Health Committee on Sept. 14th, 2017

[The Chair, Liberal, Bill Casey]

Okay, that winds it up.

I'm just listening to all this packaging discussion, and colours and logos and everything, and in the last break I called a young successful businessman in Nova Scotia. I know he participates once in a while with a little marijuana, and I said, where do you have to go to get marijuana? He said, I don't go anywhere. I said, what do you mean? He said, I just make a call. It's delivered to my door seven days a week, 24 hours a day. He doesn't care about the package much, what colour it is or anything else. That's what we're up against. I had to laugh I was so surprised. Anyway, that's what we're dealing with.

On behalf of the committee, I want to thank all the panellists, all of you, for your contribution and the knowledge and experience you've brought. It's been really helpful to us. This is the first discussion we've had on packaging and labelling and it's been very helpful. On behalf of the committee, thank you very much. We appreciate your time, especially with the video conference. We know it's a hard way to participate in a discussion, but you've done a great job. Thanks very much.

With that, I suspend our meeting until six o'clock. Thank you.

[The Chair, Liberal, Bill Casey]

I call the meeting to order again. This is meeting number 67, and we're continuing with our fifth panel for the day. Tonight's panel is going to focus on international considerations. I think it's going to be really interesting. I'm sure we're all going to learn.

We have three video conferences. I'm going to introduce our video participants first.

From the RAND Drug Policy Research Center in Brazil, we have Dr. Beau Kilmer, co-director. From the United Kingdom, we have Stephen Rolles, from the Transform Drug Policy Foundation. From the Tousaw Law Corporation, we have Kirk Tousaw.

Present with us, we have Dr. Steven Hoffman, professor in the faculty of health and at Osgoode Hall law school, York University.

We're going to open with each one making a 10-minute statement, then we'll go to questions by the members. I'll invite Dr. Hoffman to go first.

[Dr. Steven Hoffman, Professor, Faculty of Health, Osgoode Hall Law School, York University, As an Individual]

First, thank you very much to the committee and the chair for this kind invitation to allow me to present. It's really quite an honour to be here.

I'm here as a private individual with expertise in international law. By way of background, I'm a full professor at York University in the faculty of health at Osgoode Hall Law School. As far as I can tell, I'm the only public international legal scholar in Canada who focuses on health issues. I'm really pleased to be here to convey that aspect, which I understand is an aspect of this issue that hasn't yet come before this committee, so thank you very much.

My testimony here today is informed not only based on my own research, but also based on my previous experience having worked in the international system for the World Health Organization, as well as in the UN Secretary-General's office. I've also published on this issue. In fact, one of my shorter articles was circulated to this committee for translation and for you to read. I'll refer to it later in my testimony.

My interest in being here is that I'm hoping we don't break international law in the process of legalizing cannabis. My hope is that in trying to achieve a particular objective, international law and multilateralism don't become collateral damage in this process.

I'll say right up front that I think it's very clear that the proposed legislation, as it stands, would violate the three UN drug control treaties and Canada's international legal obligations under them. But the good news is that we have options, and I'll sketch those out. Some of them aren't great. A couple are more feasible, but ultimately my hope is that this committee and Parliament insist that the government have a plan to address these international legal obligations before legislation is passed into Canadian law.

Let me walk you through these treaties that I mentioned, the three UN drug control treaties that overall govern the way the world manages narcotic drugs. I'll refer you to the material I circulated. The last sheet is an appendix, which lists some of the key treaty provisions implicated. Overall, there are three treaties. The first is the Single Convention on Narcotic Drugs, 1961. The second is the Convention on Psychotropic Substances, 1971, and the third is the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988.

Let me emphasize that the treaty obligations in these laws are very clear. Among international lawyers, there's really no controversy around this particular situation we find ourselves in. I am very happy to delve into the legalities during the question and answer period, but for now I just want to highlight a couple of key sections.

The first is in article 4, paragraph (c) of the single convention, which limits the use of drugs “exclusively to medical and scientific purposes”. Later in the appendix, you will see article 36(1)(a), which requires state punishment for their possession, production, sale, and delivery.

You'll see toward the bottom of the appendix circulated that article 3(2) of the trafficking convention specifically criminalizes drug possession, even if just for personal consumption. However, at the beginning of that provision, there's a pretty big loophole in that countries are allowed to not be held to that if it violates their basic law. It's a big loophole that even a country the size of Canada can drive right through.

Overall, looking at the treaties, there's no real controversy that they overall require countries to have state punishments but not necessarily criminalization of a substance like cannabis.

Of course, when looking at treaties, we find there are always flexibilities in how they're implemented. For example, the treaties don't actually specify what kind of state punishment is required. Portugal would be one example of a country that still prohibits drugs, but where people are not sent to jail and do not face criminal penalties but instead might have mandatory treatment, access to education, or a fine.

Another flexibility in the treaties is that they don't specify that the provisions have to be enforced. A country like the Netherlands still has a criminal prohibition against the possession, use, and manufacture of drugs except it's just widely stated that police won't be enforcing those provisions. That's okay under the international law.

A third flexibility is a constitutional override, whereby if a country's constitution specifically allows something that the treaty doesn't allow, the constitutional provision overrides the treaty. For example, Bolivia took advantage of this in 2009 when it added a constitutional right for its citizens to possess and consume coca leaf, which had cultural significance, as a way to, then, take advantage of that flexibility.

