Government Operations Committee on Sept. 26th, 2024

[The Chair, Conservative, Kelly McCauley]

We will start our meeting.

Welcome, everyone, to meeting number 141 of the House of Commons Standing Committee on Government Operations and Estimates, known of course as the mighty OGGO.

Please, everyone, as always, keep your headphones away from your microphones so that we can protect the hearing of our very valued interpreters.

We have two guests with us today to start. Each will have a five-minute opening statement.

We'll start with you, Mr. Buckley, for five minutes. Please keep right to the time. That will stop me from having to cut you off.

Then, we'll go to Mr. Potestio after that.

Mr. Buckley, the floor is yours for five minutes, please.

[Shawn Buckley, Constitutional Lawyer and President, Natural Health Products Protection Association]

Thank you, Mr. Chair.

I think it's timely that this committee is considering the regulation of natural health products. This is the regulatory issue that is of most importance to Canadians.

By way of example, the organization I'm with, the Natural Health Products Protection Association, created over half a million citizen letters to targeted MPs for a single campaign just to support Bill C-368 concerning the regulation of NHPs.

Citizens are extremely engaged in this because they're concerned that Health Canada is going to increase the regulatory burden through the self-care framework. However, this committee needs to understand that the current regulations are far too dramatic and render us very uncompetitive in comparison with the United States.

I want to draw three major differences between how the U.S. and Canada regulate natural health products. I hope this committee understands that we arrived at these completely polar opposite regulatory approaches from consumer pressure.

In the late eighties and into the nineties, both the FDA and Health Canada were over-regulating natural health products by imposing the chemical drug regulations. The consumer rebelled with two messages: do not regulate NHPs like drugs, and we want increased access, meaning we want a reduced regulatory burden not an increase.

The citizen rebellion in the United States led to the passage of the Dietary Supplement Health and Education Act of 1994, which does three things completely opposite to how Health Canada manoeuvred us to regulate.

The first difference is that NHPs in the United States are classed as foods, but we've been manoeuvred into classifying them as drugs.

The second major difference—and listen carefully—is that NHPs in the United States are deemed by law to be safe, but we've been manoeuvred into the drug model where our NHPs are deemed by law to be dangerous.

The third major difference is that, in the United States, you don't need government pre-approval to sell a natural health product, but in Canada, because we've been pushed into the drug model, we have to jump through all of these regulatory hoops to get Health Canada permission in the form of a license.

This has driven the cost of Canadian NHPs through the roof compared to our American competitors, and that has removed them from low-income Canadians, who now don't have the option of using NHPs. This has health consequences.

The curious thing in the sole message by Health Canada is that we need these regulations for safety, and we can safely conclude that it is not true for several reasons. First of all, we weren't having a safety issue before the regulations. The United States isn't having a safety issue with how they're regulating. The big fraud is that every Canadian is free to import the unregulated natural health products from the United States and to use them personally, and a large number of Canadians are doing that because of the price difference.

Risk is always measured. There's a risk hierarchy. How many deaths per million of the population are there per year? Health Canada refuses to tell us what that number is because there likely isn't a credible death attributed to the entire NHP industry per decade, let alone per million per year.

Finally, if you want to have an honest risk analysis, if we're really here to regulate because of safety, then everyone on the committee knows that well over 70% of Canadians are regularly using natural health products, and a large number of those are effectively managing health conditions—some of them serious—with these products. Obviously, there's going to be a health consequence to taking products away that people are effectively using to manage their health, but we never have that type of discussion. We're just told that there's risk and that we need to increase our regulations. These are the most unpopular regulations in Canadian history, and they're likely the most damaging; there are health consequences.

I'll just close, as I think I'm getting close to my five minutes, by pointing out that I'm not suggesting, in any way, that we stop products at the border. That would not survive a section 7 Charter of Rights and Freedoms challenge. That's not the answer. The answer is getting rid of this regulatory burden that has nothing to do with safety, and moving more towards a model like the U.S. has.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Buckley.

Mr. Potestio, please, you're up for five minutes, and the floor is yours, sir.

[JohnFrank Potestio, Chief Executive Officer, Freedom Cannabis Inc.]

Good morning, Mr. Chair. Thank you for allowing us to voice our concerns today from the industry.

Despite the federal finance committee's recommendation to support the cannabis sector, no action has been taken by the government. It raises a question as to whether the government plans to provide relief for the industry they legalized and set in motion.

