Marijuana in Canada is a hot topic of late. Since the autumn election of a Liberal government guaranteeing legalization, it’s a subject making headlines on a regular basis.
One of Prime Minister Justin Trudeau’s first acts was to issue a mandate letter instructing the Minister of Justice to work “with the Ministers of Public Safety and Emergency Preparedness and Health, create a federal-provincial-territorial process that will lead to the legalization and regulation of marijuana”. Furthermore he recently appointed Bill Blair, former chief of Toronto Police and current Member of Parliament for the Scarborough Southwest riding, as the person in charge of investigating the legalization process. The Speech from the Throne in December reiterated the government’s intentions to legalize, regulate and restrict access to marijuana.”
Parliament is not yet in session; there is no budget; the Loonie and oil prices have plummeted; and there are other election promises to keep. Given all that, it’s no surprise that beyond the appointment of Bill Blair there has been little heard from the federal government regarding plans or a timeline for marijuana legalization. That’s no surprise as there is a lot of conjecture from experts regarding the length of time legalization could entail.
The Current Situation on the Ground
To fill the void there have been a lot of individuals weighing in with how they’d like to see legalization realized. Provincial politicians and union leaders have been very vocal in their support of recreational marijuana being sold through existing government-run liquor stores. This has caused some debate as to how a retail model for recreational marijuana should be developed in Canada.
There has also been a large increase in the number of dispensaries across Canada. Primarily in Toronto where they’ve been sprouting up like ‘weeds’. Outside of Canada’s largest city, dispensaries have been a mainstay of the urban landscape in Vancouver for a long time now. So much so that the City of Vancouver decided to step in and regulate them with a dispensary licensing process.
Dispensaries are doing great business. Although they ostensibly sell only to medical patients, it is more than clear that many of these storefronts – especially those that have opened up most recently – are aiming to capitalize on the pending legalization by getting in early, accepting patients that don’t always meet patient requirements and generating revenue while there is a lack of regulation from local authorities waiting for word from on high.
This was and is generally the situation on the ground while everyone is waiting for the federal government to make headway. However the Canadian Medical Cannabis Industry Association (CMCIA) wouldn’t wait any longer and recently asked the federal government to address the proliferation of illegal marijuana dispensaries in Canada, “in order to protect public health and public safety.”
This is unsurprising given that the CMCIA is an association representing the Licensed Producers (LPs) that are approved to produce medical marijuana for Canadians with valid prescriptions under the Marihuana for Medical Purposes Regulations (MMPR). The MMPR came into effect on April 1st, 2014 and is supposed to be the only manner in which patients can legally access their cannabis medicine.
And no, it’s not a typo, they spelled it with an ‘h’.
The LPs and the MMPR
These LPs are the few companies that have managed to pass the rigorous and ever changing demands of the Health Canada LP application procedure – an expensive and time-consuming process that has benefited 27 companies to this point. These companies have until recently been permitted to provide only dried marijuana to patients.
If the injunction resolves with patients not allowed to grow, then personal recreational growing is certainly unlikely. Conversely if the decision alters the MMPR to allow patients to grow, Canada could take heed and follow regulations that have been developed south of the border. If the injunction goes in favour of the plaintiffs, patients and designated growers will be allowed to produce marijuana – albeit most likely at much lower plant numbers – and dispensaries could continue to have ready and available access to the wide variety of products they currently offer.
However a recent Supreme Court of Canada decision in June 2015 (R v Smith) allowed patients to access marijuana extracts and subsequently four companies have been licensed to provide oil products to patients. So far these oils are prohibitively expensive and must meet specific Health Canada guidelines regarding THC concentration and viscosity at room temperature. A far cry from the virtual cornucopia of concentrate types offered at most dispensaries.
Given all the hoops the LPs have had to jump through and the limitations they face (people really like concentrates), it’s no surprise to hear they’re frustrated with dispensaries. Especially given that a recent Georgia Straight story provided a rough estimate indicating that, “Vancouver’s dispensaries likely sell more in one month (1,110 to 3,350 kilograms) than the entire country’s sanctioned LPs sell in three months.”
There are approximately 40,000 MMPR patients being served by the LP companies and it’s no question that LPs would love to see that number jump significantly. But they believe the dispensaries are undercutting them by offering products to the LPs’ customer base that they themselves are legally prohibited from producing and by preempting potential patients from seeking an MMPR prescription. There are simply more options, easier access, and first-hand information at the local dispensary. Dispensaries have a competitive advantage.
But where do these ‘grey market’ dispensaries source their product?
The MMAR and Designated Growers
Before the MMPR there was the Marihuana Medical Access Regulations (MMAR) legislation. Under this program patients were provided with an Authorization To Possess (ATP) license and could source their marijuana from Health Canada, grow their own, or designate someone as their grower.
People that became designated growers for themselves and one other (to a maximum of two people total) were allowed to grow and store a specific number of plants and marijuana respectively. The number of plants was predicated on the patient’s prescription – Health Canada’s guideline indicated that a 5g/day prescription allowed up to 25 plants on site. So depending on the daily prescription and number of patients, one grower could legally possess quite a few plants.
