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Cannabis Statute Law Amendment Act, 2018

Backgrounder

Cannabis Statute Law Amendment Act, 2018

Ministry of the Attorney General

Ontario is introducing legislation that, if passed, would bring in stricter controls to safeguard young people and combat the criminal market, and provide safer ways to buy recreational cannabis legally.

The proposed Cannabis Statute Law Amendment Act, 2018 introduces new controls, in addition to introducing amendments to various acts to make them stronger.

Supporting licensed and regulated private cannabis retail sales

  • The Cannabis Act, 2017 would be amended to permit the Ontario Cannabis Retail Corporation (OCRC) and stores authorized under the proposed Cannabis Licence Act, 2018, if passed, to sell recreational cannabis privately in Ontario. 
  • It would be made an offence for an unlicensed store to claim it is authorized to sell recreational cannabis, including misusing the cannabis retail seal.

Places of use

  • The Smoke-Free Ontario Act, 2017 and the Cannabis Act, 2017 would be amended to clarify where the smoking and vaping medical and recreational cannabis is permitted as well as where it is prohibited, such as in enclosed public places and enclosed workplaces, vehicles and boats.
  • The maximum fine for using cannabis in a prohibited place would be $1,000 for a first offence, and $5,000 for a subsequent offence, the same fines that apply to smoking tobacco or using an electronic cigarette in a prohibited place.

Licences and authorizations

  • The proposed Cannabis Licence Act, 2018 would set out a licensing and regulatory regime for private cannabis retail stores administered by the Alcohol and Gaming Commission of Ontario (AGCO). This new statute would establish eligibility criteria for the issuance of licences and authorizations.
  • Those interested would be able to apply for two types of licences - a retail operator licence (ROL) and a cannabis retail manager licence - and a retail store authorization (RSA) for specific cannabis retail store locations. A person would require an ROL before they could be issued an RSA, though they would be permitted to apply for both an ROL and an RSA at the same time.
  • The proposed legislation would make it clear that persons operating in contravention of prescribed provisions of that Act, the Cannabis Act, 2017 or the Cannabis Act (Canada) would not be eligible for a retail operator's licence.
  • The AGCO would be required to give public notice of an application for an RSA before issuing one. The notice would include a request for the municipality and its residents to make written submissions to the Registrar in respect of whether the RSA is in the public interest. 
  • Licensed producers under the Cannabis Act (Canada) would only be allowed to establish one store only, onsite at a production facility.

Sale of cannabis and operation of cannabis retail stores

  • The proposed Cannabis Licence Act, 2018 would establish requirements for the sale of cannabis in cannabis retail stores and the operation of cannabis retail stores.

Enforcement

  • The proposed Cannabis Licence Act, 2018 would be enforced by the AGCO through regulatory measures such as licence sanctions (e.g. suspensions and revocations, and monetary penalties enabled under the Alcohol and Gaming Regulation and Public Protection Act, 1996). 
  • The act would also establish general offences respecting the licensing scheme, including prohibitions against hindering inspectors or investigators and against retaliating against a person because of any disclosure to the Registrar or to an inspector or investigator.

Municipalities

  • The proposed Cannabis Licence Act, 2018 would permit a local municipality to pass a resolution by January 22, 2019, to opt-out of retail sales. The prohibition could be lifted by a later resolution passed by the municipality. However, once a prohibition has been lifted, the municipality would not be able to prohibit cannabis retail stores from being located in its community at a later date.
  • Given the robust proposed role of the AGCO, the Cannabis Licence Act, 2018 would ensure that cannabis retail could not be designated as a separate land use from retail generally, and cannabis retail stores would be exempt from municipal licensing requirements.

Municipal funding

  • The province will provide $40 million over two years to help municipalities with the implementation costs of recreational cannabis legalization, with each municipality receiving at least $10,000 in total.
  • As soon as possible this year, the province would make the first payment to all municipalities on a per household basis, with at least $5,000 provided to each municipality.
  • The province would then distribute a second payment following the proposed deadline for municipalities to opt-out, which would be January 22, 2019.
    • Municipalities that have not opted-out as of that date would receive funding on a per household basis.
    • This funding would support initial costs related to hosting retail storefronts.
    • Municipalities that have opted-out would receive only a second $5,000 each.
  • The province is considering setting aside a certain portion of the municipal funding in each of 2018-19 and 2019-20 for unforeseen circumstances, and priority would be given to municipalities that have not opted-out.
  • Finally, if Ontario's portion of the federal excise duty on recreational cannabis over the first two years of legalization exceeds $100 million, the province will provide 50 percent of the surplus only to municipalities that have not opted-out as of January 22, 2019.

First Nation reserves

  • The proposed Cannabis Licence Act, 2018 would permit a First Nations Band Council to request that the Registrar not issue retail store authorizations for cannabis retail stores to be located in their communities. The Registrar would be required to comply with such a request, as well as with any future request to amend or rescind the original request.
  • The AGCO would be required to publish a list of First Nations communities which prohibit cannabis retail stores on its website.
  • The First Nations Band Council would need to approve the location of a proposed store before the Registrar could issue an authorization for that store.

Ontario Cannabis Retail Corporation governance

  • Amendments to the Ontario Cannabis Retail Corporation Act, 2017 would provide the OCRC with the exclusive right to sell cannabis in Ontario online and by any means other than by operating physical stores.
  • OCRC would also be the exclusive wholesaler of cannabis to authorized cannabis retail stores and would be expressly prohibited from operating retail stores, directly or indirectly.
  • Changes are also proposed to the governance of the OCRC, so that it would cease to operate as a subsidiary of the LCBO. For example, members of the OCRC's board of directors would be appointed by the Lieutenant Governor in Council, rather than by the LCBO.

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