Government Operations Committee on Sept. 26th, 2024

[The Chair, Conservative, Kelly McCauley]

Give us a 30-second response, please, Mr. Buckley.

[Shawn Buckley]

I am familiar with the bill; I wrote the first draft for MP Blaine Calkins.

We've moved into a category where the penalties and powers are so strict that there's now no discretion and no ability for companies to stand up to Health Canada, even when following Health Canada advice will lead to death or harm.

As a lawyer who has practised for 30 years in that field, there have been times when companies have had to stand up to Health Canada to protect life, and we've lost that initiative. You're going to be destroyed.

Whenever you're in a situation where the bureaucracy has absolute power over you and you can't argue with them, the bureaucracy has all the discretion. If you look up the definition of tyranny, it just means absolute discretion. It's not meant to be a negative term. We just know bad things happen.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that is our time.

We'll go to Ms. Atwin, please, for five minutes.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being with us today.

My questions will be for Mr. Potestio about the cannabis industry.

In my community and riding there are a lot of unregulated stores that have popped up. We're really dealing with what this looks like in the community. We're thinking about exposure for children and all these other pieces.

There's a company in Fredericton called RPC, which does a lot of the testing of cannabis from across the country, and they can confirm that regulated cannabis products are free of heavy metals, pesticides and other harmful residues. It's part of the peace of mind for consumers when they go to buy these products. I would assume they are associating some of those elevated costs with the safety piece that's there.

The cannabis industry is relatively newly regulated and involves products that the government has indicated are therapeutic, but there are also some negative effects for Canadians to consider. In your view, and in your experience with the licensing process and getting your company up and running, did that process find an appropriate balance between public health and safety and the ease of doing business?

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Mr. Latimer; hold on two seconds.

Mr. Potestio and Mr. Latimer, because both of you are in the same room, only one of you can be unmuted, just so you're aware.

Go ahead, Mr. Latimer.

[Tim Latimer]

I think it's a great question, and it's very unfortunate. This is such a study in public policy and just getting maybe two words wrong—the words "greater of" or "less of"—in the Cannabis Act. It has to do with the excise tax. As a result of having it say "greater than" and the analysts saying, "Hey, we're going to be at $7 to $10 for a gram of cannabis and it turns out to be $2", we've now turned it around and made it a lucrative marketplace for the black market to get back into the space. That was the unintended consequence of just a flip in the words.

Now the black market is all of a sudden emboldened to get back into the marketplace. Not only are they emboldened but they can actually open up, as you pointed out, in neighbourhoods. They look exactly like all the other cannabis stores out there, except they're not following the regulations and don't have to live up to any of the regulations.

With regulated cannabis, JohnFrank, through all of the work, spends $50 million and a lot of family wealth and effort and time to build a facility. Every time he sells $100,000, because the words are "greater of", he has to give a dollar of the $2 price to the government, or about 44%. If he sells $100,000 in a week, he sends $44,000 to the government.

The illegal guy doesn't have to send that $44,000, so he has that money. I'm going to call him a "cowboy entrepreneur" on the street. He's all of a sudden seeing an opportunity. Before he had to be downtown and selling for cash. Now he can be in the neighbourhoods all over the place selling. He can use Visa and debit cards. He can take as much money as he wants. He makes $44,000 extra in a week. He starts buying fancy things for his partner or his wife, and he starts asking himself, because he's an entrepreneur, “How can I do more?” He opens up a second and third location—

[Jenica Atwin, Liberal, Fredericton, NB]

Can I just interrupt you there? I'm sorry, but I just have such a short time for questions. I just want to add a piece.

In the opening statement by Mr. Potestio, he mentioned that 40% of recent bankruptcies in Canada were cannabis companies. My questions are these. Did these regulations evolve over time? Was there a change that these industries were unaware of, or were they just not prepared to enter the market? What can account for that 40%? It's quite high.

[Tim Latimer]

It's such a new market. They put too much tax on it. The analysts had it wrong. They thought the price would be seven dollars to $10. It's only two dollars for a gram. That's where they had it wrong, and they never adjusted it. Now they have a lucrative market for the black market. What you're going to see is this. I'm going to call them "Dr. Dooms". They're going to be opening stores. You're going to be able to order online. You're going to be able to buy a small joint laced with a little bit of crystal meth just sprinkled on top of it for five dollars. It'll be available to all of our children and in our neighbourhoods. This is a travesty that is not being addressed. It has to be with the timeliness of adjusting the policy. Okay, we have the policy a little bit wrong. Adjust it.

