After Third Reading in the Senate: What comes next?

On Thursday evening, the Senate of Canada voted 56-30 (with one abstention) to pass Bill C-45 (as amended). Now that the Cannabis Act has cleared one of the last remaining hurdles before becoming law, attention is turning towards what comes next in the legislative process as well as the regulatory process that will unfold once Bill C-45 receives Royal Assent.

Earlier on Thursday, Health Minister Ginette Petitpas Taylor said that the government would consider amendments over the weekend and respond to the Senate’s amendments next week.

Between Third Reading and Royal Assent: What is the process?

The Senate will now report the amendments it has made to Bill C-45 back to the House of Commons. The House, and its Liberal majority will have the opportunity to accept, reject or suggest changes to the Senate’s amendments to the Bill. The House reports this back to the Senate in another message. The Senate then responds to the House through a subsequent message. This exchange of messages continues until both the House and Senate agree on final legislative language. The Bill then proceeds to Royal Assent where it is signed into law.

The risk of the Bill not passing before the end of this Parliamentary session is very low.

In addition to the Parliamentary clock ticking down to the summer recess, the Prime Minister and other members of the government have noted that the risk to children and youth continues to persist every day that legalization is not in place. The political will to see this happen is real and will persist until Bill C-45 is passed, especially given the work undertaken to date by the provinces and territories to prepare for legal cannabis sales. Will it be done perfectly the first time? That is less certain and will depend on how Senate amendments are addressed and how the regulatory framework is shaped, both immediately after Royal Assent and in the future.

“Every single day, Canadians are hurt and harmed by the current approach on marijuana. It’s not working” …“We are going to be moving forward this summer on the legalization of cannabis.” – Prime Minister Justin Trudeau, May 3, 2018

Amendments: What will happen to the Senate’s changes?

It is important to note that amendments are not inherently negative; it is fully within the prerogative of the Senate to make amendments (albeit, the extent of amendments made by the Senate strays from its usual practice). The Government will likely agree with some amendments, particularly those that it proposed via the Bill’s sponsor, Senator Tony Dean), as they either implement important provisions (i.e., transition measures to enable provincial distribution and retail to prepare for legal sales) or are technical in nature, providing greater clarity to the legislative language.

Other amendments, however, will provide more of a challenge to government to implement, such as those passed at Third Reading in the Senate, like the removal of the prohibition on brand stretching. The federal government will be analyzing these amendments to ensure their alignment with legislative intent, that they are constitutional and within the jurisdiction of the federal power and can be implemented as proposed. Where the government identifies issues, it can either reject or amend Senate changes to the Bill, and it may also choose to reject amendments, favouring to address issues through more flexible regulatory powers.

Regulations: Outlining the Rules of the Game

The legal framework is key to unlocking the next step in the process of establishing Canada’s legal cannabis market: legislative authority to make regulations. Without the legislative authority to make regulations, the federal government’s hands are tied with respect to its ability to implement its regulatory approach.

As soon as possible after Royal Assent, the federal government will fulfill its legal obligation to publish final regulations in the Canada Gazette Part II. Depending on the timing of Royal Assent, this could happen as early as late June, but could be delayed until July to ensure the full regulatory package is complete for publication.

Through regulations, the Government is able to provide detail on how it will implement and operationalize a wide variety of measures of Bill C-45, ranging from licensing to promotion (and a wide range of other items in the bill).

It can be anticipated that the federal government will look to regulatory frameworks it is familiar with to implement Bill C-45. For example, the section on promotion in Bill C-45 is similar to the existing scheme for tobacco products under the Tobacco Act. Other elements, such as the licensing scheme, build on the framework developed under the ACMPR.

The government will also have an eye to the entry of edibles and concentrates to the market within 12 months of Royal Assent and will endeavor to ensure that any regulations published early are consistent with the entry of these products to the market (such as regulations regarding THC limits) to provide as much regulatory certainty as possible and reduce regulatory changes in the short term.

Legalization: A dynamic process

The coming into force of the Cannabis Act will be the starting point of a dynamic process to regulate Canada’s legal cannabis market. Under Bill C-45, edibles and concentrates will become legal within 12 months of Royal Assent and the Government will have to ensure that a framework is in place in order to regulate and control these new products.

That means over the course if the next year, there will be opportunities not only for consultation on the government’s approach to regulating edibles and concentrates but for addressing issues in the overall regulatory framework. This could range from unintended consequences of the regulated market to address concerns that are limiting the migration of Canadians from the illicit to the legal market.

Conditions for success in this new legal market will include the need for constructive, open dialogue between government and industry that recognizes the shared goals of protecting Canadians while eliminating the black market. An active and engaged legal industry plays a critical role in shaping the regulatory environment for the future legal cannabis industry in Canada.