Tag: federal

With an early federal election looking increasingly likely, there are several issues those in the cannabis industry should be keeping an eye on in the coming months.

Given the current and ongoing polling and national mood, this article is written with the assumption that the next government will be a Conservative one led by Pierre Poileivre. 

If an election is called, it could mean changes to several ongoing issues the industry is focused on. Here are a few worth watching.

Regulatory changes

Health Canada delivered a large package of proposals and changed the federal cannabis rules and regulations in 2024, lowering fees and regulatory requirements and increasing the amount of cannabis that micros can grow and process. Since they were first proposed, the changes have been expected to come into force in early to mid-2025.

If an election is called at any point, these regulatory proposals will not immediately stop as they would if they were legislation (like a proposed bill), but this would mean that the work would be primarily paused until the end of the election. The new government could then choose to continue that work, pause it indefinitely, or even scrap it entirely. 

If the new government is the Liberal Party of Canada, under the leadership of Trudeau or someone else, then such work will likely continue, and the final changes will be solidified and posted on Gazette II. 

However, if the new government is, as expected, the Conservative Party of Canada under the leadership of Pierre Poilievre, then it is possible the work will be shelved, possibly indefinitely, or even scrapped entirely. The Conservatives would likely not lose much political capital in doing so and might even gain some capital among specific sectors of their base. 

That said, it’s also possible that given the general red-tape-reduction and streamlining nature of the proposed changes, a new conservative government could still implement all or some of these proposed changes. However, it wouldn’t necessarily need to be given the same level of priority in terms of implementation as the Liberals would likely have given. 

Excise stamps

The federal government also recently said it’s considering possibly moving from 13 separate cannabis excise stamps to one national one, something the industry has been asking for. The timeline for this consideration was next spring. Similar to the issues relating to the proposed regulatory package, a new government would not necessarily need to keep such a promise, and an election could, at best, slow down the process of investigating the issue. 

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Conservatives and cannabis

The above issues relate to ongoing work the current government has done on the cannabis file. But what could a Conservative federal government mean for the cannabis industry and the associated Act and Regulations, in general?

This is a very broad question that deserves its own in-depth analysis, as there are many layers to consider, but here are a few high-level considerations:

The Conservatives have several known talking points related to the cannabis file that could signal the possible direction a new Conservative-led federal government might take. 

Medical cannabis: The Conservatives have, in the past, tried to make significant changes to Canada’s medical cannabis access programs. Repeatedly forced to manage the medical cannabis file by the courts, in 2013, the Conservatives first tried to get rid of the ability for medical cannabis users entirely, with approval from a health care provider, to grow their own cannabis or to designate someone to do so on their behalf.

Their messaging since that time has not changed much, with a big focus from many conservative MPs over the years to highlight how this personal and designated producer system is, at times, abused for the purpose of diversion into the illicit market. So it’s not much of a stretch to assume they will continue this focus if they again hold the reigns of power in Ottawa.

Home Grow: Not only do Conservative party members have a track record of trying to get rid of medical home grow, but many in the party have long expressed concerns with people having the right to grow their own cannabis. This was one of the many aspects of cannabis legalization that the Conservative Party outright opposed on principle, with one famous Conservative MP suggesting that young kids would be getting high with their parents’ home grow, utilizing toaster ovens. Another Conservative MP compared homegrown cannabis to being able to make fentanyl at home (seriously). 

It was a Conservative Senator, Vern White, who proposed an amendment to Bill C-45, the cannabis legalization bill, that would have removed the allowance to grow up to four plants at home. The amendment was defeated 40-33. Then another Conservative senator, Claude Carignan, proposed an amendment that would have only allowed indoor cultivation. That was also defeated, in a 40-31 vote.

Even after legalization, the Conservative’s Shadow Minister of Health at the time, Marilyn Gladu, told the Globe and Mail in 2019 that the party would seek to ban home grows and further restrict personal and designated medical grow licenses while supporting larger publicly traded licensed producers.

So it’s not a stretch to suggest this could also be within their sights. 

A less diverse industry: The coming into force of the federal Cannabis Act and Cannabis Regulations represented a significant shift from the previous medical-only status quo. Not only did this mean more broad access to a regulated cannabis supply chain for adults in Canada, it also meant new production regulations that were much less one-size-fits-all than the previous Conservative government’s medical rules had established. 

While legalization itself was built around the basic foundation of federally licensed producers first created by Health Canada under Harper’s watch (MMPR), broader cannabis legalization simplified certain aspects of those regulations and the application process and created new licence categories to allow for smaller and less capital-rich businesses to participate. No longer was there just one large “LP” licence that could cost tens of millions and take years to apply for. Some producers today, especially micros and nurseries, can make it through the licensing process in less than a year and, at times, well under a million dollars (some have even done it for under $100,000).

This process itself, though, isn’t easy. It requires a lot of time and resources to manage the number of licences and licence categories, not only during the application process but also once they are licensed. Staff must answer phone calls, respond to emails, and undertake inspections. Licensing hundreds of small micros is not cost-effective, and a new government seeking to cut red tape and bureaucracy could view such an approach as inefficient. 

If you’re working at or invested in a big licensed producer, this could be a win for you. But if you’re a smaller business operating in or looking to operate in the cannabis space, this might mean longer wait times for service. If you think it’s bad now, imagine if there were, for example, 25% fewer employees to respond to your requests. 

Now, it’s not necessarily all doom and gloom. There are arguments to be made for red tape reduction and streamlining of some of the more onerous aspects of the federal regulations. But given the Conservatives’ overall resistance to the cannabis file in general (remember, all but one Conservative voted against legalization itself), it’s unlikely to see this as a priority. 

Excise tax 

Conservatives hate taxes, right? Well, sort of. Yes, the Conservatives, especially Pierre, have spent much time railing about the excess taxes in Canada, especially the carbon tax. “Verb the Noun!” as the slogans go. 

But does this translate to excise tax reform for the cannabis industry? It’s possible, but I wouldn’t hold my breath. Any changes to the federal excise rate for cannabis mean less money for the provinces, who bring home almost all of that money. That’s not something many federal leaders would see much benefit in doing, especially on a file that most voters don’t seem to care much about, if at all. 

So, what will a Conservative government in Canada mean for the cannabis industry? At best, I would prepare for less federal support, not more, and a delay in any ongoing regulatory changes, such as harmonizing excise stamps or the massive regulatory package proposal shared in 2024. 

At worst, the industry should prepare for a shrinking federal regulatory agency that will seek to streamline operations, which would likely mean a redefined focus on a few touchpoints (a handful of big companies, not tons of little ones). This could be good news for the handful of big pubcos on the producer side, but for the little guys, it might be about to get a lot harder. 

That said, none of this is a foregone certainty. While much of the above is negative, there’s also the possibility that with the right advice a Poilievre’s government could approach this differently, unshackling cannabis from the over-regulation of the nanny state. Some past statements in regard to edibles potency limits, for example, show some potential openness to this approach. 

Coming up with a game plan to take these factors into account would be wise and might be the difference between keeping the lights on in 2025 and beyond, or not. But we’re probably going to find out sooner than later.