What’s Up in Weed

November 3, 2017

By: Andrea Hill

I am pleased to bring you this instalment of my blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.

Dispensary owner bringing constitutional challenge in response to charges

• A Toronto dispensary owner is bringing a constitutional challenge against the law under which he was charged in the “Project Claudia” Toronto dispensary raids of May, 2016. Dozens of dispensaries were raided almost simultaneously under Project Claudia, in a concerted effort by law enforcement to crack down on the illegal storefront suppliers.  Marek Stupak was charged with possession for the purposes of trafficking and having proceeds of crime.
• Stupak has hired Osgoode law professor Alan Young to bring the challenge – and that’s significant. Professor Young (who was my law school professor and employer), known as the “pot lawyer”, spearheaded all of the successful constitutional challenges to cannabis laws in the late 1990s and 2000s.  His arguments led to the creation and evolution of the Marihuana Medical Access Regulations (MMAR), Canada’s first legal medical marijuana program.  He maintained a close relationship with Health Canada as it ironed out the MMPR and ACMPR – in fact, he introduced me to the Office of Medical Cannabis’ top executive this summer.  Alan Young is an absolutely formidable opponent.
• Young explained that the basis for the constitutional challenge in Stupak’s case is the Allard ruling of the Federal Court in February 2016 that found the Marihuana for Medical Purposes Regulations (MMPR), which replaced the MMAR, to be constitutionally unsound (although the regulations were allowed to remain in place for another six months to give the federal government time to replace them). Prior court rulings had obliged the government to enact a constitutionally sound medical marijuana regulatory system.  Since the MMPR did not meet that bar, Young posits, when the Project Claudia raids occurred a few months later, the police had no law to back their enforcement action.
• Crown lawyer David Morlog has countered Young’s argument by saying that Stupak was looking for an “extremely broad” remedy and was misinterpreting the Allard
• This challenge will be an interesting one to watch. A win for Stupak could set a precedent for the disposal of similar charges against dispensaries, and undermine the substantial investment of resources by municipal police on its enforcement campaign against dispensaries – which Toronto’s head of investigations estimates to be at least $1 million so far.
• Potentially even more legally significant, however, is if dispensaries like Stupak’s are found to have been playing a constitutionally protected role. The possible implications could fill a book, but at the very least, such a conclusion could interfere with the federal government’s plans for a streamlined system of medical cannabis sale and distribution.

Globe: supply has to meet demand on July 1, 2018

• In what reads like an open letter to Health Canada, the Globe argued that “Ottawa should heed” cautionary tales like Washington and Colorado, where supply has often been inadequate in the early days of rec cannabis. Quebec, for example, plans to undercut illicit cannabis suppliers by offering pot well below street prices when it becomes legal for recreational use next year. That only works, the paper argues, if they have the goods to sell in the first place.
• Referring to studies by Statistics Canada and the University of British Columbia, the Globe observed that, contrary to law enforcement claims, it appears that organized crime is increasingly less involved in cannabis, eschewing the relatively voluminous drug for higher-stakes, more compact products like heroin. This could, it seems, place elimination of street cannabis within the government’s reach, if legal product is priced competitively and supply is adequate and easy to access.
• A big question that follows from a potential dearth of supply is whether the government may allow the import of cannabis from other jurisdictions to meet demand. We saw frequent imports when the MMPR were first introduced, particularly between Bedrocan BV in the Netherlands to Bedrocan Cannabis Corp. in Canada as a means of stocking the pond with product, genetics, and expertise.
• Now that Canada’s system is up and running, however, LPs are expected to buy their starting materials from other LPs, and imports from other jurisdictions are rare. In fact, many LPs have staked their fortunes on the current policy continuing, by bulking up their production capacity.  The en masse import of flower, oil, and other forms of cannabis from foreign jurisdictions, where it is often much cheaper to produce, could add to product variation in the market in Canada, but raises quality assurance testing concerns and could make it harder to justify the massive expansions being undertaken by many of our domestic LPs.

Rehash: quick links to interesting points

• It isn’t easy being green: Toronto’s dispensaries operate in an increasingly risky environment. A dispensary owner in North York was fatally shot the other week, and a possible hostage situation was investigated by Toronto Police this week (it turned out to be a false alarm).  Word on the street is that dispensary workers may not feel comfortable calling the police at the first sign of trouble, as they believe police may end up arresting them, instead.
• The tipping point: Support for legal marijuana is now at majority (and record) levels among Republicans (51%), Independents (67%), and Democrats (72%), according to a very interesting Gallup poll released this week. The poll of 1,028 adults in all 50 states and the District of Columbia, measured support for marijuana, period, not just medical marijuana. A majority of Americans have consistently supported legalizing marijuana since 2013, but this is the first time that Republicans, whose approval on this subject rose nine points from last year, have tipped the balance in favour of legalization.
• Rescheduling soon? A US top international anti-drug official who has recently retired has suggested that the country may soon re-schedule cannabis.  The topic of re-scheduling comes up frequently, so I wouldn’t hold my breath, but it’s interesting to hear this from a guy who admits he’s not a fan of the industry.
  • “When the conclusions are drawn, it is likely that substances may be reclassified,” said William Brownfield, who resigned weeks ago as Assistant Secretary of State for International Narcotics and Law Enforcement Affairs.
  • Marijuana is currently a Schedule I substance under the US federal Controlled Substances Act of 1970 (CSA), a category reserved for substances with a high potential for abuse and no accepted medical value in the US. Marijuana is currently in this category, as is heroin and LSD.
  • Schedule II of the CSA includes substances with a high potential for abuse and dependence, but which have accepted medical application (with severe restrictions). Bedfellows in this Schedule include methadone, morphine, and cocaine (cocaine has an accepted medical use?  Wow).
  • The Schedules go all the way up to Schedule V, the lowest end of the controlled drugs spectrum. Schedule V drugs have a low potential for abuse and currently accepted medical use in treatment, but abuse of the drug may lead to limited physical or psychological dependence.  Examples are cough medicines with codeine.  Learn more about US drug schedules here.  (Thanks, CB!)
• How not to switch recordkeeping systems, by Washington State: just in time for Halloween, an attempt to switch cannabis recordkeeping systems from BioTrack to MJ Freeway, two leading US seed-to-sale software solutions, has turned into something of a nightmare in Washington State. MJ Freeway’s replacement system will not be ready for at least two months after the state’s contract with BioTrack expires, potentially leaving the cannabis industry with only manual spreadsheets for recordkeeping of all plant, harvest, inventory, conversion, sample laboratory testing, transportation / chain-of-custody, and sales data for the duration of the gap, just in time for harvest season for outdoor growers.  Shudder.

What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission. 

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