Health Committee on Sept. 12th, 2017

[Prof. Neil Boyd]

No, they're not. I do think it's important to look at the context. If you have no retail in a province, for example, then those concerns may be valid, but as long as you have retail.... I look at this as analogous to making your own wine or making your own beer. Most people don't want to do that. They'd prefer to go to the store and buy the product. I think we'll see something similar.

It's a complicated process to grow cannabis, or somewhat complicated, and the same is true with respect to beer or wine. It's a fear, but I think once you roll out a sufficient number of retail outlets and once consumers have a choice of products that they want, you're going to see some small grows. You're going to see people engaged in that. That was what the task force recommended. I think, as I said earlier, we're going to see some limits because of how and where people choose to live, in multi-family dwellings and the like. It's a concern, but only a concern should we fail to roll out the retail aspect of this.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'm going to end with a bit of a policy philosophy question for all of you.

I'm going to start with the last line of your submission, Professor Boyd, where you said, “we should acknowledge a more general but important point: the reasons for individual use—the pursuit of pleasure and relief from pain—are not always dichotomous categorizations, but often overlapping motivations for the consumption of cannabis.”

I think I've heard all of you say in some fashion that you've questioned the idea of continuing to treat cannabis in a criminal manner whatsoever, and you said C-45 still draws on criminal law, but it should be regulatory for what should be a legal product.

I think, Professor Boyd, you said cannabis doesn't deserve criminal sanction. I've heard the phrase that people who use cannabis should not be treated as criminals. You said it's inconsistent with human rights, yet Bill C-45 continues to do exactly that. It is a criminal sanction-based approach to cannabis. You can't possess more than 30 grams or you risk up to five years in jail. You can't grow more than four plants or you risk incarceration. A 19-year-old selling to a 17-year-old risks 14 years in prison.

Given that we have legalized alcohol—there are no criminal sanctions around the possession or use of alcohol—should we be taking a truly legal approach to cannabis and a purely regulatory one? Is this bill getting it right or wrong in that regard?

[Anne London-Weinstein]

I think the bill is getting it largely right.

My concern, and what I understand, is that the bill is trying to legalize cannabis use for ordinary Canadians. It also has a two-fold purpose of trying to eliminate organized crime, which until this point, because cannabis hasn't been legal, has gained a foothold. The two purposes of the act are to decriminalize it for the ordinary Canadians, and to get the criminals and organized crime out of the production and distribution of marijuana.

[Don Davies, NDP, Vancouver Kingsway, BC]

Why should I be criminal if I have 40 grams of cannabis? What makes that criminal, as opposed to 28 grams?

[Anne London-Weinstein]

That's an arbitrary example.

The intent of the act is to eliminate the influence of organized crime. By trying to achieve both purposes, there's going to be a slight compromise. That's what concerns me, because some of that flows into criminalizing ordinary possession.

[Don Davies, NDP, Vancouver Kingsway, BC]

I see.

Professor Boyd.

[Prof. Neil Boyd]

I want the act to succeed. It's a good piece of legislation. It's heading in the right direction.

I see a lot of wrong with it. I see too much criminalization. To go to the point earlier, why are we setting limits? We don't do that with alcohol. I think all of this is going to change over time, but let's first stop criminalizing people for this activity. Recognize that governments have to move slowly to allay the fears of those who are either opposed or concerned about what legislation might bring.

I would like to see the elimination of clause 8. I really don't understand the criminalization of possession of illicit cannabis. There's going to be a need to control the trade, and I'm hoping we don't have to use police presence to do that. I'm hoping that we can use a civil regulatory approach.

Ultimately, this will be regulated in much the same way as alcohol. I have no doubt that even when we take rates of use into account, there's no way that this drug is anywhere near as dangerous to public health as either alcohol or tobacco.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay, thank you.

[The Chair, Liberal, Bill Casey]

That's a great way to finish off.

Those were great questions, great answers.

On behalf of the committee, I want to thank you all for your participation and bringing your perspective to our committee. Obviously you've all done a lot of work on it. We appreciate your written briefs and your verbal presentations. We very much appreciate your contributions.

Thanks very much to all of you.

With that, I'm going to suspend the meeting. We'll reconvene at 1:45.

[The Chair, Liberal, Bill Casey]

All right. It's 1:45, and we'll resume our 65th meeting of the Standing Committee on Health. We're studying Bill C-45.

