ARCHIVED — Regulations Amending the Marihuana Medical Access Regulations

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Vol. 144, No. 7 — March 31, 2010

Registration

SOR/2010-63 March 11, 2010

CONTROLLED DRUGS AND SUBSTANCES ACT

P.C. 2010-289 March 11, 2010

Her Excellency the Governor General in Council, on the recommendation of the Minister of Health, pursuant to subsection 55(1) of the Controlled Drugs and Substances Act (see footnote a), hereby makes the annexed Regulations Amending the Marihuana Medical Access Regulations.

REGULATIONS AMENDING THE MARIHUANA MEDICAL ACCESS REGULATIONS

AMENDMENTS

1. Paragraphs 32(d) and (e) of the Marihuana Medical Access Regulations (see footnote 1) are replaced by the following:

(d) the proposed production site would be a site for the production of marihuana under more than four licences to produce; or

(e) the applicant would be the holder of more than two licences to produce.

2. Section 54.1 of the Regulations is repealed.

3. Subsection 63(2) of the Regulations is amended by adding the following after paragraph (c):

(c.1) the holder of a licence to produce contravenes section 52;

4. The Regulations are amended by adding the following after section 63:

63.1 Subject to section 64, if a production site is authorized under more than four licences to produce, the Minister shall revoke the excess licences.

5. The portion of section 64 of the Regulations before paragraph (a) is replaced by the following:

64. The Minister shall not revoke an authorization to possess or a licence to produce under any of sections 62 to 63.1 unless

COMING INTO FORCE

6. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue: On February 2, 2009, the British Columbia Supreme Court (BCSC) in the case of R. v. Beren and Swallow declared paragraph 41(b.1) and section 54.1 to be invalid on the grounds that it infringes section 7 of the Canadian Charter of Rights and Freedoms (the Charter). Section 54.1 of the Marihuana Medical Access Regulations (MMAR) stipulated that the holder of a licence to produce shall not produce marihuana in common with more than two other holders of licences to produce. The effect of the declaration of invalidity was stayed for one year, however, in order to provide the Government with time to modify the MMAR as required.

While the Government had already addressed the issue with paragraph 41(b.1) in amendments to the MMAR made in May 2009, it sought leave to appeal the BCSC decision to the Supreme Court of Canada (SCC). The leave to appeal was dismissed, however, on January 14, 2010, and thus the stay of the declaration invalidating section 54.1 of the MMAR was set to expire on February 2, 2010.

The Government put forward a motion for a further stay of the declaration of invalidity until May 2, 2010 and the BCSC agreed to extend the stay to March 3, 2010. However, they imposed conditions to consider this request that could not be met in light of the Cabinet confidentiality. Therefore, section 54.1 of the MMAR became invalid on March 3, 2010.

The declaration that section 54.1 of the MMAR is invalid has created a significant regulatory void in that the Minister of Health no longer has the authority to restrict the number of production licences that can be issued with reference to the same site. While the government is still considering longer term options for the Marihuana Medical Access Program (the Program) and the MMAR, these amendments provide a swift response to address the regulatory void created by the declaration of invalidity.

Description: This regulatory initiative amends the MMAR by repealing the current restriction on the number of production licence-holders who can produce marihuana in common, and by introducing a new limit of four (4) on the number of production licences that can be issued with reference to the same production site. The initiative will also introduce two new revocation authorities pertaining to the production of marihuana licensed under the MMAR. The first provides the Minister with the authority to revoke the excess production licence issued with reference to a site already authorized for four (4) production licences. The second provides the Minister with the authority to revoke a production licence in the case where a licence-holder is not compliant with section 52 of the MMAR which stipulates that production licence-holders can only produce marihuana at the production site authorized in their licence and only in accordance with the authorized production area. Finally, the initiative also amends paragraph 32(e) of the MMAR in order to increase the maximum number of production licences a holder of a personal-use production licence can hold to two (2). As described in more detail in the Objectives section, this is a consequential amendment aimed at addressing issues arising from the implementation of amendments to the MMAR published under SOR/2009-142.

Cost-benefit statement: As described below, large-scale marihuana production creates potential risks to public health, safety and security of not only those persons directly involved, but also those living at the same address, adjacent residential units, and/or in the surrounding community. The attractive street value of marihuana (approximately $10–15/gram) and the wide use of marihuana as a recreational drug could make large-scale marihuana production operations more vulnerable to theft and diversion which may result in potential risk to public health, safety and security. Government intervention to introduce a new limit on the number of production licences that can be issued with reference to a single site will provide benefits by constraining the number of marihuana plants that can be grown at one site, thereby reducing the aforementioned risks. The amendments also respect the original intent of the Program, (i.e. enabling seriously ill Canadians to have access to marihuana for medical purposes).

Business and consumer impacts: The amendments still provide production licence-holders with a small potential economy of scale as four (4) production licenses for medical marihuana can exist for the same site.

Implementation of the amendments will result in a minimal increase in the administrative burden on Health Canada, as systems and processes to administer the MMAR are already in place, and no changes to the system currently used to track production licence-holders, authorized persons and the amount of marihuana being produced under licence at the same site are required.

Domestic and international coordination and cooperation: This initiative underscores the Government’s commitment to controlling the production and distribution of marihuana, as required by the Controlled Drugs and Substances Act (CDSA) and the United Nations Single Convention on Narcotic Drugs, 1961, to which Canada is a signatory. It is expected that the International Narcotics Control Board and Canada’s law enforcement will be supportive of the proposed amendments as they serve to limit the amount of marihuana for medical purposes that can be produced at a single site, reducing the potential for commercial size grow operations, and the potential for diversion to the illicit market.