However, flexibilities have limitations. If we look at the case of Uruguay, we see that it is a country that is actually breaking international law at the moment. The country is arguing that general human rights norms trump the specific requirements of the UN drug control treaties. That may be a great political statement, but that's just not how international law works.

Similarly, if we look to the U.S. example, the U.S. would also currently be violating international law. However, it's harder to fault the U.S. given that in the U.S. the federal government has the legal ability to sign on to treaties whereas the states have the criminal law power to fully implement them. In that case, in the U.S., yes, they're breaking international law, but there is a federal ban and it's harder to hold them culpable. In Canada, it's the same level of government, the federal government, that has both the power to sign on to treaties as well as the power to implement them through criminal law or other mechanisms.

We have options in Canada. First, we can change our constitution. Second, we can renegotiate the treaties. Third, we can obtain special exceptions. Fourth, we can try to use some creative lawyering to work our way out of this, or fifth, we can withdraw from these treaties.

I think four of those options are not particularly feasible; three in particular are not. The way I'll impart that is that I think convincing the 32 countries that currently have death penalties for drug smuggling to renegotiate the treaties or to grant Canada a special exception seems as politically impossible as adding a constitutional right to our Canadian Charter of Rights and Freedoms for the possession of cannabis. I think everyone here would agree that's probably not politically feasible, although I defer to you on that.

From my perspective, I really tried to be a creative lawyer. If I were hired to try to think through how I would get around this international legal obligation, the best creative workaround I could find was trying to use the treaties' scientific purposes exception. As I mentioned, in the treaties, they generally have a ban and require states to prohibit narcotics, except for medical and scientific purposes. Theoretically, we could imagine that if the government and if Canada signalled that the legalization of cannabis was part of a big scientific experiment around seeing the intergenerational effects of cannabis consumption, or something like that, you could actually make a legal argument. However, for the International Court of Justice to uphold that, it would actually have to be a real thing. There would have to be major research funding to make that happen.

The other potential workaround that some people have argued for is related to something called principled non-compliance. This is where a government or a country would say that, on principle, they are not going to comply, and would then violate the treaties. I think that's a cute political strategy, but as an international lawyer, I can tell you that's just not the way international law works. Basically, that would be the equivalent of civil disobedience, except that when it's an individual doing civil disobedience, they're in a position where they can't actually withdraw from the law, whereas Canada as a country can withdraw from treaties.

That gets me to the fifth option we have, which I think is the most feasible, and that is to actually withdraw from these UN drug control treaties. I don't think that's a problem, necessarily. I think that joining a treaty is an exercise of sovereignty, and removing ourselves from a treaty is also an exercise in sovereignty. Of course it's a bit weird for an international lawyer like me to be recommending withdrawing from treaties. I'll agree that it's not my ideal solution, but it's certainly better than violating treaties, which is something I don't think any of us would want to see.

Additionally, these treaties that we're talking about aren't the best treaties out there. As I mentioned, the first one stems from 1961. They're rather outdated. They're from another era and they're actually kind of mean, in the sense that they treat people with an addiction as being evil in the text of the treaty, instead of as people who deserve dignity in treating any medical problem they might have.

Now the challenge with withdrawing from treaties is that you have to give notice. In this case, if the goal was to have cannabis legal in Canada for non-medical purposes on July 1, 2018, then cabinet would have had to give notice of withdrawal before this past July 1, 2017.

If cabinet withdraws today from the treaty, it means the earliest that we could legally legalize cannabis would be January 1, 2019. If cabinet waits for this upcoming spring, then the earliest that Canada could legally legalize cannabis under international law would be July 1, 2019.

One thing that people often ask me is why this international law stuff actually matters. I have to say, there is actually a pragmatic reason. It's not just that it would affect our reputation. By not following international law, we actually undermine the best mechanism that we have in Canada for solving the big problems facing this world. Canada can't condemn other countries for violating international law if we ourselves are planning for it. Just one read of a newspaper would show that we really need a rules-based order in our world today.

To conclude, I just wanted to emphasize the important role that this committee plays in all of this. A lot of people think of international law as something negotiated in fancy places such as New York and Geneva, but actually, the practice of international law happens in rooms like this, at committees like this, by people like you. It's a collection of micro-decisions that determine whether we're going to allow legislation to go through that's going to break international law, or alternatively, to take the small steps needed to make sure that we legalize cannabis in a way that doesn't break international law.

I'm really pleased to be here to be able to share that international legal expertise. My ultimate recommendation would be for cabinet to immediately give notice of withdrawal from these treaties, before any legislation is approved.

Thank you very much. I'm happy to answer your questions.

[The Chair, Liberal, Bill Casey]

Thank you very much for outlining those options. I appreciate them.

Now, we're going to go by video conference to Dr. Beau Kilmer from Brazil.

Dr. Kilmer.

[Dr. Beau Kilmer, Co-Director, RAND Drug Policy Research Center]

Good evening, Chairperson Casey, Vice-Chairperson Davies, Vice-Chairperson Webber, and other distinguished members of the Standing Committee on Health. Thank you very much for the opportunity to testify before you today.

