The Cannabis Act review will not save your business 

by Grow Up Conference | Oct 11, 2023 | Media Partners, Stratcann

Speaking with people in the industry, I’m always struck by how often I hear references to the current review of the Cannabis Act as something they expect to bring economic relief to the industry. 

While that would be a welcome evolution, in my opinion, it’s not a wise place to place one’s hopes. While there may very well be some regulatory changes that come out of the current legislative review of the federal Cannabis Act, the review itself is legislative, not regulatory. 

When the Cannabis Act was written, there were many concerns about the possible impact on Canadian society. There were many concerns from some segments of Canada that worried legal cannabis would mean young people would have easier access, which would make it even more likely for them to try cannabis, or that allowing home cultivation of cannabis would lead to a rash of home fires and mouldy basements. Similarly, many First Nations and other Indigenous leaders told the government they were concerned about the negative impacts of cannabis in their communities, many of which were and are already “dry” to alcohol sales and even consumption. 

Because of these concerns, the Cannabis Act had a review built into it, calling on the government to investigate the progress of legalization and its impacts on these three key issues. 

From the Act:

Review of Act

• 151.1 (1) Three years after this section comes into force, the Minister must cause a review of this Act and its administration and operation to be conducted, including a review of the impact of this Act on public health and, in particular, on the health and consumption habits of young persons in respect of cannabis use, the impact of cannabis on Indigenous persons and communities, and the impact of the cultivation of cannabis plants in a dwelling-house.

This review, which was supposed to begin by October 2021 but began a full year behind schedule, is supposed to culminate in a report to be tabled by both Houses of Parliament within 18 months of the review’s launch, which would be early 2024. 

This report will not necessarily result in every proposal or statement resulting in any legislative or regulatory change. It’s simply to provide information that serves to answer the three key questions as to the impact of legalizing cannabis on Canadian society, namely young people, Indigenous communities, and people’s homes. 

Any changes resulting from the report will still be required to go through Health Canada rather than the report serving as a specific mandate. 

In addition, it’s important to understand the difference between a legislative review and a regulatory review. Cannabis in Canada is built around two key documents: the Cannabis Act, and the Cannabis Regulations that the Act empowers.

While the Cannabis Act deals with things such as prohibitions, obligations, and offences, the Cannabis Regulations deal with things like federal production and research licences, rules for how producers must operate, subcategories of products like edibles or extracts, etc. Specific industry hot topics, like the high rate of the excise tax or the low 10 mg limit for edibles, are informed by the Regulations, not the Act. 

That isn’t to say that the current review of the Act won’t result in any regulatory changes. It very well may. Regulatory changes tend to be ongoing, with an array of changes in the last five years, from more significant changes like the planned addition of edibles, extracts, and topicals, to changes such as allowing processors to be automatically issued a sales amendment for dried cannabis, or an array of changes during covid to streamline producer activities. 

So there is little reason to think that the report to be tabled in the House of Commons by next Spring (assuming they stick to the stated timeline) won’t include any regulatory changes—but keep your expectations tempered. While industry wants (and needs) sweeping changes, but don’t count on it.

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What is the status of the Review?

In late 2022, Health Canada announced the members of the independent five-person expert panel to lead a review of the Cannabis Act, with experts from public policy, public health, First Nations, and criminal law backgrounds. 

The panel’s work is divided into two phases. The first is a “factual assessment” of the impacts of the Cannabis Act, informed by the results of a recent public engagement process that ended in November 2022. Health Canada has an additional engagement process for First Nations, Inuit, and Métis peoples that was extended until January 15, 2023.

The expert panel released their What We Heard Report on October 10, which emphasized the public health lens the review is going through, while also acknowledging feedback from industry calling for more substantive regulatory changes.

The second phase of the panel’s work will focus on providing advice to the government on what aspects of the legislative (note: not regulatory) framework, or its implementation, can be improved or reformed. 

The expert panel has also been crisscrossing the country, meeting with a wide array of stakeholders, from First Nations and activist groups to small and large cannabis businesses, medical and public health experts, law enforcement, various political representatives at all levels of government, and more. 

