Briefing Note for the Minister of Finance:ImplementingCannabis Retailing in Ontario Issue Statement: How can theprovincial government implement a cannabis retailing system in Ontario that isin accordance with federal legislation? Background: · Afterproposing cannabis legalization in 2012, the federal Liberals under PrimeMinister Justin Trudeau campaigned in the 2015 federal election with cannabislegalization as a major platform. Shortly after entering office, the federalgovernment created the Task Force on Marijuana Legalization and Regulation(“the Task Force”) in November 2016 as part of a broader strategy to engagewith provincial, territorial, and municipal governments.
The purpose of theTask Force was to design a new system to legalize, strictly regulate andrestrict access to cannabis in Canada. Amongst other suggestions, the TaskForce recommended:o Marketing: Allow limitedpromotion of cannabis and cannabis products exclusively in areas accessible byadults, similar to those restrictions under the Tobacco Act.o Packaging: Prohibit products thatmay appeal to children, including those that may be packaged with brightcolours or look like candy, while also having childproof packaging to preventaccidental consumption. Product must be appropriately labelled, includingnutritional information, consumption guidelines, and suitable warnings.o Taxing: Implement a taxing schemethat balances health protection with the goal of reducing the illicit market,while also ensuring equitable distribution of revenues with provincial andterritorial governments. o Regulation: Regulate productionat the federal level while implementing good production practices adopted fromthe medical cannabis system. Ensure a competitive market using licensing andproduction controls. o Distribution: No co-location ofalcohol, tobacco and cannabis sales.
Limits on the density and location ofstorefronts including appropriate distance from schools, community centers,public parks, etc. Wholesale distribution of cannabis should be regulated byprovincial and territorial governments in collaboration with municipalities.Maintain a separate medical access framework to support patients.
· InApril of 2017, Bill C-45, commonly referred to as the Cannabis Act, wasintroduced to Parliament by the Liberal government in an effort to legalize theuse of recreational marijuana in Canada by July 2018. The bill, currently inits second reading in the Senate, establishes a legislative framework forcannabis consumption, sets federal minimum standards, and provides for thelicensing and oversight of the legal cannabis supply chain. In keeping with therecommendations of the Task Force, the Cannabis Act specifies:o Minimum age: Provincialgovernments have the discretion to increase the minimum wage in their province,however it cannot be lowered past 18 years of age.
o Marketing: Any promotion,packaging, or labelling of cannabis that could be appealing to young persons orencourage its consumption is prohibited. o Distribution: Only those personsauthorized under respective provincial Acts may sell or distribute cannabis. Generally,the federal legislation has left great oversight powers to the provincialgovernments in the areas of implementation and commercial regulation, includingpossession, sale, home cultivation, and use. · InNovember 2017, the Ontario government announced Bill 174, the Cannabis,Smoke-Free Ontario and Road Safety Statute Law Amendment Act. With Bill 174’spassing, the Cannabis Act and the Ontario Cannabis Retail Corporation Act wereenacted, entailing the following:o Provincial Retailers: The actwould create a new provincial retailer as a subsidiary of and overseen by theLCBO, named the Ontario Cannabis Retail Corporation. The OCRC is the onlyentity licensed to sell cannabis for recreational use in Ontario. In compliancewith the Task Force’s recommendations however, cannabis will not be sold in theLCBO’s 651 stores that sell alcoholic beverages.
Instead, the OCRC willinitially operate 40 stand-alone cannabis shops, increasing to 150 stores by2020. The OCRC will also control online sales. OCRC stores will be staffed withspecially trained members of the Ontario Public Service employees’ Union, asLCBO outlets are. o Regulation of Use: Usage will berestricted to private residences. Consumption will be banned in all publicplaces, including parks, workplaces, as well as in vehicles. There are limitedexceptions for medical cannabis users. o Protection of Youth: Minimum ageto use, buy, possess, and cultivate cannabis in Ontario will be set at 19 yearsof age.
Additionally, there will be no self-service at OCRC shops, all productswill be sold from behind the counter to customers. In keeping with LCBOpolicies, identification requirements will be implemented for those appearingunder the age of 25. · InDecember 2017, the federal government announced legalized cannabis will bepriced at approximately $10 per gram. Each gram of marijuana would have a taxof $1 on sales up to $10 and a 10-per-cent tax on sales worth more than $10.The tax revenue will be split 75-25 between the provinces and federal governmentin order to help cover costs of implementing cannabis retailing systems. Key Considerations: Protecting youth from undue exposure· Thefederal Cannabis Act sets the minimum age of use at 18. The province ofOntario, however, in uniformity with provincial alcohol consumption regulation,has set the minimum age of cannabis consumption at 19 years of age.
The federalgovernment has informed provinces that there is a moderately low risk offrustrating federal law if the minimum age were to be increased past 18, asdoing so could potentially lead to continued reliance on the illegal market byyouth and young adults. Furthermore, there may also be a rise in “bordershopping” for youth similar to what happens with alcohol. · Youngpeople would not face criminal prosecution for sharing up to 5 grams ofcannabis with adults or other young persons. There is no prohibition in thefederal framework prohibiting youth from sharing with a person under 12. TheOntario government must implement more stringent possession and sharingregulations by way of provincial legislation. · Heavyrestrictions on places of consumption could increase the risk of users turningto other more inconspicuous mediums, such as edibles, which may lead tostronger impairment and negative effects. Taxation· Monitoringof market demand and reevaluation of pricing of must be conducted frequently inthe weeks and months after implementation in order to ensure price and taxprice that balance health protection with the goal of reducing the illicitmarket.
· Coordination with municipal governmentsis necessary to determine a tax regime that includes equitable distribution ofrevenues· Committo using revenue from cannabis as a source of funding for administration,education, research and enforcement· Design a taxscheme based on THC potency to discourage purchase of high-potency products Health· Aswe move away from prohibition, many stakeholders will turn to governments forinformation on how to assess the risks and harms of cannabis use and on how theregulation of cannabis will work. There is significant misinformation that mustbe addressed. Public opinion research shows that youth and some adults do notunderstand the risks of cannabis use.· Nationalcampaigns and in-school programs are important components of an overallapproach to public education on cannabis. Information should be available toconsumers in retail locations, on packaging, as well as through healthpartners. · Co-ordinationbetween federal, municipal, and provincial partners is crucial.