We welcome our guests today, those who are present and those who are here by video conference. We are looking forward to your contribution with great interest, because many of you have gone where we're about to go and can provide us with a lot of information.

We'll start with a 10-minute introduction and presentation by each presenter and then go to questions for seven minutes, then for five minutes, and then for three minutes.

First of all, I'll introduce our panellists.

We're pleased to have with us Dr. Sam Kamin, professor of marijuana law and policy at the University of Denver, appearing as an individual; from the Colorado Department of Revenue, Mr. Michael Hartman, executive director; from the National Organization for the Reform of Marijuana Laws, Marc-Boris St-Maurice, regional director, and Abigail Sampson, regional coordinator; and from the Washington State Liquor and Cannabis Board, Mr. Rick Garza, by video conference.

We're very interested to hear what you're going to have to say.

We'll start with you, Mr. Kamin. Is it Dr. Kamin?

[Dr. Sam Kamin, Professor of Marijuana Law and Policy, University of Denver, As an Individual]

Yes.

[The Chair, Liberal, Bill Casey]

Okay. If you would like to begin with a 10-minute opening statement, we'll go on from there.

[Dr. Sam Kamin]

Thank you very much.

My name is Sam Kamin and I am the Vicente Sederberg Professor of Marijuana Law and Policy at the University of Denver, Sturm College of Law. I hold a J.D. and a Ph.D. from the University of California at Berkeley and I've been teaching both constitutional and criminal law for more than 18 years.

In 2012 I was asked by Governor Hickenlooper to serve on the task force that he was appointing to implement amendment 64 that legalized marijuana for adult use in Colorado.

The next year I was appointed by California's lieutenant governor, Gavin Newsom, to serve in a similar capacity on a blue ribbon commission that he put together in California to consider best practices for marijuana regulation and legalization.

Since that time I've continued to consult with both state and local governments about marijuana regulation. I've written extensively on the interaction between state and federal law in this area, and I've taught law students courses on marijuana regulation and public policy.

Last week I submitted a brief to this committee outlining my impressions of how marijuana regulation has proceeded in Colorado. As I outlined there, I believe that Colorado has largely been successful in spite of a number of challenges. In fact, many initial opponents of legalization in our state have come to appreciate the successes of marijuana regulation there.

As you have a number of witnesses who can speak directly to the specifics of the Colorado regulatory experience, particularly to my right, I would like to use my time today to talk about what Canada can hope to learn from the American experience as it considers adopting regulations of its own to legalize and regulate marijuana for adults.

In my brief I outline five take-aways that I think Canada and this committee can take away from our experience and I'd be happy to answer any questions you have about them during that period.

First, I think it's important to understand the limits of marijuana regulation. Robust regulations, like those implemented in California and Washington, can keep organized crime out of licensed marijuana production and can help ensure that marijuana products are consistent, well-labelled, and free of contaminants. But regulation alone cannot solve all the problems currently associated with marijuana prohibition. In fact, I believe that regulating licensed businesses may be the easiest task in the legalization of marijuana, and I'll explain what I mean through an example.

The diversion of marijuana from Colorado, where it is legal, to other states where it is not, is rarely attributable to the malfeasance of businesses regulated under Colorado law. In fact, I think that there are two primary factors that are responsible for the diversion of marijuana out of Colorado. The first is criminals who have taken advantage of the prevalence of marijuana production in Colorado to produce it there for export to other states.

This conduct is prohibited by both state and federal law and can be addressed only by law enforcement, rather than by regulatory agencies. Colorado continues to work with its partners in the federal system to ferret out illegal production of marijuana and to arrest those responsible for it.

The second principal factor in the diversion of marijuana outside of Colorado is that people are buying it lawfully within Colorado and then taking it and reselling it illegally elsewhere. Again, there is only so much that the regulatory system can do to limit this conduct. While consumers can be educated as to the applicable law, if they choose to ignore that law that is a question for law enforcement rather than regulators.

My second principal lesson from the American and Colorado regulatory experience is that it is crucial to establish relevant metrics for the evaluation of a marijuana regulatory regime and to begin measuring those as soon as possible and, in any event, prior to the implementation of regulations.

One can only know whether legalization is meeting its goals if one clearly establishes those goals in advance and has settled on the relevant measures of success. For example, Bill C-45 expresses as a principal goal a reduction in the use of marijuana by young people—though one might wonder whether moving from prohibition to regulation is the best way to reduce use.