Approximately 40% of all bankruptcies in Canada over the past three years were of cannabis companies, highlighting the issues plunging the industry. This collapse underscored the urgent need for federal intervention and support in the industry.

Cannabis companies face a crippling tax burden of over 45% of their revenues, far beyond what is seen in other regulated industries such as alcohol and tobacco. This has led to unviable profit margins, with many businesses unable to sustain their operations. Benefit from lower taxes and better regulatory framework is needed.

The industry has seen massive wealth destruction, as many cannabis companies raised tens of billions of dollars in capital investment only to declare bankruptcy and have their facilities demolished and closed. Financial failure, despite the sector's being heavily regulated, is rare outside the major market crashes and demonstrates that the current regulatory fundamentals are broken. Companies that followed all required steps have still been unable to reach breakeven, even after investments exceeding millions of dollars. The proposed 10% flat, ad valorem tax would allow the financial pressures and situations that have been advocated in industry leaders over the years, but action from the federal government is long overdue and needed.

While Canada leads the world in cannabis production, its domestic companies are struggling under regulatory and tax burdens that make it more viable to sell products abroad rather than at home. The burdensome tax and regulatory environment are pushing consumers and producers towards illegal cannabis markets that can offer lower prices without the strict government rules, which undermines the legal industry that raises tax revenue for the government.

There has been a backlog of unpaid excise taxes in excess of over $200 million in the last years. Companies are unable to pay the taxes due to the unstable financial conditions, further endangering the sector's stability. The wave of bankruptcies has resulted in significant job losses, affecting thousands of Canadian workers across the country. Without tax relief and regulatory reform, the industry employment base will continue to shrink.

Over-regulation in innovation and potential growth of new product development, research, intervention and competitiveness are being limited by the restructuring of the tax and regulatory environment. The cannabis industry is a multi-billion dollar sector with the potential for driving economic growth in this country and job creation; however, over-regulation and excise taxation are hindering its full contribution to Canada's economic recovery.

Thank you for your attention and the opportunity to contribute to this important discussion on Canada's industries.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Before we start our rounds, I just want to wish one of our members a very happy birthday.

Mr. Sousa, happy birthday.

[Some hon. members]

Hear, hear!

[The Chair, Conservative, Kelly McCauley]

As a birthday gift, you can take all the rounds today. Go ahead.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Kelly McCauley]

You're up for three hours, Mr. Souza. Go ahead.

We'll start with Mrs. Block for six minutes.

Go ahead, Mrs. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Chair.

Welcome to our witnesses today as we continue our study on red tape reduction.

My first questions will be for Mr. Buckley with the Natural Health Products Protection Association.

I would have to say that as a member of Parliament, there are certain issues that we tend to hear back from our constituents about in a really big way. I heard from many constituents after the introduction of the budget implementation act last spring. They were deeply concerned with the changes that were introduced in that bill to the regulation of natural health products.

I have two questions for you.

First, were any consultations held with the natural health products industry?

Would it be fair to say that your industry was caught off guard by the changes that were introduced in the budget implementation act, Bill C-69?

[Shawn Buckley]

First of all, you need to understand the history. This law that came to be known as Vanessa's law in 2014 was first introduced by former health minister Tony Clement in March 2008. It was called Bill C-51. The bureaucracy still remembers Bill C-51.

Basically, it brought in these $5-million-a-day fines and all of these almost God-like powers that Health Canada has. The original bill just applied to all drugs. We didn't have the therapeutic product category. That came in with Vanessa's law.

I remember a meeting I had at the Prime Minister's Office. We were being escorted out by Laurie Throness, who was number two at the ministry of health at the time. He explained to us that there was so much mail going into the minister's office that it was coming in wheelbarrows. Canadians were concerned.

Health Canada knew that Canadians did not want these powers and penalties applied to natural health products, so it waited until 2014, when Vanessa's law created the category of therapeutic products, which excluded natural health products, so the consumer was fine. The consumer was not concerned with fines, which actually are very small when you consider the money the pharmaceutical companies make, but which would absolutely destroy any natural health product producer or practitioner for that matter. The consumer was also not concerned about Health Canada's having increased powers, but about a rule of law perspective that would be inappropriate for any branch of the public, so everyone sat still.

