VIDEO: Cannabis Compliance Inc on Illegal Dispensaries and Legalization

Cannabis Compliance Inc Vice President Deepak Anand and Director of Strategic Sales Michael Elkin join James West in the Midas Letter studio to talk about legal issues surrounding federal de-prohibition in Canada. They share their thoughts on a court case in British Columbia between the City of Vancouver and unlicensed dispensaries providing medical cannabis access to patients in terms of its Charter implications. The trio also discuss the legal framework determining which providers can, and which providers cannot, sell cannabis once federal legalization occurs on October 17. Anand believes that the non-medical illegal dispensaries will be subject to stricter enforcement after October 17 as the federal government (through Bill C-45 and Bill C-46), and various provincial governments, have created significant legal frameworks to enforce licensing. The pair suggest allowing pharmacies to distribute medical cannabis is a likely path to addressing both compliance issues and the Charter rights of patients.

Transcript:

James West:   Hey, welcome back to Midas Letter Live. My guests in this segment are returning for second time or the third time – second time, okay – Deepak Anand is Vice President, and Michael Elkin is Director of Strategic Sales for Cannabis Compliance Inc. Gentlemen, welcome back.

Deepak Anand: Thank you, James.

James West:   You guys always have the ear to the ground in what’s going on behind the scenes, and today is no different. I’d like to open the discussion with the idea that there is a lawsuit wending its way through the Supreme Court of British Columbia, or is it Federal Supreme Court?

Deepak Anand: Supreme Court of BC.

James West:   Supreme Court of BC, whereby a group of dispensaries have engaged Messieurs Conroy and Toosa, who are the successful challengers in the MMAR constitutional challenge back in March 2013?

Deepak Anand: Something like that, I believe.

James West:   And the dispensaries are challenging the government’s right to shut down their dispensaries and stop them from providing medical cannabis to medical patients, because they feel they have a constitutional right to do so?

Deepak Anand: So, James, the story is that the City of Vancouver actually has an injunction to shut some of the dispensaries down in Vancouver that have not paid a lot of municipal licensing fees. John Conroy – Craig Toosa is not involved in this file anymore, because he’s been hired by Canopy Growth, unsurprisingly – but, so Doug Conroy is representing dispensaries in this sort of charter issue that’s been brought forward. It’s actually an injunction filed by the City of Vancouver to shut dispensaries down; what John Conroy has argued this week, it was the first hearing in the Supreme Court – was that the City of Vancouver is aiding and abetting, essentially, an illegal activity. And he’s arguing that the dispensaries should remain open because they’re providing medical cannabis access to patients.

And so they’ve sort of counter-filed sort of a suit saying that they’re going to take the provincial government in BC as well as the federal government to court, demanding to remain open because they’re providing medical access to patients in BC.

Michael Elkin: Looking for a loophole.

James West:   Yeah, okay. So it sounds to me like the dispensaries could, if successful, be a legal outlet for medical cannabis across the country?

Deepak Anand: Well certainly – I mean, this, so basically what’s being tried here, and I think there’s a ruling coming down, is, determining now the constitutionality of the ACMPR. It’s one of sort of the line items that the judge is going to rule in the next four weeks once these hearings are complete. I mean, arguably, at that time we’ll be getting into Cannabis Act territory, so we don’t know exactly how this will unfold, but arguably, if the ACMPR is deemed unconstitutional, then there will be an avenue for dispensaries to remain open for medical purposes.

James West:   It all gets so confusing, especially since the Canadian Medical Association is also lobbying for an extension or a preservation for Health Canada’s dominion over the medical side, while others are saying that there’s no need for ACMPR once the medical rules take effect. And I don’t know about you guys, but I’m so confused.

Deepak Anand: Yeah, there’s certainly a great deal of confusion on this issue. I mean, the CMA has never sort of wanted to be involved on this file. You know, very early on when the MMAR was being drafted, pharmacists were the ones that were going to be the gatekeepers for this drug, and very quickly they said they didn’t want part of it. And sure enough, now we’ve come full circle where we’ve got pharmacy chains that are very interested in getting into the space; we’ve got the Canadian Pharmacist’s Association saying hey, we want to start getting involved in dispensing this drug. So you know, I think it’s a matter of time before we’ll see the CMA come full circle, but they’re certainly not there yet.

James West:   Wow. So it sounds like October 17^th is still fraught with certain peril in terms of the certainty of who can and who can’t legally sell it, and whoever is excluded from that has got avenues to pursue legally.