I am a senior policy researcher at the non-profit, non-partisan RAND Corporation where I co-direct RAND's drug policy research centre. Over the past two years, I've been fortunate enough to travel to Canada multiple times to meet with researchers, policy-makers, and members of the task force to talk to them about Canada's policy and provide an objective assessment about what is happening with cannabis legalization in the United States.

I was invited today to testify about my general thoughts on Bill C-45 and on some of the international implications if it passes. I want to make it clear that RAND does not take positions on legislative bills or ballot initiatives. My goal for today is solely to help inform Canada's policy debate at the federal, provincial, and municipal levels. I will divide my comments into three sections: prices, taxes, and the international implications.

With respect to prices, many of the outcomes featured in debates about legalizing cannabis will be shaped by its retail price. For example, those seeking to reduce the size of the illicit market will want the retail price to be competitive enough to move users to the newly legal market. On the other hand, those concerned about an increase in problem cannabis use and cannabis use disorders will want to prevent retail prices from significantly declining because cannabis users are price sensitive.

Over time, legalization is expected to dramatically reduce the production and distribution costs of cannabis for many reasons. Most important is getting rid of the risk. Right now when people buy heroin, marijuana, or cocaine, a lot of what they're doing is compensating the drug dealers and everyone else along their supply chain for the risk of arrest and risk of incarceration. With legalization, that goes away. Also, firms will be able to take advantage of economies of scale as they move from producing in backyards and basements to larger farms and facilities. Also it will be easier to take advantage of advances in technology if the activity is legal.

For those who are concerned about an increase in cannabis consumption and use disorders that are related to a price drop, jurisdictions have several options. I want to talk briefly about six of them. The first option to help inflate the price would be to implement a government-run monopoly and it sounds as if that's what Ontario is thinking about doing. When the government has that control, it can set the price. The second option is to minimize competition. If you are going to allow private firms to get involved, you can minimize the number that are competing so that should help reduce a drop in price.

The third option would be to cap production. A fourth option would be to impose costly licensing fees and/or regulations such as accurate testing protocols. For example, requiring cannabis producers and/or processors to submit to rigorous product testing for potency and adulterants ends up driving up costs to the firm, which are then passed on to the consumer in the form of higher prices. This can also help protect public health. The fifth option for keeping the prices higher is to require minimum pricing, and Canada does have experience with that with respect to alcohol. The final option would be to levy cannabis taxes.

Before I get into more detail about cannabis taxes, I want to make it very clear about the trade-offs involved when we're talking about prices. Realize that if your goal is to eliminate the illegal market as quickly as possible, you're going to want to minimize regulations and you're going to want that price drop to happen as quickly as possible. Now if you're concerned about the public health implications of a price drop, you're going to want to take actions to inflate that retail price. It's important to acknowledge this trade-off and realize that people have different goals for legalization. Just acknowledging that can lead to more productive discussions throughout the country.

Now back to taxes. Let's make it clear, nobody knows the best way to tax cannabis, and there are trade-offs with all the options. For example, taxing as a function of price is attractive because it's very easy to apply. For example, Washington State levies a 37% tax at the retail level, but the main drawback to that particular option is that the tax revenue per transaction will fall as the price falls.

Another option is to tax as a function of weight. For example, Alaska applies a $50 per ounce tax at the wholesale level. Once again, it's also easy to apply but some are concerned that it creates incentives for the producers to sell more potent cannabis. We know very little about the health consequences, both the risks and the benefits, of these higher-potency cannabis products that are being sold in the stores in Washington and Colorado. We realize that most of the research that's been done on the health effects of cannabis was largely based on people who were smoking lower-potency cannabis in the 1980s and the 1990s. We have a lot of research to do.

Another option is to tax cannabis as a function of THC, which would allow the government to nudge cannabis users to lower potency products. Such an approach is similar to how many countries typically tax alcohol, with higher taxes imposed on products with higher ethanol content. The final report of the task force recommended that Canada develop strategies to encourage consumption of less potent cannabis, including a price and tax scheme based on potency, to discourage purchase of high potency products, but Bill C-45 is largely silent on this issue.

I now want to focus my final comments on the international implications. I will largely focus on the movement of people and cannabis across international borders, and I want to say a few words about the banking situation in Uruguay.

I will not speak to Canada’s international drug treaty obligations and the various options Canada could pursue if it legalizes cannabis for non-medical purposes, including doing nothing. I will note, however, that what Canada does, and perhaps more importantly, how other countries respond to those actions, could send a signal to other countries about their drug treaty obligations. Given Canada’s size, its proximity to the United States, and its status as a member of the G7, national legalization in Canada could have a much larger international impact than the legalization of cannabis in Uruguay.

With respect to the movement of people across international borders, drug tourism will happen if provinces and territories do not limit sales to Canadian residents. If provinces and territories allow public consumption in cannabis cafés or cannabis lounges, this will make tourism even more attractive.

There is also the issue of Canadians being denied entry to the United States because of cannabis consumption or previous arrests. It is unclear whether the United States will change its approach if Canada legalizes cannabis, and if it does change its approach, whether that will become more or less strict.

With respect to the movement of cannabis across borders, we must acknowledge that this is already happening via legal and illegal channels. Currently, Canada legally exports cannabis products to some countries for medical or research purposes. As for smuggling cannabis and money across the U.S. border, the amount, as well as the direction, will depend on cannabis production costs, retail prices, risk of arrest, and oversight on both sides of the border.

