Commercialization of Cannabis in Québec, the provincial government reacts

By Liliana Korosi and Jason Moscovici

Bill 157 on the Act to constitute the Société québécoise du cannabis, to enact the Cannabis Regulation Act and to amend various highway safety-related provisions (the “Act“) has been recently tabled. The regulation(s) made by the provincial government, under the Act, would detail the terms and conditions of its application (the “Regulations“).

We have summarized below the main topics of the provisions that are of interest especially to those who are already preparing for the future application of the Cannabis Regulation Act.

Distinction
Except for Chapter IV (which contains restrictions on the use of cannabis in certain places), the Cannabis Regulation Act does not apply to the production and possession of cannabis authorized for medical purposes under the federal law. In addition, unlike under the federal proposed recreational cannabis legislation, the Cannabis Regulation Act prohibits the cultivation of cannabis for personal use, in their own dwelling-house.

Monopoly
The new Société québécoise du cannabis (SQC), a subsidiary of the Société des alcools du Québec (SAQ), will be the only one authorized to sell in Québec, at the price it will establish, cannabis produced for commercial purposes by a licensed cannabis producer under the Regulations (the “Authorized Producer“). The SQC would, among other things, (i) purchase cannabis from the Authorized Producer, (ii) operate cannabis retail outlets, (iii) sell cannabis over the Internet, and (iv) authorize a person to engage, on SQC’s behalf, in the transportation, including the delivery, and storage of the cannabis that SQC sells, all as it may be further detailed in the Regulations.

Unless it is shipping it outside Québec, an Authorized Producer may only sell cannabis in Québec to the SQC, and it would have the obligation, under the Regulations, to provide reports thereon to the Minister. However, the provincial government may, by Regulation, provide for other cases where an Authorized Producer may sell cannabis to a person other than the SQC, as well as the conditions applicable to such sale.
Inspection, investigation and seizure procedures are also included. It should be noted that a director or officer of a legal person would be presumed directly responsible for any offence under the Cannabis Regulation Act or the Regulations committed by the legal person, its representative, mandatary or personnel member, unless it is established that they exercised due diligence by taking the necessary precautions to prevent the offence.

Restrictions
Restrictions on the promotion, advertising and packaging of cannabis for commercial purposes include the prohibition of (i) free of charge supply and distribution of cannabis to consumers or furnish them cannabis for promotional purposes, (ii) discounts on cannabis products, (iii) offering gifts or rebates to consumers, or the opportunity to participate in a lottery, a contest or a game, or any other form of profit on the purchase, or obligation to provide information about cannabis or its consumption, (iv) any sponsorship associated with the promotion of cannabis, a cannabis brand, the SQC or an Authorized Producer, (v) any association of a sports, cultural or social facility or event to a name, logo, distinctive sign, design or image, or slogan related to cannabis, a cannabis brand, the SQC or an Authorized Producer, (vi) all direct or indirect advertising which is not in printed newspapers or magazines that have an adult readership of not less than 85%, or it is not a signage visible only from the inside of a cannabis retail outlet.

Offenses
Fairly important fines (from $5,000 to $500,000) are applicable for offences under the Cannabis Regulation Act, which would be doubled in the event of a subsequent offense.

By way of conclusion
We will know soon enough whether Bill 157 will undergo substantives changes; more likely, the Regulations will specifically detail the various aspects of the recreational cannabis trade in Québec. One thing is certain, ROBIC Team will keep you informed of all developments.