Deepak Anand: Absolutely, and then you add to that another layer of complexity is the whole home grow element, where you’ve got provinces like Quebec and Manitoba saying no, absolutely zero plants, you can’t grow up to four plants – which again, the Ministry of Health said, is defeating…or Minister of Justice said is defeating the technical purpose. So that’s going to be challenged in court.

James West:   Right. So how can, I mean, I’m just thinking, if I’m an individual in Manitoba and I say No, province of Manitoba, the Feds say I can, so I will and I am, and then the provincial police kick down their door and steal their plants, and then you challenge them in federal court and the Feds say ‘this case is dismissed, because we said it’s-’ I mean, it’s just a dog’s breakfast, really, is what it is.

Deepak Anand: Absolutely, and there’s paramount laws that sort of come in, in terms of do the Feds have say in this, or do the provinces. I know that the Justice Minister Federally said it’s defeating or frustrating the Federal purpose, so I mean, we’re going to see a lot of this stuff play out through the courts.

Michael Elkin: And then how does it domino from whatever court decision comes down, and what other provinces pick up on that. Yeah, so it’s going to be pretty interesting just to see how that plays out in BC, and then how it dominoes through the country.

James West:   Sure. So from where you guys sit, and from what you’re saying, we’ve got probably 1,000 illegal dispensaries across the country.

Deepak Anand: Minimum.

James West:   Minimum. I look on WeedMaps and there’s 100 companies that will deliver me a bag of dope for $90 in one hour or less. And those dispensaries are saying that they will defy the law and will stay in business. So I’m looking at these constitutional challenges that are arising, and I’m looking at these dispensary operators, and I mean, it doesn’t seem to me that the government has a lot of solid ground around their legal basis, differentiating who can and who cannot supply cannabis to the public.

Deepak Anand: I think what the Federal government has done well is through the Cannabis Act, address issues of non-medical cannabis. I certainly differentiate the two, between medical and non-medical cannabis. I think the Cannabis Act does a good job addressing sort of non-medical cannabis or recreational cannabis, administration, possession, cultivation, it addresses all of those challenges.

James, there’s a Bill called Bill C46 that deals with terminal penalties. 45 is the Cannabis Act; 46 deals with terminal penalties for people working outside the system. Then you’ve got provincial bills layered on top of that that have further terminal provisions for people working outside the system.

So I think if you keep the medical issue aside for a second, people that are operating non-medical cannabis dispensaries are on sort of very shaky territory if they remain open post-legalization, because there are a number of things the provinces and the Federal government have built in, and they will start to enforce that.

James West:   Okay. When are they going to start enforcing? I walk by two dispensaries on my way to work every day, and they’re just doing a booming business. It’s all cash. They don’t even seem to be – in fact, it was the height of irony to me that I was walking home and they were shooting a movie, and there were two cops standing in front of the dispensary making sure nobody parked in front of the dispensary who was working for the movie, which was who the cops were working for. You know, it was like, the cops aren’t doing anything about the dispensary; they’re more concerned about the traffic on behalf of the movie! Which to me is like, well, what’s going on here?

Michael Elkin: I think, just drawing a parallel to California right now, what’s going on is that they have gotten into their legal framework where they’re stopping the temporary license, they’re moving to a permanent annual license, they’ve started to send out cease and desist letters to cultivators, to legal retail storefronts…so I think it’s once the regulator has somewhat of a solid foundation is when they’re going to start enforcing. Because I think right now, until the Cannabis Act comes in to enforcement, it’s still that gray area right now, right, where you’re telling illegal dispensaries if you comply, then there is a window for you to get in.

So coming from the opposite side of the fence here, I think it’s just a waiting period till we can get some more foundation under Heath Canada and the Cannabis Act. Do we have the resources to go out and shut these shops down now? I mean, that’s another question.

Michael Elkin: Yeah, I mean, the Cannabis Act does give a lot of power to police authorities to be able to go off enforcement, but I mean, even the provincial government gets involved. I mean, you heard the Attorney General in Ontario, when they were announcing sort of their path to the retail monopoly, say if you’re operating in the illegal dispensaries, stop was the word. And in BC, you know, we’ve got a cannabis tsar that’s going to go and start to enforce these regulations. So you know, there’s certainly some charter issues aside on the medical stuff, but certainly on non-medical, we will certainly see enforcement step up.

Where I think this gets a little bit more challenging is not the bricks and mortar dispensaries; it’s actually, James, the online dispensaries. I think those are the ones that are going to be a lot more challenging to shut down, because they’re operating offshore with domain and credit card processors that aren’t within the control of the government of Canada. So I think that gets a lot more challenging.