Finally, Canada should pay attention to the cannabis banking issue in Uruguay. While Uruguay legalized cannabis for non-medical purposes in December of 2013, residents could not purchase it at pharmacies until July 2017. Then last August it was reported that U.S. banks would stop doing business with banks in Uruguay that provided banking services to pharmacies selling cannabis. In response, The New York Times noted that the Uruguayan banks warned some of the pharmacies over the last few weeks that their accounts would be shut down.

Now it is unknown whether U.S. banks would apply the same pressure to Canadian financial institutions doing business with Canadian entities suppling cannabis for non-medical purposes, but if Bill C- 45 passes, this possibility should not be ignored.

In sum, the federal and provincial governments will confront complex decisions if Bill C- 45 passes. Because it is hard to predict the international and domestic consequences of these choices, jurisdictions considering alternatives to prohibiting cannabis supply should proceed cautiously and build flexibility, especially with respect to prices and taxes, into the proposed regulations.

With that I will close, and I look forward to your questions and comments.

[The Chair, Liberal, Bill Casey]

Thank you very much for that background.

Now we go to Tousaw Law Corporation with Kirk Tousaw by video conference.

[Kirk Tousaw, Lawyer, Tousaw Law Corporation]

Mr. Chair, members of the committee, my name is Kirk Tousaw. I am a barrister based in British Columbia. I formerly practised in the United States, which is perhaps why I am on the international panel. I represent clients across Canada, exclusively in cannabis law and policy, and have done so for the past decade.

My firm currently acts for hundreds of people charged with cannabis offences in Canada, many younger, few with other criminal records, all of whom do not deserve to be treated like criminals for their cannabis-related activities.

I was part of the legal team that successfully challenged the prior medical cannabis regime on charter grounds in the Allard case and litigated R. v. Smith, the only medical cannabis case to reach the Supreme Court of Canada. It resulted in a unanimous per curiam decision, finding the CDSA unconstitutional because of its prohibition on access to medical cannabis derivative products.

I commend the Government of Canada on its decision to move toward a rational and empirically based model for production, distribution, and possession of cannabis by Canadians.

Before making substantive comments on Bill C-45, I would like to take a moment to speak about why Canada is taking this important step. The Government of Canada posits two main reasons for legalization: to protect young people and to eliminate the black market.

As a father of four, ages seven to 17, and you may hear them outside the room later today, I certainly agree that protecting young people is an important social goal. The best way to protect young people is to stop criminalizing them. By far the most harm done to young people related to cannabis is done by the criminal justice system, not the use of the substance itself.

As a lawyer who has represented hundreds, if not thousands of people unjustly charged with violating the cannabis laws of both the United States and Canada, I support eliminating the black market in the sense of allowing those who are now involved in the cannabis industry, or wish to be involved, to do so lawfully.

When we speak of the black market as it relates to domestic cannabis production and consumption, we are not speaking of what most Canadians understand to be organized crime. We are not speaking of gangs. Instead, the domestic black market is comprised almost exclusively of ordinary Canadians, otherwise law-abiding, who make their living, pay their bills, and support their families by working in the cannabis industry. They do so for a variety of reasons. Some are committed to the plant and the cause. Some are entrepreneurs, employers, and small business people who simply want to be part of a vibrant industry that produces a product that brings people joy, with very little in the way of negative effect. Almost none are violent or otherwise harmful to society in any way.

While I agree that eliminating the black market is a critical goal, I strongly urge this committee and the governments of Canada and the various provinces and territories to understand elimination to be synonymous with transition and not with incarceration. This includes provinces like Ontario that are moving toward a misguided and unworkable government monopoly on retail sales. Private dispensaries are preferred by consumers, both domestically and in other legal jurisdictions internationally, and already do a great job of providing dignified reasonable access to cannabis.

There are other more important reasons to end cannabis prohibition. Canada is a constitutional democracy committed to notions of individual freedom and individual responsibility. This requires allowing Canadians to make autonomous decisions about their own bodily integrity, without undue interference or criminalization of their choices by the state. Prohibition has caused incalculable harm, both to society and to individuals entangled in the criminal justice system. Twenty-six thousand Canadians were charged with simple possession of cannabis just last year. Many will have difficulty crossing the border into the United States.

Over the course of this failed policy, hundreds of thousands of Canadians will be criminalized to no good end. Each time a Canadian is arrested, handcuffed, and caged for cannabis-related activity, an injustice is done, harm is caused, and we all suffer. Moreover, cannabis prohibition detracts from respect for the rule of law. Millions of Canadians violate the law by possessing cannabis each year. Some of these citizens have achieved positions of great prominence in our society. That is because, either through accident of law, social or racial privilege, or powerful connections, they've been able to avoid entanglement in the criminal justice system. Hundreds of thousands of Canadians are not so privileged.

When millions of otherwise law-abiding and decent people feel it unnecessary, impractical, or harmful to obey the law, respect for the rule of said law suffers. When police officers are tasked with enforcing laws that are ignored by millions of Canadians, the relationship between the police and citizens suffers. It is far past time to right these wrongs. Amnesty for Canadians charged with cannabis offences is long overdue, and I urge this committee to recommend amendments to Bill C-45 that would eliminate the criminal records of, at a minimum, those convicted of simple possession of cannabis. This would go a long way to restoring their ability to travel, in particular to the United States.

