The authors practice in the Toronto office of Torys LLP and are members of the cannabis law practice group. Two of the authors (Eileen McMahon and Sue Fei) are alumnae of Osgoode Hall. The editors of Obiter Dicta have asked them a few questions regarding Canada’s legalized cannabis industry one year on, and their reactions follow.
- Question: We’re now upon the 1-year anniversary of legalization of cannabis in Canada. What remarks would you like to make regarding successes and failures?
Answer: Collectively, the three of us have worked in regulatory law (on matters where Health Canada is the regulator) for decades. Leading up to the legalization of cannabis, we had developed deep expertise in food and drug regulatory law, so the new cannabis laws were simply another regulated product/industry, from our perspective.
Cannabis is like other regulated products (for example, drugs, foods, etc.) where there are legal requirements relating to production, labelling and advertising. Federal law set out the obligations of the manufacturers (in the case of cannabis, manufacturers are known as “licensed producers”) and the regulator (in the case of cannabis, the regulator is Health Canada) oversees compliance with those laws. In addition to Federal oversight, the distribution and retail sale of cannabis is controlled by provincial governments, increasing the complexity of the legal regime.
Whenever there is a new regulatory law, there is invariably a period of time for manufacturers to hit their stride on compliance. Therefore, it was not surprising that there were multiple instances of non-compliance since legalization, including licenses that have been suspended and, in one case, revoked, nor was it surprising to us that various licensed producers were pushing the boundaries in terms of their interpretation of the laws. Health Canada has also expressed its displeasure at practices within the industry, publishing statements on compliance and sending warning letters to licensed producers, where they regard those practices as being offside the law.
In terms of successes, it is quite remarkable that several years ago, with the exception of cannabis for medical purposes (which has been legal since 2001), cultivating, processing and selling cannabis for recreational purposes were illegal and, as of the date of publication of this article, Canadians are able to purchase and use various forms of cannabis (dried, prerolled, oil, capsules) and very soon, edibles, topicals and extracts.
- Question: Have companies found the laws difficult to navigate?
Answer: Certainly there has been a learning curve, as the Cannabis Act and regulations are a complex set of laws, with criminal and monetary penalties for non-compliance. One could definitely say that the laws are difficult to navigate, and Health Canada has not had time to publish guidelines and policies that are typically relied upon for interpretation of laws relating to other regulated products. Licensed producers typically have robust legal departments that help them navigate the laws and are often reaching out to law firms for additional support.
Leading up to the enactment of the laws, the federal government published the laws in draft for comment and provided a runway to licensed producers for the coming into force date. For example, the laws relating to edibles, topicals and extracts, which come into effect on October 17, 2019, were published in final form in Canada Gazette Part II on (June 26, 2019), allowing companies time to prepare.
- Question: What has surprised you?
Answer: We have been surprised by the amount of legal work created by the legalization of cannabis. Legal departments within licensed producers have sprung up, resulting in new opportunities for junior and senior lawyers. Departments within law firms have sprung up, to support the industry (including licensed producers, companies entering into transactions with licensed producers, investors, bankers, insurers). Lawyers are asked to sit on the board of directors of cannabis companies to help with governance. On any given date, there are multiple opportunities for lawyers in the cannabis sector advertised on LinkedIn. Recruiters and headhunters call regularly. Legalization has resulted in a whole new legal practice area, and the legal profession has jumped on this great new opportunity.
As a lawyer who practices in this area, it is also fun to be the person who knows the most about cannabis laws at a party.