There were thousands of growers registered under the MMAR scheme producing marijuana in 2014. And I think it’s safe to say that any one person with a few hundred plants is likely producing more than enough medicine. Although the growers must provide their growing and storage address plus meet inspection requirements, without a sufficient number of auditors for these designated growers who’s to say they weren’t producing more than their legal limit?
It’s fairly common knowledge that dispensaries source some, most, or all, of their product from MMAR designated growers. There is little Health Canada can do about this since they designated the number of plants and allowed them to grow. There is little law enforcement can do about this since they likely don’t have the manpower to visit every grower and don’t have any evidence growers are exceeding their limit. Further, patients visiting dispensaries are unlikely to face prosecution. The group most at risk for arrest and prosecution is the dispensary operators themselves.
You might ask, why the designated growers are still allowed if the MMPR was designed to replace the MMAR? The LPs under the MMPR are now supposed to be the only legal source of marijuana in Canada.
Enter the Allard Injunction
As part of the transition from the MMAR to the MMPR Health Canada required all patients and growers to destroy their plants and stored marijuana before transitioning to the LPs as their sole source of medicine.
In response Neil Allard and plaintiffs, with John Conroy as their lead counsel, launched an case against the government arguing that forcing them into the MMPR program would be prohibitively expensive and deny them access to their medicine. With prices from LPs ranging on average from $6-12 a gram depending on strain it’s a valid point – especially when you can arguably grow your own for under or around $1 a gram.
The government has argued, amongst other things, that there is compassionate pricing available for low income patients and home growing does not have the quality standards industry is required to meet to ensure people have safe medicine that will not be diverted to an illegal market.
Without giving bias, it’s important to point out that personal growers are just growing a plant, not manufacturing their own chemotherapeutic drugs. Plus many, if not most, future patients will still sign up and purchase marijuana from LPs rather than grown their own. In either case, both sides have made their arguments and we now await the decision from Justice Phelan.
Possible Outcomes of the Allard Injunction
The outcome of the Allard injunction could have long lasting ramifications on how patients are allowed to source their own medicine. If patients have the right to grow amended to the MMPR, it could also impact how legalization unfolds. It could influence whether or not people will be allowed plants for recreational growing.
If the injunction resolves with patients not allowed to grow, then personal recreational growing is certainly unlikely. Conversely if the decision alters the MMPR to allow patients to grow, Canada could take heed and follow regulations that have been developed south of the border.
Of the areas in the United States allowing recreational marijuana, Colorado, Alaska, and Washington, DC, allow six plants per person; in Oregon it’s four; while Washington state doesn’t allow any personal plants. This growing hasn’t seemingly put a dent in sales or tax revenue. It could be that Justice Phelan looks to these examples in determining how patients should be allowed to grow their medicine.
In the meantime the injunction has allowed growers under the MMAR to continue producing marijuana until a decision is reached. Much of which may or may not be finding its way into dispensaries.
If the injunction goes in favour of the plaintiffs, patients and designated growers will be allowed to produce marijuana – albeit most likely at much lower plant numbers – and dispensaries could continue to have ready and available access to the wide variety of products they currently offer.
Of course, they could also experience a dip in supply if Justice Phelan requires significantly reduced grow limits. But it is likely that this will be just a small amount of slack that is quickly taken up by growers ready to flout any cultivation limitations. Or supply to storefronts could originate from future cooperatives that spring up and are designated to grow for a large number of patients, in the event the court makes this possible with an amendment to the MMPR. Examples of this exist in the Unites States and Uruguay.
In either case, it is likely that any amendments to the current legislation to allow medical marijuana patients to grow will result in continued diversion to the ‘grey market’. This will not favour the LPs and the CMCIA will not like it.
If the injunction goes in favour of the defendants then the current source of marijuana for many dispensaries could go away as fast as the designated growers operations are shut down. Some dispensary operators have stated that they will only comply with a direct order to cease and desist operations from the city or police and will otherwise source product elsewhere. People were growing marijuana well before the MMAR existed so that shouldn’t be overly difficult.
How Long Until a Decision on the Allard injunction?
It could be weeks or months. No one can really say with any kind of certainty except Justice Phelan. And then there is the possibility of an appeal process. But it is likely that the decision will come down before any kind of legalization can be enacted. And that’s what people seem to have forgotten.
Dispensaries are popping up all over Toronto and the CMCIA wants the federal government to clarify its position on dispensaries – in other words, shut them down. It’s still too early to expect legalization as a new source of revenue.
If the marijuana supply to dispensaries slows drastically or dries up completely, many will be forced to close. On the other hand a favorable decision for Allard et al. could be seen as a de facto mandate to further expand marijuana storefronts. This could result in further sluggish progress of the LP industry until legalization.
The most immediate factor that could determine how the present state of marijuana distribution in Canada develops could be determined by the Allard injunction.