Turning to the substance of Bill C-45, I say with regret that much work remains to be done. This bill takes us in the right direction, but does not and in its present form cannot achieve either the goals I've identified or the goals that Canada seeks to accomplish.

Bill C-45 continues to criminalize young people for possessing more than five grams of cannabis, an extraordinarily small amount. It is very likely that, post-legalization, thousands of young Canadians will continue to be entangled with the criminal justice system, doing irreparable harm to the future course of their lives. I agree with age limits related to sales of cannabis to Canadians by commercial entities. Parents, not shopkeepers, should be making these decisions. Age limits for sales, however, are an entirely different thing than imposing criminal penalties on young people for simple possession. I urge this committee to recommend amendments to Bill C-45 to remove any possibility of criminal penalties being applied to any young people in the country for activities related to cannabis.

Bill C-45 also contemplates criminal penalties being applied to adult Canadians who possess more than 30 grams of cannabis or grow more than four 100-centimetre plants per household. These are arbitrary numbers.

These criminal restrictions are decidedly unlike the way our country regulates alcohol, a vastly and inarguably more dangerous substance than cannabis. At this moment in Canada, a 19-year-old can walk into a liquor store and purchase enough alcohol to kill that person and all that person's friends and acquaintances. Indeed, there's enough alcohol in one bottle of vodka to kill the consumer. Similarly, there are virtually no restrictions on individual Canadians' rights to brew beer or make wine for their individual consumption or for non-commercial sharing with friends and acquaintances. Canadians can also currently grow 15 kilograms of tobacco per year, enough for some 15,000 cigarettes.

Given that reality, it's ludicrous or, to put it in legal terms, arbitrary, overbroad, and grossly disproportionate to allow Canadians to be arrested and caged for simply possessing any amount of cannabis, or for possessing cannabis deemed to be illicit, which is, in any event, a wholly unenforceable distinction. There is no empirically, morally, or legally sound reason why cannabis should be treated more strictly than alcohol.

There are also practical difficulties related to these arbitrary restrictions. Cannabis, particularly outdoors, can easily grow five or more metres high in its natural state. Do we really need or want a rule that would require Canadians who wish to grow a few plants in their gardens to continually tie down the branches or otherwise artificially manipulate a plant during its growth to keep it no more than 99 centimetres high? The 100-centimetre limits are the height of absurdity.

In addition, the limit of four plants per household arbitrarily penalizes those living in large households. These limits, backed by criminal sanctions, will certainly lead to legal challenges based on section 7 of the Charter of Rights and Freedoms, which requires that the liberty of Canadians not be infringed by arbitrary, overbroad, or grossly disproportionate laws.

The restrictions on possession amounts and plant numbers and sizes for personal non-commercial production of cannabis also detract from the goal of eliminating the black market. Allowing Canadians to be self-sufficient and to obtain their cannabis by growing for themselves supports the transition away from reliance on the black market.

I urge the committee to recommend amendments eliminating limits on what Canadians can possess or grow for non-commercial purposes and removing the artificial and unenforceable distinction between licit and illicit cannabis. At the very least, possessory limits should be increased substantially, and plant limits should increase and be calculated per person, not per household.

Also critical to ensuring a workable transition away from the current vibrant and enormous but unlawful market for cannabis in this country is to make the process of becoming a commercial producer and distributor of cannabis as easy as reasonably possible. Most details related to becoming a commercial producer of cannabis are not contained in the bill and are instead left to regulations to be determined. If those rules mirror the current situation involving production for medical purposes, they will be too onerous, there will not be enough people or companies able to participate, there will be an insufficient amount of lawfully produced cannabis to Canadians, and the black market will continue to thrive.

The black market will also continue to thrive throughout the entire supply chain, from production to processing to sale, if legalization does not include products that are becoming increasingly popular. Edibles, concentrates, and products such as vape pens must be legal. Trends in Canada and other international legal jurisdictions, particularly in the United States, demonstrate the increased popularity of these methods of consumption, which are also potentially less harmful to the consumer and less bothersome to non-consumers.

On a practical note, there are literally hundreds of companies operating in Canada making these products right now in a professional, safe, and sophisticated manner. These products are not going away, and all rely on someone growing the raw plant material to make them. If they are not legal, then, as always, consumer demand will be filled by persons operating outside the law. It is better by far to allow the existing industry to come out of the shadows and into the light.

I urge the committee to recommend amendments to Bill C-45 that legalize cannabis derivative products, eliminate barriers to entering the lawful industry for persons currently participating in the unlawful marketplace, and carve out from federal oversight the intraprovincial production and sale of small-batch craft cannabis.

Thank you for the opportunity to address the committee. I look forward to your questions.

[The Chair, Liberal, Bill Casey]

Thank you for your very clear presentation. We appreciate this.

Now we'll go to Mr. Stephen Rolles from the Transform Drug Policy Foundation in the United Kingdom. Welcome.

[Stephen Rolles, Senior Policy Analyst, Transform Drug Policy Foundation]

Thank you for the opportunity to address you on this important issue.