This process will be used to inform the report eventually tabled in Parliament. 

In addition, the review process includes a yet-to-be announced expert advisory panel made up of industry stakeholders. Although no official list of names has been released yet, some media and others in the industry have noted it reportedly has several high-level executives from large, publicly traded cannabis companies, and has not been meeting consistently.  

Where do we go from here?

Lobbying the government for regulatory changes is an ongoing process, and the Canadian cannabis industry has a varied track record in that regard, some successful, others not so much. The ongoing Cannabis Act review absolutely provides a rallying point for industry to highlight many ongoing issues and concerns, such as high taxes and edibles potency limits, and industry has been making full use of that. 

However, I worry that many have bought into a narrative that major regulatory changes are coming soon as a result of this review. Changes that will “save” the industry. And I have to say, if you are waiting for the government to come swooping in to save this industry, you’re waiting for Godot. 

BC First Nation utilizing new “sovereign” edibles store next to their own provincially-licensed retail store

by Grow Up Conference | Oct 10, 2023 | Media Partners, Stratcann

A First Nations-owned cannabis producer and retailer is now taking what they say is a “hybrid approach” to cannabis sales on their reserve lands.

Williams Lake First Nation (WLFN) is the signatory of the first government-to-government agreement with the Province of British Columbia under section 119 of BC’s Cannabis Control and Licensing Act and owns and operates cannabis retailer Unity Cannabis as well as the cannabis producer and brand Sugar Cane Cannabis on WLFN reserve land on a large lot just south of downtown Williams Lake. The two businesses share a large parking lot. 

The First Nation also recently opened a new retail store in that same parking lot that sells edibles that are otherwise not available through the BC LDB’s supply chains. Kirk Dressler, the Director of Legal and Corporate Services with the Williams Lake First Nation and the CEO of Unity Cannabis and Sugar Cane Cannabis, says the new “hybrid” retail model is one born of both economic necessity, and as a response to a recent BC court ruling.

According to Dressler, the new store will initially carry a limited selection of edibles that have demand in the WLFN community and in other indigenous communities. He also decries the amount of plastics and other packaging required for edibles under the federal regulations, saying that the products sold at the WLFN sovereign store seek to address the issue.

From an economic standpoint, Dressler says both Sugar Cane and Unity Cannabis are facing challenges, with slim profit margins and increasing price compression, making it difficult to compete. WLFN has engaged the province on the issue multiple times to address the issue, and to push the government on the Cannabis-related commitments in its DRIPA Action Plan, but Dressler says the response from the government has not been satisfactory. 

Since the province has in the past said they are not seeking to actively enforce their own provincial retail rules on First Nations land, WLFN is utilizing this new “hybrid” retail space to exercise what they say is their sovereign right to sell cannabis on their own land without provincial oversight. 

“WLFN is in a position where it might be one of those that is forced to exit [the industry],” Dressler explains. “That is not acceptable. We’ve invited the province to look at fair and reasonable solutions. The province has refused to collaborate in any meaningful way, despite the fact the province has an obligation under DRIPA to do so and has agreed that it must do so. We’ve advised them that this leaves us with no option but to contemplate what steps we can take to utilize our jurisdiction to make our operation more viable. The province has nodded their head and acknowledged that that seems to be a reasonable response. That’s the inference we’ve drawn. So, we are in fact proceeding to do so.”

He says WLFN is taking steps to ensure they are still adhering to the rules of their Section 119 agreement, and the Unity Cannabis and Sugar Cane Cannabis operations are entirely unaffected by the establishment of the new store. . 

“What we are contemplating at this point is a hybrid system that would continue to respect the commitments we have in our 119 agreement but it would also allow Williams Lake First Nation to utilize its jurisdiction to develop a cannabis-related enterprise that might generate revenue sufficient to sustain our global cannabis operation.”

The store bills itself as an “edibles store” and promises the “cheapest edibles in town”. Dressler says all products sold within the store will come with COAs.