Current Legal Landscape - Cannabis Regulation in Canada

In Canada, the production, cultivation, and sale of cannabis for recreational use is currently illegal. However, if strictly for medicinal purposes and under physician prescription, personal cultivation for medical use and the production, cultivation and sale by licensed medical producers is permitted and regulated under Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR).

Legislative reform to legalize recreational use, cultivation and sale has been progressing since the Liberal Party of Canada promised legalization during the most recent federal election. On April 13, 2017, the Liberal government introduced the first reading of the bill (Bill C-45) to the House of Commons, which proposes to provide legal access to cannabis, and many analysts and news sources report that the legal sale, cultivation and use of recreational cannabis is expected by the summer of 2018.

Despite this expeditious plan, Secretary to the Minister of Justice and head of the legalization effort William Blair indicated on numerous occasions that timelines are merely speculative and that while the government will keep its promise to legalize cannabis, it is committed to taking the time to do it right, citing the need to develop sound regulations and negotiations with the provinces and territories. Further, it has been suggested that the federal government decriminalize possession of non-medical cannabis for personal use until such legislation is passed (though in our view this is unlikely to occur). The Canadian 2017 budget provided little insight into the proposed legislation or timeline, but stated that in regulating the industry, the government “will take steps to ensure that taxation levels remain effective over time.”

There is a great deal of optimism surrounding the Canadian cannabis industry. According to Bill C-45, licenses issued under the ACMPR will be deemed to be licenses for the production, testing, packaging, labelling, sending, delivery, transportation, sale, possession or disposal of cannabis, including recreational cannabis, issued under the proposed Cannabis Act. Accordingly, many companies are applying for licenses to produce medical cannabis under the ACMPR in an effort to gain a “first-mover” advantage over their unlicensed counterparts. However, as of March 2017, Health Canada had only approved approximately 2.6% of applications received under the ACMPR