December 19, 2018 Practice Points

The Canada Cannabis Act: A Blueprint for the Future

By Edd Gaus

This October, Canada became the second country to open its doors to recreational marijuana use. While many rejoiced at their newfound freedom, Canadians seeking to join this modern green-rush face a complex and highly restrictive regulatory framework. As the United States ponders legalizing marijuana nationwide, lawmakers are no doubt paying close attention to whether the highly restrictive regulations are furthering the intended purposes of the law.

The regulation’s official webpage states that the purpose of the Cannabis Act is to accomplish three goals: (1) keep cannabis out of the hands of youth, (2) keep profits out of the pockets of criminals, and (3) protect public health and safety by allowing adults to access legal cannabis. These are noble causes, no doubt, and legalization advocates in the United States argue in support of a similar law. But Canada’s new regulation may cause some concern for American businesses and manufacturers pining for legal marijuana. Canada’s restrictions on promotional activities and advertising provide few opportunities for retailers to peddle their new products. Additionally, future violators face potentially significant penalties, including large monetary fines and even years in prison. Some critics of the new law point out that because each province is free to regulate much of how marijuana may be sold, used, and transported, there is a high likelihood of confusion among Canadians. Businesses and citizens face a daunting task maneuvering through the new and complex legal landscape ahead of them.

If the regulations help Canada accomplish its stated goals, American lawmakers may use them as a blueprint. Should this be the case, companies eager to jump into an American green-rush may face similar highly-restrictive regulations. The chaos that may result will undoubtedly cause a flurry of litigation as companies struggle through the initial stages of what promises to be an evolving regulatory scheme. Businesses seeking to cash in on any future legalization—and their attorneys—would be wise to pay attention to future reports about the success, or failure, of Canada’s bet on cannabis. They may face a difficult regulatory landscape if Canada cashes in.

Edd Gaus is an associate at Shook, Hardy & Bacon in San Francisco, California.

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