Other harms of marijuana consumption should also be studied, including use of marijuana by vulnerable groups, heavy or problematic use by adults, and use that poses a danger to others, for example through impaired driving.

It is also important in this context that marijuana not be considered in a vacuum. While no one wishes to see marijuana use rise among vulnerable groups, it is important to determine whether marijuana use supplements or displaces the use of other substances such as alcohol, tobacco, and harder drugs. If teens are choosing to use marijuana over alcohol, for example, that is certainly less serious than if they are adding marijuana use to the combination of substances they are already consuming.

Furthermore, it is important to understand that changes in law enforcement practices can impact behavioural measurement in ways that may confound data analysis. For example—and we have experienced this in Colorado—if patrol officers are trained as they should be to identify the characteristics of marijuana intoxication, we can expect more arrests for driving under the influence of marijuana, whether more of that conduct is occurring or not. It may simply be that training more officers on how to do this leads to more arrests in ways that might indicate an increase in impaired driving when none is occurring.

My third principle takeaway is this. By legalizing marijuana at the federal level, Canada would create an opportunity for the provinces to adopt regulatory models that are not currently available in the United States. As long as marijuana remains prohibited by federal law in our country, the states are necessarily limited in the types of regulatory regimes they can implement.

For example, the ongoing federal prohibition makes the dispensing of marijuana by federal mail impossible in the way that Canada is able to. Similarly, it is impossible for American states to develop a state-run distribution model akin to the one used to sell alcohol in Canada and some American jurisdictions and that apparently Ontario is considering for the distribution of marijuana here.

There are many potential advantages to state control of distribution. It allows the government to control price, to easily identify the licensed purveyors, to collect all revenue rather than simply taxing it, and to control the way the product is marketed to consumers. However, because such a model would put state employees in the position of directly violating federal law, such a model would create a direct conflict between state and federal law in the United States, and no American jurisdiction has attempted to implement one.

The freedom that Canadian provinces will have in determining how and whether to regulate cannabis distribution within their territories thus presents a great opportunity. If the various provinces adopt a diverse array of regulatory models, we might be able to greatly expand our understanding of how different kinds of regulation impact consumer behaviours. We have not been able to measure that in the United States. Most of our regulatory systems look quite similar. If there were a variety of distribution models here in Canada, coupled with the modelling and metrics that I spoke about beforehand, we would be able to learn a great deal about which regulations are effective and which are not.

Fourth, it is important not to oversell the fiscal benefits that legalized marijuana can bring. It is tempting to see marijuana legalization as a double fiscal win. Less money needs to be spent on law enforcement while more money comes in from the taxation of a substance previously sold only on the black market. I believe caution is necessary with regard to both of these, for two reasons.

First, as I described above, regulating marijuana for production and sale is hardly the end of marijuana law enforcement. Steps will need to be taken to stamp out illegal production and sale in order to channel marijuana production into the licensed market. Furthermore, the costs and the ongoing costs of establishing and operating a robust marijuana regulatory regime are not to be discounted.

The second reason to be cautious about the fiscal impact of marijuana is that lawmakers should not expect game-changing revenue from marijuana taxes, particularly at first. Regulatory compliance by producers will be expensive, and in order for regulated marijuana to compete on price with the black market, tax rates will need to be kept low initially. I believe there are good reasons to move away from marijuana prohibition, but enriching state coffers is not among them.

Fifth and finally, it is important to understand that the decision to legalize and regulate marijuana rather than to prohibit it is merely the first step along a path. Marijuana regulation is an iterative process rather than a one-time pronouncement. One of the crucial lessons Colorado and other states have learned in the last five years is that consumer behaviours change quickly in response to regulation and to market forces. Legalization will have unintended consequences, and regulators will need to be flexible and nimble in order to keep up. Patience will be needed as loopholes and other regulatory gaps are identified and closed.

I believe the experience of Colorado and other American jurisdictions indicates that this effort is worth the candle, but the process will not be without its complications and frustrations.

I thank you for your time this morning and for the invitation to appear before this hearing. I look forward to your questions.

[The Chair, Liberal, Bill Casey]

Thank you for your contribution.

Now, we'll go to Mr. Hartman of the Colorado Department of Revenue.

[Michael Hartman, Executive Director, Colorado Department of Revenue]

Chairman Casey, and the rest of the committee members, thank you very much for the invitation to appear today. It's an unfortunate circumstance that I have to follow Mr. Kamin, because his comments are largely reflective of the ones I will make. Hopefully, you'll view that as sufficient evidence of our agreement on many of the different trends he has indicated.

