Canada: The Bureaucratic Delight Of Cannabis Regulation

Photo Credit: Al Charest

So it was Saturday night on the acreage. Around the campfire a few joints were circulating. Your pals in halter-tops, tank-tops and ball caps were talking about the impending legalization of pot.

Hey, they said, blinded by their brilliance. Let’s open a pot shop!

I suppose … if among your pals was a lawyer, an accountant, a government-relations expert, a cannabis expert, a realtor, a seasoned retailer and plenty of investors.

In reality, this horse has long left the barn.  The regulations surrounding the upcoming growing, distribution and selling of pot in Alberta are so complicated and laborious that amateurs need not apply — regulations by the federal government, regulations from the provincial government through the Alberta Gambling Liquor Cannabis Commission (AGLC), regulations by municipalities.

At this point, regulations contemplated by the City of Edmonton seemingly contradict AGLC regulations. Remember, this is Canada and Canada loves rules and regulations.

The federal government, through Health Canada, has its act together. Medical marijuana has been legal since 2001, so the feds are building on existing rules.

The federal government licenses cannabis growers — and only a licensed grower can sell into the legal pot market. The testing and certifying of cannabis product — that the product is actually what it says it is — is a federal responsibility.

As they do for alcohol and tobacco, the feds will arbitrarily set the rules regarding packaging, marketing, advertising and sponsorship of all things pot.

Most interesting will be decisions regarding how pot can be consumed — also regulated by the feds. Will Health Canada allow baked goods, cannabis pills, pot drinks, instant powders?

The federal government is leaving distribution and retail regulations up to each province. Experts  generally approve of the Notley government’s decision to put all pot-related regulation into the hands of the quasi-independent but government-appointed AGLC. (Currently, an extra ‘C’ for ‘Cannabis’ will not be added to the AGLC acronym.}

The AGLC will handle pot as it does liquor. All cannabis product from federally licensed growers will go through an AGLC warehouse and then out to an initial 250 AGLC-licensed retail outlets throughout Alberta.

The AGLC will be a retailer itself, as the only pot seller allowed to retail cannabis online in Alberta. How you enforce that one is beyond me, but it will still be a law.

Overseeing retailers will be an AGLC responsibility — the AGLC will build on its experience and rules in casino and bar regulation. AGLC inspectors will ensure the rules are being followed by cannabis retailers, as it does with alcohol and gambling.

The AGLC will set the wholesale price for cannabis: Low enough to compete with the black market (which may shrink, but is unlikely to disappear); high enough so retailers can make a reasonable profit; high enough to satiate government’s need for ever more tax dollars.

In Alberta, municipalities will control development permits — where a pot store can be located in relation to schools, other pot stores and so on. Building permits ensure hundreds of municipal rules are followed. Then there are municipal business licenses.

At this point — a final decision has yet to be made — Edmonton city council is leaning to a pure lottery system to issue development permits for a set number of cannabis stores.

For whatever reasons, city council has not included the AGLC-issued licence as a pre-condition of applying for a city-granted development permit. In Calgary, an applicant will have to have an AGLC license before applying for a pot store development permit.

So what happens if an applicant wins a city development permit for a pot store, but is denied one of the 250 AGLC-issued licenses to sell pot? Or vice-versa?

Nobody seems to know … other than fortunes may be made (or lost) in a secondary market consisting of the buying-and-selling or matching-up of AGLC pot licences and City of Edmonton pot-store development permits.

Then there will the rules and regulations needed by law-enforcement agencies to determine what constitutes intoxicated driving.

So, yep, the idea of opening a pot shop may have sounded positively brilliant around the campfire on Saturday night, especially after the 10th toke.

But in the cold, hard, light of day, it would be clear to the most ardent enthusiast: Going into the highly regulated (legal) pot business will likely be a game restricted to corporate entities with deep, deep, pockets