Argyle Public Relationships

Legalizing Cannabis: The Train has left the Station

By David Gourlay and Yan Plante

/ Posted in News


7 Key Trends To Watch
 
Last spring, the Government of Canada announced plans to legalize the recreational use of cannabis for July 1st, 2018. The House of Commons is studying draft regulations and amendments designed to prepare Canadian society for both the legal and cultural changes the new regime will bring. As provinces and municipalities consider what this means for them “on the ground”, the time has passed to debate whether it should be legalized, and instead focus on how to maximize the benefits of legalization – and to minimize its risks.
 
Argyle TACT Public Affairs has been following this file carefully and has identified seven emerging trends that will determine the impacts of legalization.
 
1. PROVINCIAL ALIGNMENT IN QUESTIONING THE JULY 1ST, 2018 IMPLEMENTATION DATE
As a united front, the premiers are concerned about the pace the Government of Canada has imposed on them to implement cannabis legalization, given that it is a complex issue and needs time to be done right. In July, the premiers announced the creation of a Provincial Territorial Working Group on Cannabis Legalization that will request more information on ambiguous areas, including :

  • Road safety and enforcement mechanisms
  • Preparation and training for distribution network
  • Taxation arrangements and cost coverage
  • Public education campaigns
  • Supply, demand and relationship to black market

 
The legalization timeframe poses interesting political optics for many provinces that will soon hold elections, such as Québec and Ontario in 2018, and others in 2019. It will be interesting to see voter reaction in these provinces.
 
2. PUBLIC SAFETY AND LAW ENFORCEMENT IS THE MAIN CONCERN
The top concerns of premiers relate to public health, safety and law enforcement. The key issues include impaired driving, keeping cannabis away from minors, ensuring no ancillary black market, and educating the public about health risks. In addition, retailers will be encouraged by provinces to design safe workplaces for employees who will have to sell cannabis.
 
Part of the provincial working group mandate is to build a political case to secure federal resources to assist in the implementation of these new priorities and we expect municipalities to equally ask for resources to enforce new bylaws on the recreational sale and use of cannabis in their communities.
 
3. ONTARIO IS THE LEAD-OFF HITTER
On September 8th, Ontario led off among the provinces with its proposed approach to cannabis legalization by setting the age at 19 for purchase and consumption and establishing the Cannabis Control Board of Ontario (CCBO) to regulate the distribution and sale through 150 stores by 2020.
 
Initial criticism of the Ontario plan is centred on a limited retail access structure that opponents charge will fuel opportunities for the black market. We believe the Ontario position reflects the apprehensions of elected officials about the risks and unknowns about the impact of legal cannabis on society. If the Ontario model sets a trend across provinces, it will be because a public monopoly structure is seen as the safest move – particularly before an election. We expect some provinces will follow a similar path, while others may be more bold.
 
4. REGIONAL ALLIANCES ARE BUILDING AND HAVE MOMENTUM
Québec and Ontario are working together to have a similar retail framework; the four Atlantic provinces are discussing a regional collaboration, and we expect similar working relationships in Western Canada.
 
These alliances make for convenient politics, but a risk is that a “winner / loser” market emerges where consumers are crossing provincial boundaries to access lower-cost product that will then drive demand in the black market, as we saw with tobacco. As a positive, we believe there will be certain common pillars to all provincial policies and regulations — i.e., a minimum age, limited hours of availability, and enforcement provisions.
 
5. 19 IS LIKELY TO BE THE MINIMUM AGE TO BUY MARIJUANA IN THE MAJORITY OF PROVINCES
Provinces will determine the minimum age required to buy and consume marijuana. Even as some stakeholders advocate for 21, there is a clear trend toward 19, as Ontario has announced. Two main reasons would explain this: (1) avoiding driving purchasers across provincial borders will influence a common minimum age, for example in Ontario and Quebec; and (2) many decision-makers are open to the argument that the minimum age should be the same as it is for alcohol.
 
6. HIGH IMPLEMENTATION COSTS FOR PROVINCES AND MUNICIPALITIES
If provinces and municipalities are united on one front, it is that the federal government’s decision to legalize cannabis will bring new costs to mitigate its risks. The costs on education, health and law enforcement will increase significantly and the provinces and municipalities are already pointing fingers at Ottawa for not thinking through the costs more carefully.
 
7. THE MAYORS ARE POWERFUL INFLUENCERS
With their municipal zoning powers, cities will have a big say around implementation. City councils will determine certain parameters on cannabis sales, such as location and minimum distances from schools; in larger cities with local police services, they will have new law enforcement costs. We have already seen mayors ask tough questions: at a recent meeting of the Association of Municipalities of Ontario, mayors asked about access to tax revenue to cover these costs. In the U.S., for example, Washington State has legal cannabis and its state government collects more than $365M a year ($1M a day) in tax revenue, providing incentives for local governments to seek revenue to cover their costs.
 
CONCLUSION
Implementation is a very tricky and complex issue for the Trudeau Liberals, and they have yet to address many details that will matter greatly to provinces and cities; achieving alignment with the other orders of government will be essential to their ambitious timeframe. Mistakes in implementing cannabis legalization could be costly for incumbent governments, and premiers are conscious of this. Of course, Prime Minister Trudeau will want to have this well behind him at the time of his re-election bid in 2019, when he can showcase this as a delivered promise instead of a delayed commitment — or worse, a false start.
 
The next Parliamentary session and the early September hearings of the Health Standing Committee will be interesting to observe and understand stakeholder perspectives. Our team is close to the ground in Ottawa, monitoring the developments and engaging directly with decision-makers.
 
 
Please let us know how we can help you. We are available to discuss our insights into how change in Ottawa affects you and your business. Please contact either David Gourlay at dgourlay@argyletact.com or Yan Plante at yplante@argyletact.com.

Want to ignite a discussion or contribute to the discourse?
Join the conversation