I'll start by giving you a bit of my background, which I think is a bit unusual. After I finish my presentation, if you have questions, I'd be happy to address them. I have an undergraduate degree in accounting from the University of Colorado Boulder and a masters in business administration from the University of Chicago in Chicago, Illinois. I'm a businessman by background. I'm not a lawyer; I'm not a regulator. But I bring a unique perspective from the governor's standpoint of being able to take a balanced approach in emphasizing public health and public safety at the same time and looking into the realities of what the business market requires as this industry continues to grow and become more legitimate within our state confines.

I've been in the role for a total of of five weeks, so if I get some details wrong or answer a question incorrectly, I'm sure Mr. Kamin will let me know and I'll beg your forgiveness. Having said that, I will mention that I'm a quick study, otherwise I would not have accepted your invitation to come here today.

As to my background with the Department of Revenue, I'm in charge of four businesses for the state: the Colorado lottery, the division of taxation, the division of motor vehicles, and the enforcement division. The enforcement division has five specific enforcement areas: alcohol and tobacco, gaming, horse racing, automobile dealerships, and the marijuana enforcement division. For the total department, all four businesses account for approximately $12 billion in revenue for the state, which is about 50% of the state's annual income, and the marijuana enforcement division accounts for approximately $200 million of that $12 billion. To emphasize Mr. Kamin's point, while this is an important industry within the state and takes up quite a bit of my time and that of my colleagues, the reality is that the economic incentives for this industry are relatively minimal.

I'll reflect on comments our governor made at the time our initial amendment was passed. We had medicinal marijuana approved via amendment 20, and our citizens had to vote on this state constitutional amendment in order to allow it. At the time, our governor was an outspoken opponent of the legalization process. Nevertheless, we had retail marijuana approved in 2012 and implemented in 2014. This was again against the governor's wishes. Two years later, his remarks would become a bit more neutral. At the time it was legalized, he would have said that the headache of implementing the necessary regulation was not worth the additional tax revenue. More recently, he has stated he believes that the experiment is actually working. The tax revenue is nice to have. Whether it justifies the work that went into creating it, we don't yet know. The people of Colorado spoke, and it was our responsibility to uphold the law they put into our constitution.

There are three segments to the marketplace in Colorado. We have what we consider the black and grey market—that's the criminal segment. We have the private citizen segment, which includes caregivers and home growing. We also have the commercially licensed regulated segment, which is the segment that falls under my marijuana enforcement division, where my expertise lies. I can speak to the other two on an anecdotal basis, but I have no expertise there. I will, however, speak to Mr. Kamin's comments that diversion largely appears to be coming from the unregulated spaces, whether from the black and grey market directly or from the private citizen segment feeding into the black and grey market. Hopefully, I can answer some questions around the limitation on plants that you have in place in the home grow market, and I will tell you I think that's a wise step if you consider going forward with legalization.

To give you a sense of the size of the market, I act as the state licensing authority for the State of Colorado, which means that any business or employee wishing to enter this space has to come through my department, the marijuana enforcement division. They have to pass an FBI background and criminal check, and they have to go through a background screening process to make sure their finances are clean and that there is not a criminal enterprise supporting them.

There are a total, as of September 1, 2017, of approximately 2,900 licences. Those are split relatively evenly between 1,500 licences in the medical space and 1,388 spaces in the retail space. That is a key differentiation, as I'm sure you guys are aware.

I've listed the key stakeholders that we've identified as we've gone through the different iterations of our legalization process and through our continued regulatory process. We believe, very strongly, in encouraging a collaborative process. That's true within our state; it's true outside of our state, by working with the three other states that have legalized marijuana since we came on board, and also at the federal level working with our Department of Justice and the other entities that are impacted by the states that have legalized it on a recreational basis.

In addition, and candidly and more importantly in my mind, we work very closely with the public, whether it's the operators in the space, the businesses that are running their operations; the consumers who actually go out and purchase the product; and health professionals, most importantly in my mind.

From our standpoint, the way that we look at this marketplace is that we focus on public health and public safety number one. Those absolutely have to be the key defining hallmarks. First, it's the right thing to do. Second, it has a heightened sense within our state because of the fact that it is not legalized at the federal level. Third, it's important to us to make sure that the citizens of our state are healthy and that they keep within the laws such that we don't allow them to get into trouble that they otherwise wouldn't be able to be.