I am the senior policy analyst for Transform Drug Policy Foundation, which is a U.K.-based charity and think tank. We're involved in policy analysis and advocacy in the field of drug policy, specifically drug policy reform. Our speciality has been to focus on models of legal regulation and advocacy to bring them about.

We've been involved in this work for more than 20 years now. Our work has substantially focused on cannabis in recent years because of the nature of the debate. We've produced a detailed book, available online as a PDF download, that looks at the detail of cannabis regulation models, from production through how you would regulate the products in terms of such things as preparation, price, and packaging, as well as taxation issues, some of the things that Beau touched on, how you regulate vendors in terms of training and licensing requirements, how you regulate the outlets that cannabis would be available from in terms of things such as opening hours and storefronts, and how you regulate access, who has access to this market, and issues such as age controls or membership clubs.

In the question section afterwards, obviously I'll be happy to speak to any of those particular issues that the committee is interested in. We also have specific chapters on cannabis-impaired driving, cannabis-related tourism, and cannabis and the international treaties, which I'll come to in a moment.

Before I get into specifics, I have a few general comments that to a large extent are going to echo things that other speakers have said both tonight and during the week.

The importance of evidence-based policy is clear to everybody; therefore, it's vital that proper evaluation and monitoring mechanisms are hard-wired into the policy framework from the outset. It's obviously important to know what's working and what's not working and to have a system that is able to respond to that evidence in a flexible way. It might be that the system is too loose and needs tightening up. It might be that the system is too restrictive and needs to be relaxed in some ways. However, we need to be constantly monitoring the evidence, looking at what works and responding to that in a scientific and responsible way.

Secondly, clearly there is a tension between the interests of public health and the interests of commerce and commercial entities. Public health will tend to seek to moderate and reduce use, whereas commercial entities are essentially profit seeking and might seek, as a result, to increase sales or initiate new use. That's not to say that all commercial entities are going to behave irresponsibly or in an unprincipled way, but there is clearly a tension there. It's vital that we learn the lessons from alcohol and tobacco regulation around the world and look at what has worked and what hasn't worked. That's very much what has informed Transform's work in terms of developing our proposals, propositions, and analysis around cannabis regulation.

There is a particular focus on advertising and marketing, bearing the previous point in mind on the need to regulate retailing of cannabis and access to cannabis markets in particular. Whilst I very much support the freedom of people to consume cannabis and to be able to access it and buy it, I'm less enthused by the freedom of profit-making commercial entities to aggressively market potentially risky products as lifestyle accessories. Again, looking at the experience with the bad old days of alcohol and tobacco regulation, I think we need to learn those lessons and make sure we don't repeat those mistakes.

My final point, just a general introductory point, is on the need to start cautiously. I don't think there's any need to rush into a program of legalization. There are many things we don't know. It's absolutely fine to err on the side of caution initially, see how it's working, have an initial system bedding in, and then move cautiously forward on that basis, looking at what's working and what's not working. We don't have to make everything available overnight. We can move in stages.

Part of the work I've done on this issue was working with the Canadian task force. I thought their report was an outstanding piece of work and I was very happy to be an adviser. Beau was also an adviser with that group.

Along with Transform's other work we have also supported the work that's taken place in Uruguay. I was an adviser to the Uruguayan government, developing their regulation models, and we've worked with a number of other governments in various forms. We've been very actively involved in the debate in Mexico, in various European countries, in Jamaica, and elsewhere.

The task force, I thought, did an excellent job and the issues I've had with the bill as far as I have scrutinized it—which I have to be clear is not in forensic detail—are generally where they have diverged from the recommendations of the task force.

I'd certainly echo some of Kirk's comments about criminalizing young people. That really is not sensible. It's not going to deliver any of the outcomes we all seek.

I also think there are some absurdly harsh sentencing proposals within the bill. I noticed there was a potential maximum 14-year sentence for supplying drugs to minors. While that obviously does need to be an offence, I looked at the Canadian law and saw that it's one year for doing that for alcohol, and I believe 90 days for tobacco, so it's clearly disproportionate and it's inconsistent. I think that kind of thing undermines the rule of law and doesn't support the goals that are outlined at the beginning of the bill, and it's certainly not going to help protect young people. I would encourage amendments to modify those absurdly disproportionate sentences.

Coming briefly onto treaty issues, I have some disagreements on political strategy with what Professor Hoffman said, although much of what he said I was very much in agreement with. Clearly the treaties were drafted in the forties and fifties, nearly 60 or 70 years ago—the 1961 treaty—and a lot of it was based on treaties from even further back, the 1912 Hague International Opium Convention and others. These are hideously outdated treaties that were written in another time when the political, social, and cultural landscape was vastly different from the one we live in today and they simply do not fit the purpose.

I don't see the tensions that have emerged for Canada as Canada's fault. I see them as the fault of a broken, outdated international legal system in drug control that is badly in need of modernization.

As Professor Hoffman has outlined, there are a number of ways in which these tensions that have emerged could be resolved, but I'd absolutely agree with Professor Hoffman that if Canada does proceed, the legislation will put them in non-compliance with their obligations, or at least some of their obligations in the treaties with regard to cannabis.