James West:   Well, exactly. Fulfilled through the mail – who knows where it came from, who knows where the source of it is? So that’s just it: the, you know, if you look back at the laws that were challenged successfully on constitutional grounds, I mean really, the whole access to cannabis for medical purposes was originated as a result of patients challenging the Federal government for their right to access the medicine that they felt helped them, in 2002 I guess was the original MMAR. And so the pattern is that constitutionally, people have generally succeeded against the government where their rights were infringed for accessing cannabis for medical reasons to this point; but now we’re going into the recreational era. Why should it be any different? Like, why should it be criminal for recreational use, if it’s not criminal for recreational use, as long as it’s from a certain source?

It strikes me that there’s going to be very difficult to resolve that conflict, where just because it’s a government-sanctioned source that pays taxes to the government, and this source doesn’t pay taxes to the government, therefore is illegal, I think constitutionally you’re going to have a hard time incarcerating people and depriving them of their freedom on constitutional grounds.

Michael Elkin: Yeah, I mean…

Deepak Anand: You know, you have to look at one of the basic tenets of legalization, is, we’re proceeding with this public health and a public safety approach, and that’s sort of the government’s objective in going about this, has been ‘we want to make sure that anything that’s being controlled is safely used, is well-regulated’. I mean arguably, you don’t know what product is out there currently, whether it be at an online dispensary or a bricks and mortar dispensary, because some of it’s been tested, others aren’t.

I mean, the whole objective here is, we’re protecting public health and public safety by strictly controlling access, and I think that’s what our clients who are licensed producers do very well, is certainly comply with those regulations from a safety, efficacy and quality control perspective.

And then, when you add another layer to this, James, there are UN treaties that we are signatory to that control sort of how we can go about dealing with this controlled substance, even post-October 17^th. We will be in violation of the UN treaties, but there’s still things that you need to legislate from a federal government perspective that, you know, you can’t have if this is going to be sort of open to illegally growing it wherever.

James West:   Incredible. So where do you see the court case ending up in BC? Like, what’s your gut feeling as to the direction that thing’s going to go.

Deepak Anand: Well, I think the Charter issue on medical access is a strong one. You know, I’ve had a chance to review some of the court filings, and I can say there’s some very strong affidavits being made around access being impeded to licensed producers. So you know, it’ll be interesting to see what happens and when that ACMPR, whether it’s sort of deemed constitutional or not, and then the Cannabis Act kicks in. so I mean, there’s certainly a lot of interesting things coming up, and I mean, clearly, if I was the federal government, I would be looking at enabling pharmacy access, because that address the issue of compliance and all the other things.

But I’m sure those conversations are happening in Ottawa now.

James West:   Interesting. One of the things I’ve noticed, just to take it a bit of a different direction now, is that Health Canada only issued one ACMPR license in all of August.

Michael Elkin: A new ACMPR license.

James West:   A new ACMPR licenses – only two in July, but six in June. So has – I mean, if just looking at the way it’s sort of dried up, has there been a sort of informal moratorium placed on future AMCPR licenses at this point?

Deepak Anand: Health Canada is certainly going down the path. I mean, we’ve seen a lot of clients getting RFIs, which is Request for Information. I mean, I don’t think that it’s been stalled and there’s a moratorium being placed; I certainly think resources are being shifted and sort of adjusted within the department to cater towards the Cannabis Act and all of the different licenses that are coming on board. I mean, Health Canada is doing a phenomenal job of transitioning people that are both applicants and licensed producers, into the CTLS, which is the Cannabis Tracking and Licensing System. I mean, they’ve been busy over the whole summer doing tutorials to both applicants and LPs to transition into that category.

So I think momentarily you may see a sort of fewer licenses being handed out, but that’s because they’re preferring to get into the new regulated sort of structure.

Michael Elkin: Yeah, there’s a massive migration coming, right? We’re going to go from one program to a completely other program, and then there’s going to be people who are going to be caught in limbo. So just taking care of those people that have, you know, worked their way through the queue, and answering their RFIs, keeping up their file, has to be taken care of.

James West:   Okay, so then, who’s going to administer the recreational licenses?

Michael Elkin: It will still be Health Canada.

Deepak Anand: So, Health Canada has formed something called the Cannabis Legalization and Regulation branch that’s going to oversee all 10 categories of licenses that are available under the Cannabis Act. Previously it was called the Office of Medical Cannabis, and then so now it’s called CLRB, which is the Cannabis Legalization Regulation Branch.

James West:   Okay. Sounds really interesting. We’re going to leave it there for now, guys. Thanks again for your participation; we’ll come back to you soon.

Michael Elkin: Thanks, James.

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