The key stakeholders that we interact with on a regular basis are the state legislators. I will very clearly point out here that as an administrator of the government, I do not view it as my role or responsibility to establish the laws. Our state legislature does that, much as your body does for your country. It is my job to take the laws they establish and to interpret them and put them into effect without political bias to any extent that we can to make sure that we are upholding the will of the Colorado people as well as the Colorado legislature.

The next group that I would point to are the public health and public safety individuals. The third group would be physicians. Fourth would be legal/ law enforcement. Fifth would be the marijuana industry, and sixth would be the consumers.

The challenge for my office and for the marijuana enforcement division is to try to strike a balance between public safety and public health and commercial marketability, the ability of the businesses in the industry to operate free of the burden of an overreach of government regulation but with government regulation that's necessary to protect the public health and public safety of our people. That's always a natural balance and a natural tension that's going to exist and something that we strive for at all times.

We have a highly collaborative rule-making process. As we interpret the laws that are passed by the legislature, we very much encourage all the key stakeholders whom I mentioned on the previous slide to engage in the conversation and to give us their viewpoint so that we can very much understand exactly the key points that we have to consider when we put regulations in place.

Again, public health and public safety are our absolute main focuses. We have three operating guidelines that we've looked to in implementing regulations of the space. The first is to keep it out of the hands of minors. The second is to keep it out of the hands of criminals. The third is to keep it out of other jurisdictions.

The way that you guys are thinking about legalizing it on a federal basis, I don't know that keeping it out of other jurisdictions is germane to this conversation, but keeping it out of the hands of minors and criminals, I think, is very germane. I'm happy to answer any questions that you have on that front, particularly as it relates to protecting minors and keeping it out of their hands.

We think that having a public message department that actively goes out and advertises our concerns to the marijuana marketplace is important. On that front, we have two main messages: number one, what's good to know; and number two, what's next? The reason why we focused on those two messages is that it's important for our minors to understand what concerns and potential health complications are associated with using this product at an early age. What we have found, through market studies, in regard to what's next is that what prevents our minors from using this product illegally or inappropriately is their focus on their key goals for the rest of their life. If we can communicate those messages succinctly and importantly to our young individuals in our community, we believe that it has a strong impact on whether or not they use. We believe that the data supports the fact that the current and historical use amongst our general population and our minor population in the State of Colorado is below the U.S. average and has shown a decreasing trend over the last couple of years. We believe that supports the fact that we have a strong and thoughtful regulatory environment in place.

With that, I'll turn over the rest of the time to you guys.

[The Chair, Liberal, Bill Casey]

Thanks very much.

Now we'll go to the National Organization for the Reform of Marijuana Laws.

Mr. St-Maurice.

[Marc-Boris St-Maurice, Regional Director, National Organization for the Reform of Marijuana Laws]

If it pleases the committee, may my colleague present before me?

[The Chair, Liberal, Bill Casey]

Why certainly. It would please us.

[Marc-Boris St-Maurice]

Thank you.

[The Chair, Liberal, Bill Casey]

You're on.

[Abigail Sampson, Regional Coordinator, National Organization for the Reform of Marijuana Laws]

Good afternoon, Mr. Chair and other members of the committee.

My name is Abigail Sampson. I'm the Ontario regional coordinator for NORML Canada, the National Organization for the Reform of Marijuana Laws in Canada.

Since its founding in 1970, NORML's mission has been to move public opinion sufficiently to legalize the responsible use of cannabis by adults and to serve as an advocate for consumers to ensure that they have access to high-quality cannabis that is safe, convenient, and affordable. There are now currently over 150 NORML chapters worldwide working hard in their communities to reform cannabis laws.

NORML Canada commends the government's commitment to legalizing cannabis federally and Canada's becoming the first G20 nation to regulate the production and sale of cannabis for all adults. Globally there are other jurisdictions with an existing and thriving cannabis culture whose policies, lessons, and successes we can learn from.

The following are five key considerations we wish to put forward to the committee.

Number one is stopping ongoing arrests leading up to legalization. NORML Canada says the government should immediately halt arrests for simple possession and other cannabis offences leading up to legalization in July 2018, and if someone is charged, the government should stop seeking sentences of imprisonment and focus on constructive alternatives now. Canadians should not continue receiving criminal records for a substance that will be legal in less than one year. Canada will save significant resources on policing and prosecuting these simple offences against otherwise law-abiding Canadians.