The treaties can be amended but that requires a consensus and that is very unlikely to be achieved at the UN, given the lack of support among many countries for these sorts of reforms. The treaties can be modified. That doesn't require a consensus in rescheduling cannabis, so cannabis could be removed from the treaties altogether by a scheduling decision. That requires a majority vote at the UN, but again, that seems highly unlikely given the balance of opinion within UN member states.

Individual member states do have options, and Professor Hoffman has outlined some of these. Withdrawal is one of them. I would disagree about the desirability of withdrawal. It seems to me it could come with serious political consequences. There are international trade deals that are linked to participation in the treaties. The UN still has its system of judging countries in their application of the UN drug treaties. Also, parts of the treaties are very useful and important and for which a consensus does exist, the most obvious one being the control and regulation of the trade in medical drugs and control of medicines. We would not want to see that jeopardized by individual states withdrawing.

There is the possibility of withdrawal and reaccession with a reservation on cannabis, but that comes with its own issues and challenges. I can certainly talk about that during the questions and answers if people are interested.

There is another option that was touched by Professor Hoffman, which is certainly one I think is strategically perhaps the most favourable from my analysis, which is to continue with implementing domestic reforms in what we would call principled non-compliance. Clearly, open non-compliance with international legal obligations is not desirable. However, in some circumstances temporary periods of non-compliance may be necessary. Indeed, domestic laws and practice change in a wide range of fields and non-compliance is a fairly common feature of international regime evolution and modernization.

To be very clear, the problem at hand here is not Canada's opting for a regulatory approach to cannabis. Rather, it is the outdated legal treaty framework that gives rise to this need for a temporary and transitional period of principled non-compliance. As such, the recognition of the fact that Canada can no longer comply with the conventions' obligations regarding cannabis, need not be seen as disrespectful of international law, in my opinion. On the contrary, if accompanied by reasonable arguments and the expressed intention to resolve the situation over time, taking a stance of principled non-compliance can in fact confirm that treaty commitments do matter and that they require careful consideration.

There are ways in which Canada could proceed. For example, they could attempt in parallel to their domestic reforms to entertain treaty amendments and treaty modifications. Now, problems may arise with that and they may not succeed, but they are showing a commitment to resolving their problems and resolving their obligations. They can also—

[The Chair, Liberal, Bill Casey]

Mr. Rolles, we have to move to questions pretty soon. Thank you.

[Stephen Rolles]

Okay, I will conclude.

I can take questions on more of the details and issues around that as we proceed.

[The Chair, Liberal, Bill Casey]

That would be excellent.

[Stephen Rolles]

I just want to say that we are moving in many ways into uncharted waters with regard to treaties, so there are many questions outstanding in terms of how individual countries or countries working together should proceed to resolve the tensions that cannabis regulation is presenting.

[The Chair, Liberal, Bill Casey]

Okay, thank you very much.

Now we'll go to questions. We have our first round of seven-minute questions and we'll start with Ms. Sidhu.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you, Mr. Chair, and thank you to all of the presenters. My question is to Mr. Rolles.

One of the goals of this legislation is to reduce the black market and organized crime. Do you think other jurisdictions with legalized use of cannabis have had success with this?

[Stephen Rolles]

It's actually quite early to tell. In Uruguay, the cannabis stores only opened very recently, within a matter of weeks ago. Probably the best evidence, and I think Beau could probably speak to this better than I can, would come from Colorado and Washington where the retail stores have been open for a couple of years.

It's quite difficult to estimate the degree to which the criminal market has been undermined. While I think some people have estimated that as much as 60% of the market has now moved into the legal sphere, there is an issue in that those states border other states that are still prohibitionist, so a lot of people are obviously crossing state lines, buying cannabis in the legalized places and then leaving again. It's quite difficult to make an estimate. I would bounce that question over to Beau if he's happy to take it.

[Sonia Sidhu, Liberal, Brampton South, ON]

You just made a statement about treaties being outdated and non-compliance. Can you tell us about the treaty modifications? Can you explain that a bit?

[Stephen Rolles]

There are various mechanisms that are clearly outlined within the treaties themselves, and I'm sure Professor Hoffman can speak to this as well, by which the treaties can be modernized. Amendments can be tabled and they are then either accepted or subject to a conference of the parties, or they are rejected.

Modification is a mechanism of the scheduling of particular drugs, so the drugs are placed in a particular schedule, rather like—I'm not sure how the Canadian system works—but the schedule they're placed in determines how strictly those particular drugs are regulated and controlled. Cannabis could potentially be rescheduled from schedule 1 down into a less strict schedule that might make it more accessible in some ways, or it could be de-scheduled and actually removed altogether from the treaties. It's not entirely impossible.

[Sonia Sidhu, Liberal, Brampton South, ON]

In your view, if somebody can do that, on that modification side, there's nothing to violate international law.

[Stephen Rolles]

The problem is that those decisions have to be made by the group of member states, and there are many member states who would oppose such a move, so it becomes very difficult. Whilst there are a growing number of member states who are exploring options for regulation and are keen to explore issues around treaty reform to allow those to proceed without creating these tensions, there's also a large group of member states that are very much opposed and would act as a bloc.

In the short term at least, whilst it might be worth pursuing issues of amendment or modification to show goodwill and also to make sure these issues are being actively discussed in key UN forums, they are unlikely to prove successful in the short run. That then means that, if Canada is to resolve these issues, it may have to act either unilaterally or with a group of like-minded states they can act in conjunction with.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you.

