we don’t yet know exactly (at) what rate we’re going to be taxing it, how we’re going to control it, or whether it’ll happen in the first months, within the first year, or whether it’s going to take a year or two to kick in,” he said.
The Green Party, on the other hand, did have an estimate for tax revenues: as high as $5.4 billion annually by 2019-20. As a point of comparison, the Ontario government took in $1.163 billion in tobacco taxes last year.
Patrick Fafard, an associate professor at the University of Ottawa who served as Director-General of Strategic Policy and Research at the Intergovernmental Affairs Secretariat of the Privy Council Office of Canada from 2002-2005, pointed out that he federal government could also impose its own tax in addition to the provinces’.
But he cautioned against assuming the provinces’ cooperation.
“If you removed it from the controlled substances legislation, that creates the opportunity for provinces. Whether they want to take advantage of the opportunity is another question,” he said in an interview Tuesday.
“The challenge, of course, is that while the new government led by Mr. Trudeau is willing to run the political risk associated with legalizing cannabis, it’s not clear to me that all provincial governments are equally enthusiastic. And so that’s a huge obstacle to getting a uniform regime across the country.”
Jones, however, isn’t convinced recalcitrant provinces would have a choice, as evidenced by the American experience.
“First, it strikes me as unlikely that even a conservative government would not want the tax revenue. Second, we are going to have to pay attention to a problem called regulatory arbitrage, which the United States has confronted. And that is, the contiguousness of Colorado and Utah. Cannabis is legal in Colorado, illegal in Utah, so people are driving it by the tonne over the boundary from Colorado to Utah,” he said.
But the right level of taxation is a fundamental question, Jones added.
“The tax regime will have to come in below the black market price. And the black market price has come down a lot in the last 20-30 years. This is a paradox of prohibition. Cannabis is more available today and cheaper than it has ever been after 90 years of prohibition. Go figure,” he said.
There’s also the possibility, of course, of a more limited provincial role. Maybe the Liberal government doesn’t remove cannabis from the Controlled Substances Act. Maybe it tinkers with the existing system — the network of professional federally regulated medical marijuana producers.
“Often, even though you do think you’re making a dramatic change, you try and do so incrementally. You build on what exists. It’s just simpler. And in that scenario, the path of least resistance is to keep it under the control of the Substances Act and use the preexisting producers,” Fafard said.
That’s certainly the preference of Hugo Alves, a partner at Bennett Jones in Toronto, who — along with associate Michael Lickver — is one of the leading advisors in the existing Canadian medical marijuana industry.
Alves thinks removing cannabis from the Controlled Drugs and Substances Act and downloading responsibility to the provinces would be a mistake.
“In my view, that would be an unwise regulatory move to make. Part of what makes our system so attractive to the rest of the world in terms of being a model to aspire to, is the fact that it is a federally-regulated system, so you have uniformity of regulation across the country,” he said.
“If you create a system where you have the provinces governing individually, then you run the risk of policy gaps and a disparity in rights. Everyone is keenly focused on the recreational or the regulated adult-use market, but we can’t lose sight of the fact that marijuana policy reform in this country is premised on patient access, and there are a lot people in the country who need to access cannabis as a viable medical treatment…From a policy perspective, we don’t want to do things for the sake of a regulated adult-use market which prejudices the rights of patients.”
Instead, the goal should be to build on the platform created by the Conservative government, Alves argues. That is, expanding the system of licensed growers operating under strict quality controls.
On the production side, an accommodation could be made for people who want to grow their own. Distribution could be broadened, and the rules around consumption will have to be sorted out.
“How that ties together will be a multi-stakeholder discussion, because I don’t think recreational (use) means that it’s a free-for-all,” Alves said.
Health, justice, finance, and agriculture ministries would likely need to be involved at the provincial and federal levels, along with the PMO and Privy Council Office.
In the short term, Alves is waiting for November 4, when Trudeau names his cabinet.
“When the new ministers get their mandate letters, that will, I think, be the first fundamental view into how the process is going to go. Who is going to have the pen? Who is going to lead the stakeholder consultation?”
For his part, Jones knows whom he would like to see in the health and justice portfolios.
“Fingers crossed that Carolyn Bennett gets health and Sean Casey, who has been the Liberal justice critic, will get justice. And that strikes us, anyways, as logical choices, because both of them have been grappling with the issue of cannabis legalization,” he said.
“And both of them have known for a long time, that there’s an inevitability to this, and it’s prudent to get up to speed on it quickly and have some ideas on how the regime rolls out.”
When Craig Jones, executive director of The National Organization for the Reform of Marijuana Laws in Canada (NORML Canada), started reaching out to the provinces about a year ago to see what steps — if any — they were taking to prepare for the possibility of cannabis legalization, no one wanted to talk to him.
It could have been because they were worried about “painting a bullseye on their forehead” if the Harper government got re-elected, Jones, formerly the executive director of the John Howard Society, posited in an interview Wednesday.
He hopes they’ve been working on it since. Should Prime Minister-designate Justin Trudeau’s Liberal government decide to remove cannabis from the Controlled Drugs and Substances Act, the provinces would stand to become the principal beneficiary in terms of tax revenue — as with alcohol and tobacco — but would also be forced to take on the responsibility of regulating their new cash cow.
“I’m really hoping that, in the background, they’ve been breaking their heads over what’s the best model for cannabis regulation,” he said. “It’s happening in the United States. And if it happens in the United States, it happens eventually in Canada…The role of a public service (is) to look over the horizon, to see what’s coming, and to plan for it.”
If statements made by several provincial governments this week are any indication, they haven’t been that proactive.