Number two is criminal penalties for non-compliance under the cannabis act. While NORML commends the government for creating a ticketing scheme for minor transgressions, the maximum penalties for a serious breach should be similar to those of the Tobacco Act in Canada. We believe that imprisonment should be reserved for only the most serious of abuses and be no greater than the penalties for tobacco and alcohol. Further, cannabis laws disproportionately target our most vulnerable populations and communities, burden our criminal justice system, and have been demonstrated to be more harmful than cannabis itself.

In terms of examples from other jurisdictions, while there are some harsher penalties for those who have committed more serious offences against the state's cannabis laws, in California the sale or delivery of cannabis by an individual over the age of 18 to individuals between the ages of 14 and 17 years carries a felony charge with a punishment of three to seven years' incarceration. By comparison, distribution of an equivalent of more than 30 grams of dried cannabis, under the proposed cannabis act, is considered an indictable offence and carries a maximum penalty of 14 years' imprisonment, far more severe and disproportionate than the harms caused by cannabis use alone. Our Le Dain commission in 1972, some 45 years ago, recommended that the federal government hybridize the trafficking of cannabis, providing a maximum of six months on summary conviction and five years on indictment.

Number three is accessible requirements for participation in the legal cannabis market, including co-operative growing. NORML Canada believes in a diverse legal cannabis landscape where community gardens, co-operatives, and designated growers can participate and compete with larger corporations. Accessible requirements for participation in the cannabis industry are key to a successful legalization strategy and must support the integration of a variety of stakeholders into the new legal cannabis market, including the expertise found in the grey or illicit space.

In terms of examples from other jurisdictions, California is one example of a jurisdiction having an inclusive transition from its existing cannabis practices into the regulated space. For close to 19 years, community gardens and co-operative growers operated outside of a regulatory scheme. Currently the text of the MCRSA, the Medical Cannabis Regulation and Safety Act, allowed these establishments the opportunity to continue to operate until January 2018, just as long as their businesses complied with zoning, local, and state requirements. This window provides them an opportunity to apply for appropriate licensing. Rather than shutting down these businesses, the good players are afforded the ability to remain open, serve their clientele, and become a part of the legalized framework.

Number four is pardoning past cannabis offences. NORML Canada will continue to advocate for a legal cannabis regime that allows for pardons of past cannabis-related convictions and clearly addresses the prejudice associated not only with convictions, but also cases that resulted in stays of proceedings, withdrawals and acquittals, as well as records and police databases, even if no finding of guilt ever occurred. Further, prior cannabis-related records should not bar Canadians from participating in the new legal cannabis market, including in both production and distribution.

These are some examples from other jurisdictions. In an attempt to provide reparations to Oakland residents who were jailed for offences related to cannabis possession in the last 10 years, city council has approved a program to help convicted drug felons get into the legal cannabis industry. Called the equity permit program, this “first in the nation” idea will allow recently incarcerated individuals the opportunity to receive medical cannabis industry permits. By implementing this program, Oakland is ensuring that those entering the legalized cannabis scheme have the demonstrated the experience and expertise required for running and growing a successful cannabis business. As well, it recognizes the harms done by the war on drugs by allowing those who have been affected by it through incarceration an opportunity to participate.

Number five is driving under the influence. While NORML Canada discourages driving motor vehicles or operating complex machinery while under the influence of cannabis, the government should continue to investigate the development of a fair system that targets those drivers whose ability to drive is impaired and avoids the arrest and conviction of innocent Canadians based on the mere presence of cannabinoids in one's system—a per se limit. Per se limits refer to a specific concentration of a substance, for example THC in blood or a blood alcohol concentration, or BAC, that triggers a criminal charge when the set limit or cut-off is exceeded. Per se limits, however, do not factor in impairment and may result in criminal charges for any user who exceeds the limit even if no signs of impairment are demonstrated. Special consideration should be given to medical cannabis users who may use cannabis daily, or near daily, to manage their symptoms. It should also ensure they are not unfairly targeted or criminalized by an arbitrary nanogram level. Many will exceed this limit, but their ability to drive will not be impaired in the least due to their significant tolerance.

