UPDATE: As of April 13, 2018, every province and territory in Canada had tabled legislation outlining their plans for regulating cannabis. Our primer has been updated to include proposed legislation details from across the country.

Days after recreational cannabis legalization in California, Attorney General Jeff Sessions announced the rescission of the “Cole memo,” moving to change the country’s policy on non-interference with cannabis-friendly state laws. In his one-page memo addressed to all United States’ attorneys, Sessions announced that “previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately.”

On November 21, 2017, Health Canada released its proposed approach to the regulation of cannabis in anticipation of legalization in July 2018. The proposal addressed seven broad areas relating to cannabis activities: (i) licensing and permitting; (ii) security and security clearances; (iii) cannabis tracking; (iv) cannabis products; (v) packaging and labelling; (vi) cannabis for medical purposes and (vii) health products and cosmetics with cannabis. 

California has one of the largest consumer and business markets in the world, with a population larger than all of Canada. As a result, regulatory developments in the state should be of interest to all cannabis producers and investors across North America.

On November 24, 2017, the TMX Group (TMX) issued a news release updating the ongoing engagement that the CDS, which is owned and operated by the TMX, has with the Canadian Securities Administrators (CSA) to address the clearing of trades of issuers with cannabis-related activities in the United States. While little substantive developments were announced, the TMX emphasized that the final decisions will be based on each exchange’s role in assessing listing requirements, particularly analyzing an issuer’s compliance with applicable laws. This announcement comes just over a month after the TMX and CSA issued substantially different standards that each entity will apply to assess listed cannabis companies with activities in the United States (as summarized in our blog post dated October 17, 2017).

On November 16, 2017, the Government of Quebec released its proposed cannabis legislation, Bill 157, an act to constitute the Société Québécoise du Cannabis (the SQC), to enact the Cannabis Regulation Act and to amend various highway safety-related provisions (the Act). The Act elaborates on the Quebec Government’s plan to establish the SQC, a subsidiary of the Société des alcools du Québec, as the sole distributor of cannabis in the province. If passed, the Act will lay the foundations for a stricter cannabis regime as compared with other provinces.

On November 7, 2017 the Premier of Manitoba announced the proposed model of cannabis distribution throughout the province when the Federal Cannabis Act comes into force on July 1, 2018. Unlike the Ontario and Quebec models, whereby the liquor control bodies in each province have been designated as distributors and retailers of cannabis, the model in Manitoba is considered a hybrid retail and distribution, carving out roles for both the public and private sector.

On November 1, 2017, the Government of Ontario released its proposed cannabis legislation, Bill 174, Cannabis, Smoke-Free Ontario and Road Safety Statute Law Amendment Act (the Act). The substance of this bill is Ontario’s Cannabis Act, 2017, but the bill also details amendments to related legislation in the form of a new Smoke Free Ontario Act, 2017 and amended Highway Traffic Act. If passed, the Act would regulate the use and distribution of recreational cannabis in Ontario upon the enacting of the federal Cannabis Act in July 2018.

On October 16, 2017, the Toronto Stock Exchange and the TSX Venture Exchange (collectively, the Exchanges) issued notices providing guidance to those companies with business activities related to the cultivation, distribution or possession of marijuana in the United States (the Subject Entities). In particular, the Exchanges’ notices provide that the Subject Entities could be subject to an in-depth review based on their continuous disclosure records, which could result in de-listing on the applicable Exchange. In contrast, the Canadian Securities Administrators (the CSA) took a more lenient approach in its Staff Notice issued on October 16, 2017, addressed to issuers engaging in cannabis related activities in the US.

On Tuesday, October 3, 2017 the Standing Committee on Health (the HESA) approved a number of amendments to Bill C-45, the Cannabis Act (the Act).¹ Two specific amendments will likely have a considerable impact on the recreational cannabis market:  

On Tuesday, October 3, 2017 the Government of Canada unveiled its proposal for a federal excise tax on the sale of cannabis. Under the proposal, a $1 tax would be levied on prices up to and including $10 per gram and a 10% tax would be levied on prices over $10 per gram. The proposal is for the tax revenues to be evenly split between the Federal and Provincial Governments.

On September 29, 2017, government sources confirmed to Radio-Canada that Quebec's liquor board, the Société des alcools du Québec or Quebec Alcohol Corporation (SAQ), will oversee the distribution of recreational cannabis in the province following legalization in July 2018. Sources also confirmed that the legal age to purchase cannabis in Quebec will be set at 18, aligning it with both the mandatory minimum age proposed by the Government of Canada in Bill C-45 and with the province’s minimum drinking age. 

Health Canada is soliciting input on possible changes to the Food and Drug Regulations regarding establishing pharmaceutical equivalence between a proposed generic drug product and the Canadian Reference Product ("CRP"). These proposed changes are intended to better harmonize the framework with the practices of other major regulatory bodies. Consultations, which are the first in a series of consultations, will be open until October 13, 2017. 

September 21, 2017 marks the provisional entering into force of the Comprehensive Economic and Trade Agreement ("CETA") between Canada and the European Union, and concurrently the coming into force of Bill C-30, the Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act  (the "CETA Implementation Act"), an act which implements Canada's obligations under CETA.

On August 17, 2017, the TMX Group issued a statement announcing that it has engaged with the Canadian Securities Administrators regarding the clearing of securities of issuers with cannabis-related activities (including assets and operations) in the U.S. Although the TMX Group’s general position on companies engaging in such activities has been a source of speculation and uncertainty for some time, the announcement highlighted specific uncertainty about whether the TMX Group, which is the parent company of The Canadian Depository for Securities Limited ("CDS"), might make the securities of issuers with cannabis-related activities in the U.S. ineligible for clearing and settlement through CDSX. Although no such action has been taken or articulated, such action could materially impede the ability to trade in the securities of issuers with cannabis-related activities in the U.S. and thus have a chilling effect on the listing and financing of such issuers.

Yasir Naqvi, Attorney General, Charles Sousa, Minister of Finance and Dr. Eric Hoskins, Minister of Health and Long-Term Care, announced Ontario’s planned approach to the federal legalization of cannabis as proposed by Bill C-45, the Cannabis Act, this morning. Bill C-45 left significant discretion to the provinces for determining the appropriate distribution, sale and retailing of cannabis.

A look at the current healthcare landscape in Canada, including financing, mergers & acquisitions, notable transactions and big announcements.

On April 13, 2017, the Government of Canada released Bill C-45, the Cannabis Act, which, as discussed in a prior blog post, deferred significant discretion to the provinces with respect to the distribution, sale and retailing of cannabis.

The Supreme Court of Canada’s (the “Court” or the “SCC”) recent judgment in AstraZeneca Canada Inc. v Apotex Inc., (2017 SCC 36, “AstraZeneca v Apotex”) released on June 30, 2017, constitutes an important paradigm shift in Canadian patent law. As described in greater detail below, the SCC has rejected the “promise of the patent” doctrine (the “Promise Doctrine”), a doctrine which has been a unique and fundamental principle in Canadian patent law, used to determine if the subject matter claimed in a patent is useful, as required by section 2 of the Patent Act.

With the legalization of recreational marijuana in Canada slated to occur within the next 12 months, a looming concern is whether Canada's supply will meet its demand. In a recent Bloomberg article, Cameron Mingay discusses practical realities associated with ramping up legal marijuana production in Canada.