Québec Hints at Private Sector Retail and Distribution Framework for Cannabis

May 30, 2017 | Claire R. Durocher

This past April, the federal government introduced Bill C-45, known as the Cannabis Act, and, if it is passed, the production, distribution and retail of recreational cannabis would become legal in Canada under strict regulation. Bill C-45 splits responsibility between the federal government, which retains control of production, licensing, cultivation, quality control and taxation, and the provincial and territorial governments, which would be tasked with developing their own retail and distribution frameworks.

At this time, no province or territory has tabled legislation that would establish this framework. When Bill C-45 was announced, Québec’s response was mixed, with dissatisfaction stemming mostly from the high cost to provinces for the implementation of a distribution and retail framework and the associated cost of prevention programs, and sparse details on federal funding. However, the Québec government announced it would work closely with the Ontario government to establish harmonised regulations and a common framework between the two provinces.

The latitude afforded to the provinces and territories to establish their own retail and distribution framework has left entrepreneurs curious as to whether there would be business opportunities beyond the production and cultivation of cannabis. If a province or territory fails to implement a system, the federal government is planning to allow web-based sales and postal delivery of cannabis in order to ensure equal access across the country.

Until recently, Ontario Premier Kathleen Wynne had been espousing the state monopoly model of distribution, which would have seen cannabis products retailed at the Liquor Control Board of Ontario outlets, or similar. However, while no official decision has been made public yet, the Québec ad hoc ministerial committee working on cannabis issues has hinted that they are eschewing the state monopoly model in favour if a tightly regulated private sector model.

Québec quickly rejected the idea of selling cannabis alongside the alcohol products retailed at the state-run Société des alcools, and considers the cost of implementing a separate state-run commercial network to be prohibitive, especially given competition from the web-based postal delivery service set forth by the federal government. Costs are an important factor as one of the purposes of legalisation is to kill demand for cannabis on the black market and excessive costs to the consumer would defeat that objective.

While the private sector may be favoured, not all businesses would be able to retail cannabis, with pharmacies and corner stores specifically excluded. As with tobacco, pharmacies would not be allowed to sell cannabis for recreational use but would continue to dispense prescription cannabis. Corner stores, or dépanneurs, which are ubiquitous throughout Québec, would also be prohibited from selling cannabis, as the ministerial committee highlighted the need to regulate the areas in which cannabis products are sold, taking particular care with regards to proximity to schools and to avoid high concentrations of retailers in underprivileged areas.

Cities and municipalities will also play their part, as they can determine and restrict the areas where cannabis-related businesses may be operated on their territory. Prospective businesses will have to take the urban planning and zoning bylaws into consideration when looking for an establishment.

The details of the distribution and retail framework are expected in fall of this year, in order to meet the July 2018 timeline set forth by the federal government, but political opposition has already voiced its concerns, advocating for the state monopoly which would allow Québec to retain profits.


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