Ontario Finance Minister Charles Sousa told reporters Monday, “The federal government hasn’t even been formed. Once that is established, once they start to proceed, we will be at the table, we’ll listen…We do know it’s complicated and we know that it’s going to involve a lot of different ministries, activity, jurisdictions, and looking at what happens in other parts of the world.”
Cheryl Oates, a spokesperson for Alberta Premier Rachel Notley, told iPolitics marijuana legalization isn’t a priority of their government at the moment.
“We haven’t turned our minds to the issue of legalizing marijuana at this time,” she wrote in an email.
A spokesperson for the B.C. Ministry of Justice said something similar.
“At this time, it is too early to speculate on the specifics of any future legislation, or its implementation. Marijuana control is a federal responsibility and B.C. will continue to monitor — and would look forward to participating in — any consultation the Government of Canada may conduct around proposed changes,” they wrote.
Trudeau hasn’t exactly gone into much detail on the policy implications either. On the campaign trail in late September, he said the Liberals didn’t book any of the tax revenues in their platform.
“We are going to get working on it right away. The fact of the matter is, we didn’t book for tax revenues from marijuana, because we don’t yet know exactly (at) what rate we’re going to be taxing it, how we’re going to control it, or whether it’ll happen in the first months, within the first year, or whether it’s going to take a year or two to kick in,” he said.
The Green Party, on the other hand, did have an estimate for tax revenues: as high as $5.4 billion annually by 2019-20. As a point of comparison, the Ontario government took in $1.163 billion in tobacco taxes last year.
Patrick Fafard, an associate professor at the University of Ottawa who served as Director-General of Strategic Policy and Research at the Intergovernmental Affairs Secretariat of the Privy Council Office of Canada from 2002-2005, pointed out that he federal government could also impose its own tax in addition to the provinces’.
But he cautioned against assuming the provinces’ cooperation.
“If you removed it from the controlled substances legislation, that creates the opportunity for provinces. Whether they want to take advantage of the opportunity is another question,” he said in an interview Tuesday.
“The challenge, of course, is that while the new government led by Mr. Trudeau is willing to run the political risk associated with legalizing cannabis, it’s not clear to me that all provincial governments are equally enthusiastic. And so that’s a huge obstacle to getting a uniform regime across the country.”
Jones, however, isn’t convinced recalcitrant provinces would have a choice, as evidenced by the American experience.
“First, it strikes me as unlikely that even a conservative government would not want the tax revenue. Second, we are going to have to pay attention to a problem called regulatory arbitrage, which the United States has confronted. And that is, the contiguousness of Colorado and Utah. Cannabis is legal in Colorado, illegal in Utah, so people are driving it by the tonne over the boundary from Colorado to Utah,” he said.
But the right level of taxation is a fundamental question, Jones added.
“The tax regime will have to come in below the black market price. And the black market price has come down a lot in the last 20-30 years. This is a paradox of prohibition. Cannabis is more available today and cheaper than it has ever been after 90 years of prohibition. Go figure,” he said.
There’s also the possibility, of course, of a more limited provincial role. Maybe the Liberal government doesn’t remove cannabis from the Controlled Substances Act. Maybe it tinkers with the existing system — the network of professional federally regulated medical marijuana producers.
“Often, even though you do think you’re making a dramatic change, you try and do so incrementally. You build on what exists. It’s just simpler. And in that scenario, the path of least resistance is to keep it under the control of the Substances Act and use the preexisting producers,” Fafard said.
That’s certainly the preference of Hugo Alves, a partner at Bennett Jones in Toronto, who — along with associate Michael Lickver — is one of the leading advisors in the existing Canadian medical marijuana industry.
Alves thinks removing cannabis from the Controlled Drugs and Substances Act and downloading responsibility to the provinces would be a mistake.
“In my view, that would be an unwise regulatory move to make. Part of what makes our system so attractive to the rest of the world in terms of being a model to aspire to, is the fact that it is a federally-regulated system, so you have uniformity of regulation across the country,” he said.
“If you create a system where you have the provinces governing individually, then you run the risk of policy gaps and a disparity in rights. Everyone is keenly focused on the recreational or the regulated adult-use market, but we can’t lose sight of the fact that marijuana policy reform in this country is premised on patient access, and there are a lot people in the country who need to access cannabis as a viable medical treatment…From a policy perspective, we don’t want to do things for the sake of a regulated adult-use market which prejudices the rights of patients.”
Instead, the goal should be to build on the platform created by the Conservative government, Alves argues. That is, expanding the system of licensed growers operating under strict quality controls.
On the production side, an accommodation could be made for people who want to grow their own. Distribution could be broadened, and the rules around consumption will have to be sorted out.
“How that ties together will be a multi-stakeholder discussion, because I don’t think recreational (use) means that it’s a free-for-all,” Alves said.
Health, justice, finance, and agriculture ministries would likely need to be involved at the provincial and federal levels, along with the PMO and Privy Council Office.
In the short term, Alves is waiting for November 4, when Trudeau names his cabinet.
“When the new ministers get their mandate letters, that will, I think, be the first fundamental view into how the process is going to go. Who is going to have the pen? Who is going to lead the stakeholder consultation?”
For his part, Jones knows whom he would like to see in the health and justice portfolios.
“Fingers crossed that Carolyn Bennett gets health and Sean Casey, who has been the Liberal justice critic, will get justice. And that strikes us, anyways, as logical choices, because both of them have been grappling with the issue of cannabis legalization,” he said.
“And both of them have known for a long time, that there’s an inevitability to this, and it’s prudent to get up to speed on it quickly and have some ideas on how the regime rolls out.”
