The policy of Ontario’s response to the Cannabis Act, Bill 174

Jeffrey Lizotte of Next Wave Brands takes a closer look at Ontario’s response to federal cannabis legalization

Ontario’s response to the Cannabis Act is actually four pieces of legislation from four different ministries smashed together. The formal title reflects that: An Act to enact the Cannabis Act, 2017, the Ontario Cannabis Retail Corporation Act, 2017 and the Smoke-Free Ontario Act, 2017, to repeal two Acts and to make amendments to the Highway Traffic Act respecting alcohol, drugs and other matters. Try to hashtag that.

It proposes to govern “the sale, distribution, purchase, cultivation, possession and consumption of cannabis” for 13 million Ontarians by July 2018. Though it’s relatively short, it has intentionally wide-ranging implications. In four Schedules it enacts two new Acts (on prohibition and retail), repeals and replaces one (on consumption), amends another (on driving), and affects 10 Acts in total.

Bill 174 was introduced for First Reading on Wednesday (and Second Reading on Thursday), to much less media coverage than the Ontario government’s retail policy announcement did in September. The legislation largely sticks to delivering an Ontario Crown Corporation to be the sole retailer of recreational cannabis (and the inevitable global example for government retail policy within a regulated legal cannabis regime). Mainstream accounts of Bill 174 focussed on the age of majority (19) and the tools needed to fight black market storefront dispensaries (a hot political issue).

We believe the most impactful parts of Bill 174 will be the finer details—the interpretations that give rise to opportunities. Knowing the rules better than your competitors affords you a distinct strategic advantage, and we’ve highlighted just a few such details here that we believe will have an impact.

Part I: Cannabis Act, 2017

Minister Responsible = Attorney General

The order of restitution implications could be interesting. The OCA affords police broad powers to seize cannabis, even just on reasonable suspicion of an infraction. But it also sets out a pretty thorough process through the Ontario Court of Justice that can require the return of seized products up to three months after seizure (police stations might need to upgrade some Level 9 vault space, for consistency).

The worst kept secret in the ACMPR, the inevitable approval of a pharmacy distribution channel for medical cannabis, gains more steam with a minor change to the Drug and Pharmacies Regulation Act. The wording might seem innocuous - the Act would not “prevent(s) the sale or distribution of cannabis… for medical purposes,” but every line of a bill was put there with intention.

Part II: Ontario Cannabis Retail Corporation Act, 2017

Minister Responsible = Minister of Finance

The Ontario Cannabis Retail Corporation is created as a subsidiary of the LCBO. That we knew. But 174 makes it very clear that while the OCRC subsidiary won’t use the LCBO’s brand or physical locations, it will be designed and operated in the LCBO’s image  leveraging their “expertise and existing back-office infrastructure.” That would reason to include acknowledging the unique LCBO mandate that uses policies like social reference pricing as a guiding principle to limit consumption.

Governments across Canada have maintained that legal cannabis won’t be a cash cow. The Ontario government proposes a financial structure set out in the Ontario Cannabis Retail Corporation Act to ensure this. A loose mandate to pay net profits to the Consolidated Revenue Fund “at such times and in such manner as the Lieutenant Governor in Council may direct” means that the social mandate of government retail is the main priority. For comparison’s sake, the LCBO is required to kick just 20% of net revenue to the fund annually.

Part III: Smoke-Free Ontario Act, 2017

Minister Responsible = Minister of Health

The Smoke-Free Ontario Act, 2017 will repeal the previous version and replace it with one that takes a hard line on vaporizers and electronic cigarettes. The good news is that it makes clear that the government understands cannabis vaporizers will soon be (regulated by the Feds and) commonplace. The bad news is that this legislation seeks to govern cannabis vaporizers as strictly as cigarettes. As it stands, the bill says you won’t be able display or even let a consumer handle a vaporizer before purchase.

This portion of the Act will also add additional promotion restrictions for smoking or vaping products in any “place of entertainment.”  That’s defined as any publicly accessible place where “eating, drinking or any form of amusement” occurs. So, most of the good places.

Hotels, motels, and inns will be permitted to sanction guest rooms for cannabis use. This is a rare forward-looking policy to avoid an issue that would have come up, as a person’s hotel room is considered their domicile during a stay.

During the government’s Sept. 8th policy pronouncement, they committed to exploring on-site consumption (where not co-located with retail) by engaging stakeholders on the topic. They must not have liked what they heard because ultimately, on-site consumption was left on the Bill 174 cutting room floor.

Part IV: Amendments to the Highway Traffic Act

Minister Responsible = Minister of Transportation

A zero tolerance policy for youth, novice and commercial drivers comprises the majority of the changes to the Ontario Highway Traffic Act. The Feds’ C46 (now at the Senate) does most of the heavy-lifting on what is currently a lose-lose issue. The best tech available can’t gauge cannabis impairment. It can only measure the presence of the drug. And arbitrary per se limits from C46 (which experts agree are not a determination of impairment) will inevitably be challenged through the courts.

The zero-tolerance policy chosen by Ontario for specific driver classes will be easier to implement across the board. And it’s particularly important in Ontario where 19 year olds will become legal alcohol and cannabis customers at the same time.

The most surprising part of the bill comes in an amendment that looks like it was slapped onto the end. The government proposes to put cameras on school busses that could record drivers who run through it’s flashing lights. School bus camera tickets would be issued to the registered owner of the vehicle.

Note: As is commonplace with this type of bill, the OCA leaves a lot to be determined by Regulation. That allows for the government to flesh out the operational details within the spirit and intention of the bill, largely removed from parliamentary scrutiny. It will be crucial for industry actors to follow the interpretation of the OCA and the development of regulatory policies throughout this process and commit to contributing as often as possible.

Check back later this week for our complimentary piece on the politics and process of The Ontario Cannabis Act.

 - Jeffrey Lizotte

Featured image by Pearl Vas.

This is part one of a two part series from Jeffrey Lizotte of Next Wave Brands. This piece focuses on the legislation. The next piece, coming later this week, will focus on the politics and the process.

Jeffrey Lizotte is the founder and CEO of Next Wave Brands—Canada’s only cannabis government relations and brand firm—and a strategic advisor to cannabisCONNECT x Global Public Affairs, a cannabis practice from Canada’s largest private public affairs firm.


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1 comment

  1. art Reply

    more laws then there was before
    prohibition 2.0