What will Legalization look like? Cannabis for Canada Part I: The Overview November 7, 2015 – Posted in: Law, Marijuana News, Stoner Education – Tags: Canadian Law, Canadian Marijuana Reform, Cannabis for Canada, Justin Trudeau, Law, Marijuana Law, Medical Marijuana, MMJ, Trudeau, Weed
On October 19th, Canadian’s elected the Liberal Party to form the next government of Canada, ousting Stephen Harper and making Justin Trudeau Canada’s 29th Prime Minister. He was elected with a promise to “remove marijuana consumption and incidental possession from the Criminal Code” or in layman’s terms… legal weed!
We will legalize, regulate, and restrict access to marijuana.
– Liberal Party of Canada
Since the Liberals have a clear majority, this piece of the platform will pass with ease. That leaves us with one question “what will legalization look like?” Well, we at Common Object decided to take a look at laws currently on the books and grabbed the magic 8-ball to give our best guess at just that.
Canada is technically a Federation of Provinces that has its powers divided between the federal government and the provinces. Thanks to this regulatory divide things can get complicated.
The federal government (headed by Justin Trudeau) has the ability to amend the Criminal Code of Canada to remove the laws against the possession and use of Marijuana. It also has the right to include it in one of the most influential and boring pieces of legislation known as “The Excise Act” (we’ll discuss later in this article). The feds can only regulate international and interprovincial trade – where goods cross some sort of formal border.
Thanks to the Constitution of Canada the individual provinces have the right to regulate “Shop, Saloon, Tavern, Auctioneer, and other Licenses…” therefore giving them exclusive control of regulations for trade inside of their borders. This is the reason why liquor laws are so different across Canada. Each province has its own regulatory boards and sets its own standards and rules for sales. This will be the exact same when it comes to Pot, the feds will legalize it, and amend The Excise Act. It will then be up to the provinces/territories to figure out the actual nuts and bolts of regulation within their borders after that.
The Liberal Party’s platform says that they “will create a federal/provincial/territorial task force and… will design a new system of strict marijuana sales and distribution with appropriate federal and provincial excise taxes applied“. So, as we said before it will be up to the provinces and territories to really regulate pot and the feds will take their cut via The Excise Act. So just what is this Excise Act and why did we refer to it as one of the most influential pieces of legislation?
Well, we might as well start with what is an excise? Wikipedia defines it as follows:
“an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes.”
Countries have been raising excise taxes for ages and they are almost always placed on “vices” (tobacco, alcohol, prostitution, sugar, etc.) and are sure-fire money makers for governments the world over. In Canada, we have had versions of The Excise Act since before confederation, with our latest version being updated in 2001. It covers the regulation of Tobacco and Alcohol production, storage, sales, and possession and has been called the “Sin Tax”. The Liberals have made it clear that they will apply The Excise Act to the sale and distribution of Marijuana. Which means that producers and distributors will have to pay a duty on every unit of pot they sell, transport and produce. It will also require licensing fees for the commercial production of marijuana and come with the burden of excise inspectors. These inspectors will likely have the rights to inspect production, storage and distribution facilities to ensure compliance with the provisions in the excise act. They have the ability to suspend licenses, levy fines and prompt investigations that could result in the loss of a license or criminal charges.
…suspend licenses, levy fines and prompt investigations that could result in the loss of a license or criminal charges.
That sounds like a hassle doesn’t it? Well, it isn’t really that bad – this is the only legal way for the federal government to get it’s cut of profit, by collecting money via licenses and duties. The regulations it imposes are actually quite minimal but, will undoubtedly have a serious impact when it comes to growing your own pot at home. (We’ll try to cover the future of home growing in a later post.)
Like we said before – the real marijuana regulations will come from the provincial governments.
Going back to that Policy Statement from the Liberals, we know that they will meet with the provinces and territories to talk about setting up a base set of guidelines for excises, intra-provincial trade, and Criminal Code amendments. However, thanks to the Canadian Constitution we know that the provinces will set the actual laws to govern trade via a board or agency.
In Ontario, we have the Liquor Control Board of Ontario (LCBO) which licenses and regulates alcohol production and sales for the province. They also have a virtual monopoly on the sale of spirits and wine.
Tobacco is a slightly different story, falling under the jurisdiction of The Tobacco Tax Act which places the regulations for production and distribution jointly under the control of the Ministers of Finance and Health. This is coupled by the push by the province for “A Smoke-Free Ontario” makes The Tobacco Tax Act less likely to serve as a model for Ontario’s impending regulations.
With acceptance of alcohol greater than that of tobacco, when the time comes for the province of Ontario to set up the regulations surrounding the production, sale and marketing of marijuana it will likely expand the LCBO’s duties to include marijuana or will create a mirror of the LCBO specifically for marijuana. That way Ontario can get its cut from the sale of pot in a somewhat efficient manner.
…it will be up to the provinces and territories to really regulate pot and the feds will be able to take their cut via The Excise Act.
Every province is different, look at the diversity of laws when it comes to alcohol in Canada and you will see a variety of approaches that can be applied to the regulation and sale of Marijuana. We may end up with some provinces/territories taking an approach similar to BC where regulated goods can be purchased from a corner store, or you could have a province drag its heals in drafting legislation. Which, would make the sale of Marijuana effectively illegal to obtain in the province until it takes action. It is going to be very interesting to see how each province responds and regulates accordingly.
Now that we know how things will work out in terms of who will regulate what and how legalization will actually take place, it is time to get into the nuts and bolts of what legalization means. We will explore the entrepreneur’s upcoming role and the specifics of setting up a commercial enterprise after legalization in the next installment of our series on Cannabis for Canada.