My next question is to Mr. Kilmer. You mentioned different options for taxation. You also submitted a paper. We heard this week that setting up a tax rate for cannabis is a complicated decision with important implications.

Could you talk about the proposal you submitted of taxation by weight and taxation by THC level and discuss any benefits or concerns with these?

[Dr. Beau Kilmer]

Sure. There are a number of different ways to tax cannabis, and I want to make it clear nobody knows the best approach. In my testimony I only highlighted three of them. There are many other approaches, but I do want to spend some time talking about the three I discussed.

The one that is most popular here in the United States is an ad valorem tax. That's taxing as a function of the price. As I said in the testimony, the advantage is that it's easy to set up. We're comfortable doing that. We do this for other products. There are two potential drawbacks with a price-based tax. First of all, you have to be smart about bundling. If you're not, someone can just say, I'll sell you this pipe for $30 and give you the cannabis for free. People may do things like that as a way to avoid the tax, so you have to be smart about bundling.

The other issue is that, as the prices go down, the amount of tax revenue you're going to generate is not going to be as high as you thought it was going to be. This is important because now there are a lot of people getting into this, different consultants and people who are trying to make projections about what's happening, what's going to happen with tax revenues by the year 2025 and year 2030. You have to be skeptical of some of these estimates that are coming out because I don't think they're necessarily accounting for the fact that there could be this large price drop.

A second approach is tax as a function of weight. Like I said, Alaska does this. They tax at the wholesale level. It's a $50-an-ounce tax. The advantage is that it's very easy to apply and it's very easy to collect. The potential drawback with that is that it creates incentives for the producers to produce more potent cannabis as a way to avoid the tax. As I said, we know very little about the health consequences associated with some of the high-potency products that are being sold.

To give you some insight in terms of what's happening in Washington state, I've been working with a team that's been analyzing all of their data from their traceability system, their seed-to-sale system. They're tracking the plants all the way through to the final sale and keeping track of prices and potency. Washington is selling about 100 million dollars' worth of cannabis products every month. Of that, probably 70% is cannabis flower, and of the flower that's being sold, more than half of it is reported to be of THC levels of 20% or higher. There might be some inflation there, so maybe it's only 18%. But at the end of the day, some of the flower that may be 10% to 12% THC, you're just not seeing much of that in stores.

Also, the fastest growing segment of the market in Washington isn't edibles, although edibles get a lot of attention. It's actually the concentrate, so these are your waxes, your oils, and also the vape pens or the e-cigarettes, but instead of having a nicotine solution, they'll have a hash oil solution. That's the fastest growing segment, and to be honest, we don't know much about the health consequences of the higher-potency products, either the flower products or the oil products.

I also want to make it very clear that when we talk about health consequences, we need to be talking about both the risks and the benefits.

There's also this issue of titration. It might be the case that whereas before someone used to smoke a whole joint that was 5% THC, maybe if it was 15% they would only smoke one-third. It turns out we don't have much research on this issue of titration. I know of a few studies that have been published in Europe, but none in Canada or the United States. There are some concerns there about a weight-based tax creating incentives for people to use these more potent products, thus leading to a third option—the tax as a function of THC. In fact, that's what many jurisdictions do when they're creating their alcohol taxes; the tax will be a function of the ethanol content. What this does is it gives the jurisdictions the ability to nudge some users toward these lower-potency products.

The advantage of that is you're taxing as a function of intoxication. To the extent that we think that intoxication is associated with the number of public health harms, this could help reduce those harms. On the other hand, the system could be hard to set up. It's all going to depend on how good you feel about the rigour that's in your current testing and labelling regime. If you feel good about the labels that are going on those packages and what's being reported, then taxing as a function of THC is easy. However, if you don't feel good about your testing regime, if you don't feel that it's accurately portraying what's in those packages, you still have other options.

One of the things I talked about in the testimony was that in the short run, if you don't feel your testing regime is providing useful information with respect to the THC or CBD content of the plant material, it's easy to tax the concentrates and oils as a function of THC. But for the flower, you could actually have an alternative minimum tax. The tax could be determined by the stated THC the company puts on the package, or it could be a weight-based tax. The way they would set it up is that whichever tax ends up being higher, that's the tax you would have to pay.

That's a solution you could implement in the interim while you're developing a rigorous testing regime.

[The Chair, Liberal, Bill Casey]

Thanks very much.

Ms. Gladu.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair.

Thank you to all of our witnesses for appearing.

I want to go back to the topic of treaties. I think it's completely unacceptable that the Liberal government, by choosing an arbitrary implementation date, would put us in a position where Canada would breach three treaties that may jeopardize trade deals that are dependent on us complying to them. I think that's ridiculous. It's naive to think that we could have any kind of integrity on the world stage by violating the treaties. I think “principled non-compliance” was the term used. This is ridiculous. We are always calling out other countries that don't abide by the treaties they've signed with the UN. We will lose that ability if we don't address this situation. I think this is completely irresponsible.

In terms of withdrawing from the treaty, I think you said, Mr. Hoffman, that if we gave notice now, we could then legalize in January of 2019. Is that right?

[Dr. Steven Hoffman]

Yes.