Here are some examples from other jurisdictions. In order to protect patients, the United Kingdom has enacted laws that allow for a medical defence if people are taking drugs, including cannabis, for medical reasons and are not impaired. The medical defence states that drivers are not guilty of per se offences if they are not impaired and meet the following conditions: the medicine was prescribed, supplied, or sold to treat a medical or dental problem, and it was taken according to the instructions given by the prescriber or the information provided with the medicine. A medical defence for a per se limit ensures that other evidence of impaired driving, rather than just the presence of THC, must be established to ensure that patients are not unfairly criminalized for simply exceeding a per se limit. Per se limits are arbitrary and especially if they are not rebuttable, they will not be in compliance with section 7 of the Canadian Charter of Rights and Freedoms.

In conclusion, by studying other jurisdictions' experiences in regulating cannabis, Canada has an opportunity to learn from their actions, integrate policies that work, and avoid the same mistakes that lead to poor policy.

Thank you.

[The Chair, Liberal, Bill Casey]

Thank you very much.

Now we go to Olympia, Washington, for the Washington State Liquor and Cannabis Board. Mr. Rick Garza, welcome to our committee. You have 10 minutes to give us your opening thoughts.

[Rick Garza, Director, Washington State Liquor and Cannabis Board]

Good afternoon, Mr. Chairman and members of the committee.

For the record, I'm Rick Garza, the director of the Washington State Liquor and Cannabis Board. I provided you—and I think you have a hard copy—of a presentation that I'll go through. I know I only have 10 minutes. How do you tell a story in 10 minutes for which there will be five years, essentially, of legislation in November of this year? I'll try to do it as quickly as I can.

Concerning the first objective of the agency, it's really interesting that the author of I-502 actually wrote the initiative to mimic our alcohol beverage law coming out of Prohibition in 1934.

If you go to the second slide, you'll see what our objective was. It was to create a tightly controlled and regulated cannabis market similar to what we have for alcohol. It created a three-tier system for cannabis unlike those of other states.

I want to share that whether done by referendum, initiative, or constitutional amendment, the laws that have been created in Colorado, Washington, Oregon, and Alaska have some differences.

One of them here, going back to mimic the old alcohol beverage law, was to not allow for a three-tier integration. In other words, a producer or processor of cannabis in Washington state cannot have interest, direct or indirect, financially with a retailer, and obviously vice versa. That goes back all the way back to the original alcohol beverage law, when there was concern that all the saloons before Prohibition were controlled by the largest brewers and distillers in the nation and within the state.

They actually looked at the system that was created in 1934 to draw up this cannabis law. We created licences for producer, processor, and retailer. The board also enforces laws and rules pertaining to those licensees, and as with alcohol, we collect and distribute the taxes and fees.

One of the first things we had to do was wait nine months to determine whether the federal government was going to allow us, Colorado and Washington, to move forward with this experiment. In August of 2013, what has been known as the Cole Memorandum was shared with the two states. It basically provided eight enforcement guidelines that must be met as we move forward.

I think Michael Hartman, the director from Colorado, spoke to the themes that are really most important within those guidelines. How would we prevent distribution and use by minors? How would we keep the criminal element out of our licensee base and our legal base, and how would we deal with the issue of diversion either out of the state or inverting illegal product into the legal system? I'll talk very briefly about how we did that.

Basically, in November 2012 it was legal for adults over the age of 21 to possess, as with alcohol, an ounce of usable marijuana, 16 ounces in solid form, and 72 ounces in liquid form. As I said earlier, it created a three-tier system for producer, processor, and retailer.

It also imposed a 37% retail excise tax on cannabis. When you look at the history of Washington state, you find that, whether in the case of cigarettes or of alcohol, we have some of the highest spirit taxes in the nation and also the highest cigarette taxes and have imposed a pretty high excise tax on cannabis.

One thing that I forgot to mention was that the alcohol system coming out of Prohibition for Washington state is actually modelled upon the Canadian model. We used the British Columbia model for our alcohol regulations.

It's interesting that you'll see—and I'll share with you—elements that you'll see in the new cannabis law. It also established a THC bloodstream threshold for marijuana DUIs at five nanograms; it limited the number of store locations advertising, the number of outlets—again very similar to the original alcohol laws and regulations—and then it earmarked revenue for health care, research, and education.

The first piece, with respect to the Cole Memorandum, concerns how we would keep the criminal element out of the licensing of this industry. As in Colorado, we do a criminal history investigation for all applicants. That means a fingerprint that runs through the Washington State Patrol here and then is deposited with the Federal Bureau of Investigation to look at the applicants' criminal history not only in this state but throughout the country.

