Legal weed: How to regulate a budding industry

The federal government says it’s high time marijuana were legalized — but how will the provinces handle distribution?
By Sarah Reid - Published on Apr 07, 2017
Miles Claybourne sorts strains of marijuana for sale at The Station, a cannabis shop in Colorado. (Brennan Linsley/AP)



​In 2014, a 19-year-old Congolese exchange student named Levy Thamba Pongi ate one-sixth of a pot cookie — the amount recommended by Colorado public health — while visiting Denver with friends. After 30 minutes the THC hadn’t kicked in, so he ate the rest of the cookie. Then he jumped off a fourth-story balcony and died.

Pot was legal in Colorado by then. The state has since changed its labelling and packaging laws so that each edible dose of the drug is individually wrapped. “Colorado failed to completely anticipate how much attention edibles would attract and how difficult it would be to regulate them,” the Colorado Health Institute reported in 2015.

Pongi’s death and the legislative aftermath should serve as a lesson for Canada, where marijuana is set to be legalized on July 1, 2018, with legislation to that effect coming next week.

“The packaging and labelling requirements have changed [in the U.S.] over the years, and that should be something Canada should focus on from day one,” says Michael Lickver, a legal adviser to several companies and researchers in the medical marijuana industry. “But we will. We will be way more restrictive than them.”

Canada will become only the second country in the world to legalize marijuana at the national level (Uruguay was the first, in 2013). But when it comes to distribution and retail, the federal and provincial governments can learn much from pot-friendly U.S. states.

A “seed-to-sale” system

If a 2016 government task force report is any indication, then production and supply will be regulated at the federal level, as it already is for medical marijuana. Distribution will be left to the provinces and territories to work out on their own.

“Colorado has done a lot of things right, from seed to distribution,” says Deborah Weinstein, a corporate lawyer based in Ottawa. “They have very strict laws around ensuring that the seed grown emanates from the state where the product is sold.”

She says Canada should try to emulate that system here: “There has to be a proper tracking system. I think we’re well-positioned to do that because there’s technology out there, because of the U.S., that’s available to do that.”

Tracking will also allow for quick recalls and product inventories if they’re needed, the task force report says.


Regulating reefer retail

Few jurisdictions with legalized cannabis also have state-controlled alcohol sales as Ontario and some other Canadian provinces do, so the question of who should be allowed to sell is harder to answer.

Oregon is one of those jurisdictions. The state’s Liquor Control Commission sells most alcohol in the state (although beer and wine can also be purchased at grocery stores). When Oregon legalized marijuana in 2015, it opted to allow private retailers, licensed through the OLCC. Oregon is now grappling with a licensing backup, meaning almost 200 retailers are not allowed to sell their product legally.

Vancouver’s bylaw for the distribution of medical marijuana sets out retail rules. Stores must be licensed and located at least 300 metres from schools, community centres, and other businesses selling pot. The rules “can serve as a useful model for other municipalities as the legalization framework is rolled out,” according to a report from the Federation of Canadian Municipalities.

Alcohol sales are also instructive. “We know from best practices at alcohol retail outlets that increased outlet density is associated with increased access and increased levels of use,” says Rebecca Jesseman, a senior policy adviser with the Canadian Centre for Substance Abuse.

When pot was originally legalized in Colorado, users were not allowed to smoke it in public. The only real option was to smoke at home (if your landlord would allow it, that is). Residents and tourists started receiving tickets for lighting up in parks and other public spaces, and hoteliers tried to kick pot-smoking guests out.

“Right off the bat, we should allow some type of licence, similar to a liquor licence, where you can consume cannabis,” says Lickver. If you allow adult-use cannabis but you don’t regulate the consumption of it, then you’ve left a gap. I think that’s ripe for abuse.”

Eventually, in a ballot measure included in the November 2016 election, Denverites voted to allow recreational marijuana use at some businesses. Cafés, yoga studios, and other outfits can now apply for permits allowing their patrons to consume pot brought from the outside in designated “consumption areas.”

Canada’s task force recommends the federal government “permit dedicated places to consume cannabis such as cannabis lounges and tasting rooms, if they wish to do so, with no federal prohibition.”

Provincial pot

Canada will be the first federated country in the world to legalize pot. But that comes with its own set of challenges. It could mean 13 different distribution and retail systems, with varying age restrictions, products, prices and taxation.

“It would behoove the provincial authorities to be working together. Just like HST, come up with one rate of tax,” says Weinstein.

U.S. states can serve as an example to provinces as they prepare for legalization. “Where a lot of the states are encountering problems is with setting up deadlines, but not investing in administrative capacity to meet those deadlines,” Jesseman says.

There’s not much time for them to figure it out. “The July 1, 2018, deadline is very ambitious,” Jesseman says. “I think it will definitely create challenges for provinces being able to set up the administrative capacity and the regulatory details that will be needed to launch the system comprehensively.”

Even so, the Ontario government is prepared, says Emilie Smith, spokesperson for the Ministry of the Attorney General, in an email. The province is working with the feds and other provinces on regulation: “We have established a dedicated secretariat that leads and coordinates the province’s efforts towards a regulatory regime that keeps social responsibility and the protection of public health and road safety at the forefront.”

With an election coming in 2018, the Liberal government has an incentive to work quickly. They might need the brownie points if they hope to stay in power.

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