I agree with Mr. Shawn Buckley. There's too much control from Health Canada. They've overloaded the system, and they keep on overloading and overloading it and throwing on bureaucracy. It's really created a nightmare, and these places are all going broke. And they've invested. For example, JohnFrank and family have invested $50 million in this. They need to close up, because the CRA is extorting them and saying that if they don't pay this money in the next 30 days, they're going to pull their licence. They're literally saying that. Meanwhile, the illegal ones are saying that this is the best thing they ever had. They're now out in the open. They can collect with Visa and so forth, and they're innovative. They can bring new products in, and look at them go. They're going to scale up and get across the country, get online to be able to sell a lot of product.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mr. Latimer, that is our time. I had to cut you off there.

We'll go to Ms. Vignola for two and a half minutes, please.

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

Thank you very much, Mr. Chair.

Mr. Buckley, perhaps you can help me understand this more clearly. I'm always open to ways to improve processes. I think we now understand that regulations are onerous. I'm going to ask you a question for the purposes of consistency.

Let's talk about natural products. Oxygen is a natural product. Of course, 100% of human beings need it in order to live, but some people, for example, need oxygen tanks. Nitrogen is a natural product in that it's found in the atmosphere we breathe, but some people need it to treat warts, for example.

I don't know if I'm over-extrapolating, but is it possible that enforcing current regulations governing natural products might restrict access to those products for people who need them? If so, how would we go about ensuring that products that are healthy, good and essential to the health of those persons remain available to the general public?

[Shawn Buckley]

I'm not sure I fully understood the question, and it might have been the translation. What is it that you're asking could restrict access? Are we talking about the self-care framework?

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

How can we ensure that the regulatory framework doesn't block people's access to products that are healthy and essential to their health, such as oxygen and nitrogen, in certain instances? Can the present framework go so far as to prohibit access to those products? If so, what can we do to prevent that kind of anomalous situation?

[Shawn Buckley]

If the self-care framework, which has several branches, is permitted to proceed, we are going to lose most of our natural health products and cause severe problems for many of our healing traditions. The way we solve this is by starting to ask the proper question. Just say for the regulation of all drugs, be they chemical drugs or be they natural drugs, how do we get the best health outcomes? We need to review the entire system, because the system isn't based on that question. Most people agree. There are so many reasonable things. No one in the industry is going to say, let's not have good manufacturing practices—

[The Chair, Conservative, Kelly McCauley]

I'm sorry to cut you off, Mr. Buckley, but we're past our time.

I have to turn it over to Mr. Bachrach for two and a half minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair. I love how you used the words “have to”.

[Voices]

Oh, oh!

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Buckley, I think the last question you posed is a really important one: How do we ensure the best health outcomes? Surely in that somewhere is the use of high-quality data to inform regulatory decisions. Health Canada has pointed this out as a possible shortcoming of past regulatory systems when it comes to natural health products, or at least that's their claim, which is why, to my understanding, the Vanessa's law piece has been applied.

From your perspective, how do we ensure that there is high-quality, objective data on which to base our regulatory decisions so that we're ensuring those positive health outcomes that you talked about?

[Shawn Buckley]

It starts by looking into asking the proper question. If you are looking for risk, you will find risk. If you are looking for harm, you will find harm.

We've had the adverse reaction database reporting system, which has been very robust, since 1965. You're not going to find a credible report of a death caused by a natural health product in that entire time, which means peanut butter is dramatically more dangerous. I don't want to talk about shellfish. We just have to ask the right question: How do we get good health outcomes? Then we start measuring that.

You know, some of the leading causes of death in Canada are connected to the chemical pharmaceutical drugs. Good health policy might be that we restrict access to those until you've tried more safe treatment modalities. But we're not allowed to have that discussion. Nobody's saying there isn't risk with any type of health product, but if we're asking the question of how we can get the best health outcomes, which we've never asked, in our drug policy, we'll arrive at a reasonable place. If we then keep asking that question, we'll learn and learn and learn.

Truly, our drug regulations are there to protect intellectual property rights, not to get good health outcomes. We just have to start asking the right questions. Then we'll know what to measure.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I imagine that's my 2.5 minutes, but maybe I'll look to the chair to inform me on that.