We also do that for any financier or investor. It goes even further than the criminal history check that we do for alcohol. So if you have any interest whatsoever, as a financier or an investor, you must also go through a criminal background check, including fingerprinting. Obviously, if you're an applicant, there's a financial background investigation that occurs, just like it would for a potential alcohol licensee. We want to know the source of the funds being used to establish the business. We want to know about the financial wherewithal of the applicant, and then there's a six-months residency requirement. Initially it was a three-months residency requirement, but it was moved up to six months.

There's also a restriction placed on the initiative that these entities, whether producers, processors, or retailers of cannabis, cannot be within a thousand feet of schools, child care centres, transit centres, game arcades, libraries, playgrounds, public parks—all obviously places where children would be present.

Then in order to deal with the issue of diversion, we have a robust and comprehensive software system that traces product from the start to sale. We call it a seed to sale system that captures any movement of product from the producer to the processor to the retailer.

How do we limit access? Just as we do for alcohol in Washington state, we do youth compliance checks. In fact, we do three of them a year per retailer. We have a compliance rate of 93% no sales to minors today. In fact, for the last two months I believe the compliance rate was 98%. That's even higher than the compliance rate for alcohol in Washington state.

We limited the number of production and retail stores. The idea of diversion and the concern of the federal government meant that we had to establish what the demand was for those more than 21 years old in Washington state, and we limited our production to that and the number of retail stores to about 500 state-wide, again using the old liquor model where until 2011 the State of Washington actually distributed and retailed spirits, as you may recall. We used that same model to set up the number of stores within the state. I talked a little bit about the possession limits earlier and, obviously, like with alcohol, there's an age restriction.

Again, another difference between us and the other states is that we don't allow for home grows for recreational or personal use, and there has been legislation since the initial initiative passed to allow for home grows. In fact, we were directed and are in the midst of looking at and bringing recommendations to a legislative committee with respect to whether home grows should be allowed. They are allowed for medical use. They're not allowed for personal use.

To let you know what the sales activity looks like, sales were $250 million in our first fiscal year, almost $900 million the second year, and $1.3 billion this last July. We're averaging about $4 million in daily sales. You can see the excise tax collections, and you can look at the revenue projections that were initially made and the projections that have come through. It's interesting. There was a fiscal note that had to be written on the initiative to determine the amount of excise tax or revenue that would be collected by the state. The estimate was zero to $2 billion over five years, because, of course, no one knew how fast the industry would grow. If you take a look at those numbers, it looks like probably about $1.3 billion in revenue will be collected in the first five years.

What's interesting about the initiative too is that the revenues are earmarked for social services, including health care. In fact, half of the money funds the state and federal medicaid program and then, of course, there's the general fund that is the state allocation. That gets a pretty high percentage, but you can see that there was an effort to make sure that the prevention and reduction of substance abuse was funded. The department of health has public health programs to speak to parents and youth about cannabis, and then our universities also receive funding.

Some examples of some of the funding are provided to you in the document. Substance abuse prevention and treatment is provided for all drugs, and then the department of health is given a sizeable income to be able to create a media best education campaign, similar to what was done for tobacco years ago.

Consumer safety was something that we didn't expect. You'll see in the slide examples of gummy bears, lollipops, and cotton candy that were being distributed on the black market and the grey market of medical...in Washington. The board actually wrote a rule. Edibles or infused products can be especially appealing to children—anything that mimics candies. Believe it or not, that was out in the marketplace, in the black and grey market of medical. We have a four-person committee here at the board that looks up all packaging, labelling, and products. Many products have been denied. Again, anything that might be appealing to children is not allowed.

As to some of the current challenges, obviously the conflict in federal law continues to be an issue. If we had time we could talk about the issues or difficulties with accessing banking services. Because of the rigorous process that we have for licensing, we've been more successful than the other states. We have four regional credit unions and state-chartered banks that have provided banking services. Typically what we'll do is that after they sign a release, we provide the licensing file to the banks, which has the criminal background check that was done and the source of funding. They often tie into our traceability system so they can see the money that's being reported and the sales that are being reported to the state, to see if that meets up with what's happening with their bank accounts.

[The Chair, Liberal, Bill Casey]

Mr. Garza, I have to ask you to wind up. You're over your limit.

[Rick Garza]

The only thing I want to add is about the whole issue of consumer safety around pesticides. Typically, we can look to the EPA, the Environmental Protection Agency, to provide us guidance with respect to that, but that's something we continue to struggle with because of the conflict with federal law.

Mr. Chairman, I appreciate the time.