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John Ivison: Marijuana report to urge Liberals to strike at the black market
John Ivison | December 1, 2016 4:10 PM ET
More from John Ivison
Rich Pedroncelli / AP
The key recommendation of the panel charged with outlining the framework for Canada’s legal marijuana regime is that the system should be geared toward getting rid of the $7-billion-a year black market.
Sources familiar with the report, which is expected to be made public Dec. 21, say all the other recommendations flow from that guiding principle.
Provinces will set the legal age for marijuana consumption, but the report is likely to recommend the limit be the age of majority — 18 in six provinces; 19 in B.C., Newfoundland and Labrador, Nova Scotia, New Brunswick and the three territories — which would keep many young people from turning to criminal sources. (The Canadian Medical Association has recommended an age limit of 21, with limits on the quantity and potency.)
To eat into the black market, the report is expected to recommend prices should be lower than the street price of $8-$10 a gram. This would reduce the amount of tax revenues available to federal and provincial governments but would be justified by the principle of guaranteeing a safe and controlled supply.
To ensure consumers receive a Health Canada-approved product, the report is expected to recommend the existing mail-order distribution network be maintained.
Legislation is expected in April 2017, giving the provinces little time to set up their own distribution systems. There have been suggestions by some producers that legal marijuana could be sold as early as January 2018.
At the moment, medical marijuana is sold by mail order with a prescription, which allows producers to track the product from seed to customer.
Under an expanded legal system, suppliers could collect payment online and ship to an address provided by the buyer. Canada Post already makes wine deliveries where age has to be verified by the recipient. The legal marijuana industry argues that a similar age and identity verification system would work for pot.
Allowing Canada Post a monopoly in mail distribution would also boost business for a Crown corporation that saw mail volumes fall by 14 per cent in the most recent quarter.
On production, it is expected the report will recommend that the 36 existing licensed producers continue to produce Health Canada-approved pot, while new producers will be encouraged to apply for production permits.
Bill Blair, the Liberal MP managing the pot file, has made clear that production and distribution will be a matter for discussion with the provinces. That is likely to mean changes over time. On distribution, provincial governments like Ontario have talked about selling marijuana through its 600 provincially owned liquor stores.
That move would not be without controversy. Experts have warned about the dangers of promoting pot in the same way that liquor control boards market booze, and about selling the two products on the same shelves.
In provinces like B.C., which already has a large number of pot shops, the expectation is that the provincial government will require dispensaries to buy marijuana from a licensed producer.
The final report is already in circulation but public release has been delayed by the need to translate it into French. Justice Minister Jody Wilson-Raybould said in the House of Commons Thursday she expects to receive it in “mid-December.”
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime.
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime
During question period Thursday, Wilson-Raybould was pressed by the Conservatives about a spike in the trading of pot company stocks that they allege may have been caused by a leak of the report. On Nov. 16, the TSX halted trading on six medical marijuana companies. Alex Nuttall, an Ontario Conservative MP, asked the minister if she was investigating a possible leak.
Wilson-Raybould said she has not yet seen the final report and that any leak would be investigated by the Ontario Securities Commission.
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime.
There was an expectation it would generate tax revenues for strapped governments, but a report by the Parliamentary Budget Officer last month suggested tax revenues would be just $618 million at the outset, with around 60 per cent going to the provinces. That number is forecast to grow as the legal cannabis market matures and production costs decline.
“A potential customer shift to a more value-added cannabis product could create a larger tax base,” the report concluded.
Producers have pushed to be allowed to brand and advertise their products, taking the position that strong brands matter in a new market.
John Ivison | December 1, 2016 4:10 PM ET
More from John Ivison
Rich Pedroncelli / AP
The key recommendation of the panel charged with outlining the framework for Canada’s legal marijuana regime is that the system should be geared toward getting rid of the $7-billion-a year black market.
Sources familiar with the report, which is expected to be made public Dec. 21, say all the other recommendations flow from that guiding principle.
Provinces will set the legal age for marijuana consumption, but the report is likely to recommend the limit be the age of majority — 18 in six provinces; 19 in B.C., Newfoundland and Labrador, Nova Scotia, New Brunswick and the three territories — which would keep many young people from turning to criminal sources. (The Canadian Medical Association has recommended an age limit of 21, with limits on the quantity and potency.)
To eat into the black market, the report is expected to recommend prices should be lower than the street price of $8-$10 a gram. This would reduce the amount of tax revenues available to federal and provincial governments but would be justified by the principle of guaranteeing a safe and controlled supply.
To ensure consumers receive a Health Canada-approved product, the report is expected to recommend the existing mail-order distribution network be maintained.
Legislation is expected in April 2017, giving the provinces little time to set up their own distribution systems. There have been suggestions by some producers that legal marijuana could be sold as early as January 2018.
At the moment, medical marijuana is sold by mail order with a prescription, which allows producers to track the product from seed to customer.
Under an expanded legal system, suppliers could collect payment online and ship to an address provided by the buyer. Canada Post already makes wine deliveries where age has to be verified by the recipient. The legal marijuana industry argues that a similar age and identity verification system would work for pot.
Allowing Canada Post a monopoly in mail distribution would also boost business for a Crown corporation that saw mail volumes fall by 14 per cent in the most recent quarter.
On production, it is expected the report will recommend that the 36 existing licensed producers continue to produce Health Canada-approved pot, while new producers will be encouraged to apply for production permits.
Bill Blair, the Liberal MP managing the pot file, has made clear that production and distribution will be a matter for discussion with the provinces. That is likely to mean changes over time. On distribution, provincial governments like Ontario have talked about selling marijuana through its 600 provincially owned liquor stores.
That move would not be without controversy. Experts have warned about the dangers of promoting pot in the same way that liquor control boards market booze, and about selling the two products on the same shelves.
In provinces like B.C., which already has a large number of pot shops, the expectation is that the provincial government will require dispensaries to buy marijuana from a licensed producer.
The final report is already in circulation but public release has been delayed by the need to translate it into French. Justice Minister Jody Wilson-Raybould said in the House of Commons Thursday she expects to receive it in “mid-December.”
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime.
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime
During question period Thursday, Wilson-Raybould was pressed by the Conservatives about a spike in the trading of pot company stocks that they allege may have been caused by a leak of the report. On Nov. 16, the TSX halted trading on six medical marijuana companies. Alex Nuttall, an Ontario Conservative MP, asked the minister if she was investigating a possible leak.
Wilson-Raybould said she has not yet seen the final report and that any leak would be investigated by the Ontario Securities Commission.
The Liberals promised to legalize pot in their election platform as a public safety issue, to keep marijuana out of the hands of children and to cut off profits to organized crime.
There was an expectation it would generate tax revenues for strapped governments, but a report by the Parliamentary Budget Officer last month suggested tax revenues would be just $618 million at the outset, with around 60 per cent going to the provinces. That number is forecast to grow as the legal cannabis market matures and production costs decline.
“A potential customer shift to a more value-added cannabis product could create a larger tax base,” the report concluded.
Producers have pushed to be allowed to brand and advertise their products, taking the position that strong brands matter in a new market.
