How Trudeau Is (Kind of) Legalizing Pot in Canada

Canada is planning to legalize recreational marijuana, which would make it only the second nation to do so, after Uruguay. Beyond that, it gets complicated. The plans unveiled on April 13 by Prime Minister Justin Trudeau’s government were short on details about what the market might look like, and included onerous new penalties. Rather than celebrating the prospect of legalization in the not-so-distant future, Canada’s pot activists are complaining about the law-and-order campaign against pot use.

1. What will be allowed?

The proposed legislation, targeted to take effect by July 2018, would let anyone over 18 buy fresh or dried cannabis, cannabis oils, seeds and plants. Edible products like brownies will be legalized later. Adults can carry and share up to 30 grams in a public place at any time, and grow up to four plants in any residence. Minors won’t be prosecuted if found with under five grams.

2. What’s so complicated about that?

Canada’s legalization push is being accompanied, somewhat paradoxically, by a crackdown on pot use and users. Selling products that mix cannabis with nicotine, caffeine or alcohol won’t be allowed (no pot-infused coffee pods like the ones that have debuted in some U.S. stores). Police will be allowed to do roadside alcohol tests without any evidence of impairment -- likely a violation of Canada’s Charter of Rights and Freedoms, lawyers warn -- and collect “oral fluid samples” to test for marijuana. Providing marijuana to someone under 18 could lead to a jail sentence of up to 14 years.

3. Isn’t that a bit harsh?

It is when you consider this: Under Canadian law, the same maximum 14-year sentence applies to crimes such as sexually assaulting a child, severely assaulting a police officer, creating child pornography, human trafficking and certain terrorism offenses.

4. How will Canada’s legal marijuana be sold?

That’ll be left up to provinces to decide, which adds to the uncertainty. Medical marijuana is already sent by mail in Canada and, if provinces don’t set up retail sales, recreational pot will be sent by mail, too. (Provinces will also be allowed to enforce a higher minimum age for marijuana use.) The federal government hasn’t said how it will tax pot or if it will fix prices, as Uruguay, has done. Companies will be allowed to do some advertising and promotion, with restrictions, but all endorsements are barred -- sorry, Snoop Dogg.

5. Which companies will jump into the market?

Canada has 43 licensed medical marijuana producers, including prominent ones like Canopy Growth Corp., Aurora Cannabis Inc. and OrganiGram Holdings Inc. They surged in value in anticipation of the new market. Though shares fell in the days after the long-awaited announcement -- some executives had been cashing out -- these medical producers figure to have a head start.

6. What’s motivating Trudeau?

Trudeau, 45, says he’s smoked pot, including since becoming a member of Parliament. His Liberal Party passed a motion before the last election calling for legalization, accompanied by “strict penalties” for trafficking, export and impaired driving. The party also called for amnesty for those convicted until now.

7. What happened to the amnesty part?

That’s what Canada’s pot activists are asking. Not only has Trudeau not pursued amnesty, he’s publicly encouraging police to keep arresting people while legalization is on the legislative table.

8. So why is he doing that?

He probably added the strict laws to calm fears from groups that worry legalization will unleash mayhem on roads. Politics is also playing a role. Trudeau’s chief rivals in the Conservative Party largely oppose legalization, and unleashing law enforcement might be how Trudeau’s centrist government shores up its right flank.

9. What happens next?

Trudeau’s proposal, contained in two bills, is expected to pass the House of Commons but could face delays in the Senate; its unelected members serve until age 75 and have been more unpredictable recently. There are also warnings the plan violates both domestic and international law, and some portions could therefore eventually be struck down in court. Each of Canada’s 10 provinces will have to set up its own system, with potentially varying legal ages of purchase and retail rules. Cities need their own rules, too. The federal government will work to develop regulations around things like packaging, and unveil how it plans to tax sales. All this could take a while.

10. Could this really all be done by July 2018?

That’s hard to say -- the government has described it as an aspiration. Also unclear is whether pot might be sold in stores, or by mail, or both, and whether it’s taxed heavily. In the interim, producers continue to face strict, costly rules on security without clarity on when and how they will sell and market their product.

11. How does this all compare to the U.S.?

While Canada is legalizing from the top down, leaving details to provinces, the U.S. push is bottom-up. Eight U.S. states have legalized recreational marijuana use, though White House press secretary Sean Spicer warns there could be stepped-up enforcement of federal law banning it. Due to the legal uncertainty, American pot investors looking to list companies or otherwise raise funds have made Canada their home base. But don’t expect much in the way of cross-border pot trade -- Canada’s new rules mostly ban marijuana exports and imports, except for medical or scientific purposes.

The Reference Shelf

  • Text of the cannabis bill. 
  • Trudeau’s 2015 campaign promises on legalizing, regulating and restricting marijuana.
  • Now the real work begins for Canada pot companies.
  • A Maclean’s Magazine column examines the Trudeau Liberals’ marijuana-induced scowls.
  • In an op-ed, prominent Canadian marijuana activist Jodie Emery decried what she called Prohibition 2.0.
  • The Canadian Centre on Substance Abuse wants more research in areas including how marijuana can impair driving, and how its effects could differ based on age, sex race and existing health issues.
  • In Bloomberg View, Barry Ritholtz mused about marijuana stocks.
  • A Bloomberg QuickTake on U.S. marijuana legalization.
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