Canada: Senate Passes Historic Cannabis Legislation Putting End To 95 Year Prohibition

After a legislative showdown with the House of Commons regarding a series of proposed amendments, the Senate capitulated to the wishes of the lower house, in a 52-29 vote, on June 19, 2018. The House had rejected 13 of 46 amendments introduced by the Senate. Notably, the House rejected the Senate's amendments to: prohibit home cultivation, restrict advertising of marijuana branded swag, and maintain a public registry of cannabis company investors. The bill will next receive Royal Assent before coming into force on October 17, 2018.

Legislative Journey of C-45

Bill C-45 was first passed by the House of Commons on November 27, 2017. It then travelled to the Senate for consideration. After study and debate, the Senate inserted 46 amendments into the bill, despite signals from the government that some would not be accepted. The amended bill passed in a 56-30 vote on June 7, 2018.

On June 18, 2018, in a 205-82 vote, the House of Commons rejected 13 of 46 amendments proposed by the Senate.1 One of the more controversial amendments that was rejected was the prohibition of personal cultivation of marijuana in individual homes.2 The Government took the position that allowing home cultivation will help displace the illegal market and that provinces and territories are still able to make additional restrictions to personal cultivation.3 This position stands in contrast to Manitoba, Québec, and Nunavut, whose governments have indicated that they intend to ban home growing and want explicit powers to do so.4 The amendment to create a public registry of investors in cannabis companies was rejected because the government stated there are already sufficient measures to prevent organized criminals from investing in the Canadian cannabis market using offshore tax havens.5 Finally, the House also rejected an amendment prohibiting branding using company logos on anything that was not cannabis itself because it would hinder competition in the market, as brands would not be easily differentiated by consumers.6

The bill was then sent to the upper house for further consideration. From June 18-19, the Senate debated its response to the House's rejection of its amendments. There was much speculation as to whether the growing caucus of independent senators would continue to insist on their amendments, contrary to the wishes of the government. Ultimately, senators voted to accept the bill as approved by the lower house in a vote of 52-29 with two abstentions.7

Next Steps

There are many remaining steps before recreational cannabis is legal and ready for consumption by Canadians.

Federally, the bill must receive Royal Assent and come into force to become law in Canada. The prime minister announced that the law will come into force on October 17, 2018. The delayed coming into force date for Bill C-45 is meant to create a buffer period for provinces to complete their work. With the final bill approved, the roll-out of regulations that will fill-in the details of the federal regime will be published soon. These regulations will govern packaging, labelling, taxation, transportation, delivering, and stocking cannabis, among other things.8 Finally, Bill C-74, the budget implementation bill that makes changes to the Excise Act regarding cannabis, recently passed third reading in the Senate and will receive Royal Assent soon.

During this buffer period, Canada's provinces and territories have much to do on their end. They must pass any additional laws and regulations, create the product supply chains, and prepare for actual sales of recreational marijuana.9 Prince Edward Island and Nunavut still need to pass their own provincial laws regarding cannabis. Twelve provinces and territories have signed on to the Federal-Provincial-Territorial Agreement on Cannabis Taxation, with Manitoba being the lone holdout. This framework provides for the 75/25 per cent federal-provincial split from the proceeds of the proposed excise tax.10

In the coming weeks, the shape of Canada's cannabis market will be further refined. This historic moment, when the 95-year-old prohibition on cannabis comes to an end, will cement Canada as a global leader in the cannabis market.

Footnotes

1 House of Commons Debates (Hansard), 42nd Parl, 1st Sess, No 316 (18 June 2018) at 1515; Debates of the Senate, 42nd Parl, 1st Sess, No 150 (18 June 2018) at 1840 (Hon George J Furey).

2 Debates of the Senate, supra note 1.

3 Ibid.

4 Ibid; Debates of the Senate, 42nd Parl, 1st Sess, No 150 (19 June 2018) at 1810 (Hon Éric Forest).

5 Peter Zimonjic, "Senate passes pot bill, paving way for legal cannabis in 8 to 12 weeks" Canada Broadcasting Corporation (19 June 2018).

6 Ibid; Debates of the Senate, supra note 1.

7 Debates of the Senate, supra note 4.

8 Glen Korstrom, "Canada's Cannabis Act sent to Senate for second time" Business Vancouver (19 June 2018).

9 Supra note 5.

10 "Backgrounder: Federal-Provincial-Territorial Agreement on Cannabis Taxation" Department of Finance Canada.

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