Written By Ranjeev S. Dhillon, Aaron E. Sonshine, Rami Chalabi and Nicholas Nevins

On October 4, the government of Alberta released its proposed framework for legalized recreational cannabis. The framework sets out Alberta’s primary policy goals with respect to the implementation of a recreational cannabis regime and outlines the principal regulatory bodies, which will be tasked with its oversight and implementation. However, there are certain key elements of Alberta’s regulatory structure that are still being deliberated, such as the ownership and operation of cannabis retail outlets in the province. The government of Alberta is holding further public and stakeholder consultations until October 27, at which point, the province will refine the framework and is expecting to release a final version of the Alberta Cannabis Framework accompanied by draft legislation in early 2018.

Consistent with the priorities outlined by the federal government, the framework is meant to support four priorities for legalization:

1. Keeping cannabis out of the hands of children.
2. Promoting public safety on roads, in workplaces and in public spaces.
3. Protecting public health.
4. Limiting the illicit market.

In order to ensure these priorities are met, the Alberta Gaming and Liquor Commission will be responsible for overseeing all aspects, including compliance and distribution, of the sale of non-medical cannabis in all parts of the province. In the early stages of legalization, Alberta plans on having stricter direct control over sale and consumption, which is likely to evolve over time as the province learns more about the legalized cannabis system.

Distribution

The province plans to implement a distribution system similar to what is currently in place for alcohol distribution, with retailers receiving their products from a government-regulated distributor. Having a government-regulated distribution system is intended to maintain a balance between large and small producers, and also guarantees that products are shipped at the same price regardless of the end location, preventing small communities from having to pay higher delivery costs.

The province has outlined two potential approaches regarding the ownership and operation of cannabis retail outlets:

Government-owned and operated stores. The first option is to take an approach similar to the one taken by Ontario, with retail cannabis stores being exclusively owned and operated by the province. This would give the province greater oversight and more control over how the legal cannabis market is established and provide the province with greater control over the price of non-medical cannabis, ensuring that it remains competitive with the illicit market. Having control of the retail distribution gives the province greater control over which products to carry in order to ensure public health and safety standards are met.

Licensed and regulated private sales. The province is also considering a distribution model through licensed and regulated private retailers, consistent with the province's current approach to the sale of alcohol. Although this would provide the province with less direct control, it would require less up-front cost than the alternative. This method is also likely to be more responsive to consumer demand, which could more effectively divert sales from the illicit market. It is also provides another avenue for entrepreneurs, investors and existing market participants to start new businesses in the industry.

Safeguards

The framework presented by the province also contains certain safeguards that will be put in place regardless of the retail approach chosen.

• Cannabis will only be sold from specialized retail outlets that do not sell alcohol, tobacco or pharmaceuticals. The legal age to purchase cannabis in Alberta will be 18 years old and retailers may only sell 30 grams per purchase.
• The province plans to create rules regarding hours of operation and the location of stores (i.e., distance from schools, community centers, liquor stores and other specialized cannabis stores).
• Retail staff will be required to have appropriate training in order to educate consumers about the potency of products and the risks associated with cannabis use. When cannabis is first legalized, online sales of non-medical cannabis will not be available. However, the province has stated that it will be considered after legalization, once they understand more about the market and are able to ensure proper age verification. If the province does intend to allow online sales in the future, it is likely that the federally regulated medical cannabis market will be relied upon as a precedent for how to do so. The online purchase of medical cannabis in Alberta, as regulated by the Access to Cannabis for Medical Purposes Regulations, will not be affected.

• Consumption will be allowed in private areas and some public spaces where smoking tobacco is allowed, but use will be banned in automobiles. There will be a personal possession limit of 30 grams of cannabis while in a public place.
• Initially, venues specific to consuming cannabis (i.e., cafes or lounges) will not be allowed. However, this issue will be revisited once the framework has been established and the federal government makes a final decision regarding edible cannabis products.
• Growing cannabis for personal use will be restricted to indoor growing. As recommended by the proposed federal legislation, up to four plants per household may be grown up to a height of 100 cm each.

The above provides a brief overview of the framework proposed by the province. It is important to note that the framework is subject to change prior to the province introducing legislation in early 2018.

At Bennett Jones LLP, we have a team of industry-leading professional advisors that can provide legal and strategic guidance to all industry participants as the Canadian cannabis industry continues to evolve.

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