How can the cannabis industry more effectively lobby for their interests?

| David Brown

As legalization in Canada reaches the three year mark and the government begins a mandated review of the legislation, the cannabis industry finds itself beset with problems to which they feel there is little recourse. 

From taxes, to federal and provincial bureaucracies, to an increasingly competitive market, the cannabis industry finds itself at a crossroads. It needs more leeway to be competitive and profitable, say many industry insiders and business owners, but few politicians are listening. 

Recently, Dan Sutton, the CEO of BC cannabis producer Tantalus Labs, with support from numerous industry collaborators, launched a platform to draw attention to the high tax rate applied to cannabis producers. The goal, says Sutton, is to try and get the government to pay attention, especially Health Canada and the CRA, to understand how pressing the issue is in terms of viability for small cannabis businesses like his. 

But the issue, according to several close to policy issues in Ottawa, is just not a priority for the government right now. The coronavirus has taken the front seat for over 18 months now, and while small cannabis businesses might play into economic recovery, it’s hard to get politicians to see the issues. 

Omar Khan, the Senior Vice President of Corporate and Public Affairs at High Tide Inc., a cannabis retailer with several stores across Canada, says it ultimately comes down to those who benefit from the issues making sure politicians gravitate towards them.

“It’s rare for politicians and political parties to build a parade around an issue, but they are apt to jump on to a bandwagon once the parade has been built,” explains Khan. “It’s incumbent upon industry, activists, and allies of the industry to start building that parade. We are the ones who have to start talking about not only the benefits of legalization but also the challenges and pitfalls that lie ahead from a regulatory perspective. As a collective we need to be a little more aggressive on that front between now and the next election so that hopefully we can see some movement.”

Will Stewart, Senior Vice President and National Public Affairs and Advocacy Lead with Hill+Knowlton Strategies, agrees that the focus for the industry needs to move beyond just lobbying Health Canada to make substantial changes with the Cannabis Act and Regulations. Instead, he would like to see the conversation shift to seeing cannabis regulated as an agricultural product. 

“The industry has largely been dealing with Health Canada, and I think we should be dealing more with politicians and policy advisors,” says Stewart. 

“Two things that I could see that could monumentally change and create lasting impact for our industry, is to find a way for the industry to not be governed by Health Canada. And I’m not talking about things like product safety—Health Canada has a mandate in that no matter what. I’m talking more about how much different our industry would be if the growing of the product was governed by agriculture and the consumption of the product was viewed through an industry, small business, entrepreneurial lens, as opposed to a Health Canada public health and public safety lens.”

In order to shift this conversation, Stewart says the industry needs to know how to speak in the language of each of the parties.  

“You need to play into the ways in which these parties think. Liberals, very much paternalistic, a need to protect society; Conservatives very much about the economy and encouraging industry and a good economy for Canadians.”

Jay Kujath, a lawyer and consultant to the cannabis industry, says campaigns to gain public interest are a good start, but understanding the nuances of who to lobby within government and how is important.

“To effect real change, campaigns need to be more than just a public broadcast/campaign calling for legislative amendment needs. Also, because it involves cannabis, there is the risk that Parliament dismisses any call for action.”

As far as Sutton’s tax campaign, Kujath says the focus should be on the Ministry of Finance. 

“The Department of Finance should be the primary target because the goal is to have the excise duty payable reduced. Given that the legislative provisions concerning the duty and additional duties are laid out in the Excise Act and the Excise Regs, a coordinated submission to the Minister of Finance that requests a meeting and allocates a timeline for further follow-ups months prior to the next year’s Parliamentary Budget will be an effective tool in the craft group’s toolbelt. That message should show that the legislation as drafted is in conflict with Parliament’s original intent. However, if the goal is for Parliament to set new objectives regarding the regulation of cannabis, submissions should also be made to the Minister of Justice/Department of Justice. In this political environment, I feel that is a much loftier goal.”

“The CRA is obviously the administrative agency that oversees the Income Tax Act, its regulations, and the Excise Act, and its regulations. Submissions to them generally request the review of the administration elements of legislation/regulations put in place by the Department of Finance. These are generally set out in the Prescribed Forms and Excise Duty Notices that are guided by the CRA’s legislative interpretation. For the sake of consistency since we are dealing with some of the most complex provisions of the regulated cannabis regime, my view is that efforts should be singularly focused towards the review of the Excise Act/Excise Regs and the duty payable thereunder.”

For his own part, Sutton says the feedback he received from his tax campaign pointed in a similar direction and sees that as the next step.

“The target of the (campaign) was obviously a wide net to cast and within that net we included the Finance Ministry, the Prime Minister’s Office, the CRA, Health Canada, provincial distribution boards leadership, as well as provincial finance ministry leadership. We got feedback from some of those constituencies as to where we should focus.” 

“The feedback we’ve received from our campaign so far is that the Finance Ministry is really holding the keys to this castle and so we need to create and cultivate advocates within that Ministry. So that is where we will be focussing now. But getting that attention with a public campaign helped get us to this point.”