[The Chair, Conservative, Kelly McCauley]

You do have four seconds, Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'll cede those seconds to my next colleague.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Actually, that's it for this panel. Normally we have a bit more leeway, but we do have another panel of witnesses that we have to get to.

To the witnesses, thank you very much. We appreciate your patience in dealing with the mic and some of the translation issues. If you have a brief or anything in writing that you wish to share with us for the report, you are certainly welcome to send it in to our clerk. We will include it for consideration.

Thank you again for joining us.

We'll suspend for a few minutes in order to bring in the new witnesses.

[The Chair, Conservative, Kelly McCauley]

We are back, colleagues. Thank you for your patience.

We have the second panel with two witnesses.

We'll start virtually with an opening statement from Mr. Beaulieu-Guay, please.

Go ahead, sir. The floor is yours for five minutes. We are relatively tight on time, so we're going to keep everyone to their timeline.

Please go ahead, Mr. Beaulieu-Guay.

[Dr. Louis-Robert Beaulieu-Guay, Associate Professor, Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan]

Thank you very much.

It's extremely difficult to ease the regulatory burden of a country like Canada. Many reforms have been attempted in various circumstances and have met with mixed success. Here, more particularly, certain initiatives have worked, while others have not. For example, there was the implementation of the “one for one rule”, under which regulatory authorities are required to remove one existing rule for every new rule. It has never really been possible to apply the rule effectively on a large scale. However, other measures have resulted in cultural changes at certain departments. One of those measures was the small business lens, under which regulatory authorities use a checklist to increase awareness of the impact their actions have on small and medium-size businesses.

That being said, the regulatory burden has been a major issue for Canadian regulatory authorities since the 1980s. Early on, Canada established many administrative measures to reduce that burden on individuals and businesses.

The leading tool used to provide regulatory relief and improve regulations is the regulatory impact analysis, which is mandatory for every new regulation and regulatory change likely to have a significant impact in Canada. Canada is a good regulatory impact practitioner. The regulatory impact analysis statement, or RIAS, combines many tools that are used to control regulatory creep and ease any undue regulatory burden on Canada's economy and society. Those tools include cost-benefit analyses, public stakeholder consultations, a supervisory body and checklists.

Cost-benefit analyses estimate net regulatory benefits that are equal to the difference between the costs of those benefits and the benefits themselves. Public consultations are sectoral in nature and involve the principal parties affected or concerned by the regulations in question. They provide a forum where all parties may speak out and express their views to regulatory authorities. The RIAS process is spearheaded by the Treasury Board Secretariat, which ensures the quality and rigour of the analyses conducted and a degree of cross-government uniformity.

Among the checklists included in the RIAS are a small business lens, provisions concerning co‑operation and harmonization of intergovernmental regulations, and measures to facilitate the incorporation by reference of international regulatory frameworks. These elements respond directly to certain objectives of this committee, particularly those cited in points (a) and (c).

Consequently, we already have tools in place, considerable experience and more than 25 years of administrative data on regulatory relief and improvement in Canada, but much progress needs to be made. First, not all departments are capable of conducting comprehensive impact analyses. Second, not all cost-benefit analyses are reported using the same units, which complicates comparisons and estimates of the total cost of regulations. As for consultations, the ones that have the greatest impact are, in many cases, the most exclusive ones conducted upstream and involving handpicked stakeholders. Lastly, it can be difficult to determine how successful the checklists are as they aren't necessarily associated with specific or ascertainable results.

In addition, efforts to provide regulatory relief often boil down to adding certain procedures to others. If corporate accountability can be simplified, that often complicates the regulatory process as such. If you want to require less of businesses yet remain a leader in meeting Canadians needs for security, environmental protection, food safety and public health, someone somewhere will have to do the work. If you want to require less of businesses, the government itself will have to gather the information it needs to secure a safe and predictable environment for Canadians. However, that may result in deadweight losses because businesses have easier access to the information needed to develop good rules in Canada.

Consequently, if the government wishes to modernize its regulatory process, it has many tools at its disposal to determine what and where the problems are, whether it be through frequent interactions among regulatory authorities and regulated parties or by relying on the expertise we have acquired from nearly 40 years of regulatory impact analyses.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll now welcome Mr. Trudel.

The floor is yours for five minutes, please.