I can tell you that everyone was absolutely surprised. Why would you put major changes to our drug regulation that you know the consumer is extremely concerned about into a budget bill? It's an affront to the parliamentary process. We were caught completely off guard. There would have been an absolute citizen rebellion. I mean, how often does a private member's bill get into committee? Bill C-368 did because Parliament understands that the Canadian citizen is concerned about it.

I gave you the figures just from our organization, but other organizations like the CHFA are also running campaigns and supporting Bill C-368.

Half a million letters through our organization alone speak broadly to Canadians' interest in this.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I'm wondering if you would be willing to speak to the huge financial implication for small and medium-sized businesses that offer natural health products, as well as the implications for Canadians who rely on these products to manage their health.

[Shawn Buckley]

Right. You're really asking a health question. I'll address concerns with this self-care framework. However, when you have.... You know, some figures are that upwards to 80% of Canadians are regularly using these products, but low-income people cannot afford them. Low-income people.... You know, if you go to a naturopathic doctor or a traditional Chinese practitioner, you're not able to afford these, so you've basically lost a fundamental right to decide how you're going to treat yourself when you're ill. We're going into legal, philosophical problems. However, this self-care framework is going to make the regulation of natural health products prohibitive, so even just on cost recovery itself, which has already been gazetted.... Health Canada had a large Zoom meeting with the industry. Even with the new figures that are given—and we all know that the goal is full harmonization—there are players out there that are saying that they're not going to do business in Canada anymore. Almost every manufacturer will be reducing its line, and—this is very scary—with regard to cost recovery alone, we're going to lose the suppliers for the traditional Chinese practitioners who literally need thousands of products for a full scope of practice...and also homeopathic medicine. What's going to happen to the natural health community when we lose two major healing traditions within that community and have the rundown affects on the distributors and stores?

Let's not even forget, I mean, the self-care framework. Health Canada is publicly telling us that you're not even going to be able to get licensed for any product for which you'd seek the advice of a health care practitioner, like a naturopathic doctor or a TCM doctor, so now we're in a licensing scheme under, you know, C.08.001 of the drug regulations.

[The Chair, Conservative, Kelly McCauley]

I apologize for interrupting, Mr. Buckley, but we're out of time. Are you able to just wrap up quickly?

[Shawn Buckley]

Okay.

We could go through the different elements of the self-care framework. All of them together are going to make it completely uneconomic. The NHP industry is rightly viewing this as the end game. Either we get intervention or we're not going to exist.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Kusmiercyzk.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you, Mr. Buckley, for your testimony.

Of course, this committee is looking at how we balance the priorities of making sure that Canadians have access to a product and also that the product is safe for them to use.

This is an important issue for my community. We have a company, an incredible company, in Windsor—Tecumseh called Jamieson. I've had the honour and the pleasure of meeting Jamieson folks who work there probably about four or five times just in the last two years. It's a company that has a one-hundred-year-old history. It has a thousand people working there. It's incredible. It's the largest natural health product company in Canada, and it's the fastest growing. It exports to 50 countries around the world. This is something that's, again, a pride of Windsor-Essex, and again, its products are exported around the world to 50 countries. In speaking with Jamieson, one of the things that I heard is that Health Canada is actually seen as the gold standard for regulation around the world. This actually provides companies like Jamieson with an advantage against international competition because people trust Canadian-made products. People trust the products that are created because when it has that Health Canada stamp on it, it means something around the world. Therefore, that product can compete in places like China, Europe, the Middle East, Africa and elsewhere because there is trust in a strong regulatory system.

I want to ask you to speak to that—about how, in some instances, regulation can actually be seen as a strength and an advantage for Canadian-made products because people trust it.

[Shawn Buckley]

I wonder what we're doing here, because we're told we need this for safety, and not for trade advantages.

There's a name for what is happening in the regulation of natural health products. Economists call it rent-seeking, where you basically up the cost and up the cost, so that you're left with a handful of large companies left standing that support the regulations, and support increased fees to the regulatory body. Look up rent-seeking. Jamieson would be one of the few companies to survive and be a quasi-monopoly.

If we want to have exports, why don't we have a voluntary licensing scheme that meets the same standards, and those companies that want to meet that to export can do it.

There are different things, but we're talking about safety here. Safety is measured in terms of how many deaths per million of the population per year are caused by an event. Lightning is more dangerous than the entire natural health product industry. My understanding is that lightning kills about one to four Canadians a year, so there would be about 10 deaths. Well, we can't point to 10 credible deaths in all of Canadian history caused by natural health products, but I can point to you examples where Health Canada restricting products have led to deaths.

What are we doing here? Are we having regulations to make the Canadian industry able to export? Let's have voluntary standards for whatever it takes to export. We're actually talking about health products that people use. Some people survive on them.

I was counsel for Truehope nutritional support, and Health Canada restricted access to that single product for a short period of time. The Canadian Mental Health Association held a press conference every time there was a death. The court acquitted Truehope, finding there was a violation of the law, but it was legally necessary, because more people would have died from the restriction of this single natural health product, which is now happily licensed by Health Canada. You couldn't get licensed back then.

I want to caution you. We are talking about products that people rely on for their very lives, and we never have an honest safety discussion. What are the consequences of our regulations? What are the consequences of ever increasing them, upping the prices, and dropping the number? We all know when you over-regulate, you restrict.

It's just funny, because Jamieson used to be the poster child for health freedom, with the decision in Jamieson (C.E.) v. Canada. It was one of the best decisions ever. When it was a small company, it felt very differently. If I were on the board of Jamieson, I would have a legal fiduciary obligation to support this rent-seeking, because it would be good for my company, not good for the safety of Canadians. I would have a legal obligation to maximize the share price of Jamieson and profits for the shareholders.

We're talking about different things. We can export by having voluntary standards. In no way do we need that for safety. Health Canada talks about safety. You tell me, how have these regulations saved a single life since they came into force on July 1, 2004?

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Mr. Buckley, I do agree that obviously NHPs have a different risk profile from pharmaceuticals and drugs on the market. Within a two-year period, there were Health Canada reports of 1,000 adverse reactions from NHPs. It included 772 hospitalizations and adverse effects.

There is a balance. I agree there is a balance that needs to be struck with, again, making sure that Canadians have access to these products, but at the same time making sure that safety is absolutely paramount. One adverse reaction, or one negative impact, is one too many.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that is our time, so we'll now go to Mrs. Vignola, for six minutes, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I have a point of order, Chair.

Could the witness be allowed a quick response? Usually, we allow a brief witness response if members takes it to the end of their time. I'd be curious for a—

[The Chair, Conservative, Kelly McCauley]

Normally we would, but we're short of time, because we have two panels today. Perhaps in Mrs. Kusie's turn, we can get a response.

Go ahead, Mrs. Vignola.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thanks very much, Mr. Chair.

I'm going to take a moment to give notice of a motion the text of which reads as follows:

Given that: (a) the media reported on Wednesday, September 25, 2024, that the Governor General of Canada, Mary Simon, was still unable to converse in French during a visit to a community organization in Lévis, Quebec, and that she had to cancel some of the events planned for her trip to Quebec for this reason; (b) the Governor General said she was “deeply committed” to learning French in 2021, when she was appointed, and she reiterated to Radio-Canada, in a 2023 interview, that she wanted to be able to “speak to francophones” by the end of 2024; and (c) tens of thousands of dollars in public funds have been spent on French language courses since 2021, with limited results; that, pursuant to Standing Order 108(2), the committee invite the following witnesses to appear for a minimum of two hours each within 15 days of the adoption of this motion: (a) Her Excellency the Governor General; and (b) the Minister of Official Languages; and that the committee report to the House.

I don't wish to discuss the motion right now. I'm just giving notice of it, but the situation is concerning. If you can't speak the language of the place where you're going, it's better to have an interpreter. That would have been respectful and much appreciated. I won't comment any further. We can discuss this matter at another time. The text of the motion will be distributed to committee members shortly.

Now I'll go to my questions for the witnesses.

Mr. Buckley and Mr. Potestio, my question is for both of you. On April 10 of this year, Corinne Pohlmann, executive vice president of the Canadian Federation of Independent Business, recommended that the government use plain language and make regulatory compliance flexible. We understand from your remarks that regulations are very onerous and have consequences. How can we make regulations plain and flexible? Do you have any specific proposals or examples to suggest?

[The Chair, Conservative, Kelly McCauley]

Mr. Potestio, did you want to start? Did you hear the question properly?

[JohnFrank Potestio]

I did, but it was in French, so I didn't understand the question.