Issue

Marihuana is included in Schedule II to the CDSA, and as such is regulated as a controlled substance in Canada. The CDSA prohibits the possession, possession for the purposes of trafficking, production, importation, exportation, trafficking, and possession for the purposes of exporting marihuana except as authorized by regulation.

The Marihuana for Medical Access Program (the Program) was first established in 1999, and the authorization to possess marihuana and/or produce a limited number of plants for medical purposes was achieved via the issuance of exemptions under section 56 of the CDSA. In July 2000, however, the Ontario Court of Appeal ruled (R. v.Parker) that the prohibition on the possession of marihuana in the CDSA was unconstitutional because it violated the right to liberty and security of the person as it did not provide a clear legal standard to allow for an exemption for medical purposes.

In response to this decision, the Government established the MMAR, which set out a scheme by which any seriously ill Canadian can, with the support of a medical practitioner, obtain an authorization to possess and/or a licence to produce marihuana for their own personal medical use.

Under the current MMAR, authorized persons have three options in terms of procuring a supply of dried marihuana:

  • they can produce their own supply under a Personal Use Production Licence (PUPL);
  • they can designate an individual to produce it on their behalf under a Designated Person Production Licence (DPPL); or
  • they can purchase dried marihuana from the Government of Canada, who contracts a private company (currently Prairie Plant Systems, Inc.) to produce and distribute marihuana for the Program.

While the Program was originally intended to authorize access for a small number of persons, it has continued to grow in size since its inception. At present, there are approximately 4 800 persons authorized to possess marihuana under the Program, and this number is expected to grow to at least 6 000 by 2011.

Of those approximately 4 800 authorized persons:

  • approximately 60% hold a PUPL;
  • approximately 10% obtain their supply from a designated person;
  • approximately 20% purchase their supply from the Government; and
  • approximately 10% obtain their supply from an unknown source.

The recent invalidation of subsection 54.1 of the MMAR establishes a regulatory void in that the Government of Canada no longer has the ability to restrict the number of production licences (either PUPL or DPPL) that could be issued in reference to the same site. The decision in Sfetkopoulos, Dora et al v. AG of Canada invalidated the one to one designated person to authorized person ratio. The MMAR were amended to address the Sfetkopoulos court decision in May 2009 (SOR/2009-142) in order to introduce a new limit on the number of production licences a designated person can hold. Currently, a designated person can only cultivate marihuana for a maximum of two authorized persons.

The invalidation of section 54.1 impedes the Government of Canada’s ability to limit the number of licences and, by the same fact, the amount of marihuana plants legally produced at a single site. The absence of a limit could, in turn, give rise to situations in which large numbers of marihuana plants could be legally produced at a single site, without the benefit of the tight controls applied to the production and handling of marihuana by the private company under contract for the government or for other controlled substances regulated under the CDSA. The Government’s inability to limit the number of licences and thereby the amount of marihuana plants could compromise the intent of the MMAR, which is to authorize the possession and/or production of marihuana for medical purposes on an individual basis while minimizing the potential risks to public health, safety and security.

The inability of the Government to restrict the number of production licence-holders who can produce at the same site could mean that it would be possible for multiple production licence holders who are authorized to produce a high number of plants to also cultivate at the same site. Such a situation may blur the line for law enforcement between legal production under the auspices of the MMAR and illicit marihuana “grow operations.”

The Minister of Health has therefore elected to make amendments to the MMAR which are intended to reduce the possibility that the declaration of invalidity of section 54.1 might result in the proliferation of large scale marihuana production operations within the auspices of its Marihuana Medical Access Program.

Objectives

The primary objective of these amendments is to address the regulatory void resulting from the striking down of section 54.1, thus maintaining a degree of control over the production of marihuana, a controlled substance whose production, except as authorized under the Regulations, is prohibited. The introduction of a new limit on the number of production licences (PUPLs or DPPLs) that can be issued with reference to the same site as well as the introduction of two new revocation authorities pertaining to the production of marihuana licensed under the MMAR is intended to mitigate the potential risks to public health and safety (where this includes the risk of diversion and/or theft) associated with the large-scale under-regulated production of marihuana.

The second objective is to introduce an amendment required to address issues arising out of the amendments published under SOR/2009-142. In the aforementioned amendment, the limit on the maximum number of production licences a designated person can hold was increased to two (2). The Government omitted, however, to consider the impact of this new limit on designated persons who are not currently PUPL-holders but who may wish at some point to hold a PUPL. Accordingly, the Government is now seeking to increase the maximum number of production licences a holder of a PUPL can hold to two (2), so that an individual who is already a designated person can also apply for and be issued with a PUPL.

By instituting these amendments, the Government is still allowing Canadians with debilitating medical conditions to access a legal source of dried marihuana for their own personal use, while minimizing the potential risks to public health, safety and security associated with large-scale production. The amendments may also provide production licence-holders with the opportunity to realize some economies of scale via production in common with other licence-holders.

Regulatory and non-regulatory options considered

Three options were considered in addressing the invalidation of section 54.1 of the MMAR.

The first option considered was to take no action in response to the invalidation of subsection 54.1 of the MMAR. This would, however, do nothing to mitigate the potential but not insignificant health, safety and security risks associated with large-scale production of marihuana in an under-regulated environment.

The second option considered was to amend the MMAR to introduce security requirements for high-volume production sites (e.g. persons cultivating over a certain number of plants and/or at sites where more than a certain number of persons are cultivating in common). This option would likely restore some level of safety and security over the production of marihuana within the confines of the Program, and it may address some concerns raised by fire chiefs. However, as with the first option, it does not address the potential proliferation of legal commercial-size “grow operations.” Furthermore, it does not allow the government to respond swiftly to the regulatory void resulting from this recent court decision.

The third option considered was to repeal section 54.1 of the MMAR and establish a new limit on the number of production licences that can be issued with reference to the same site, and, in order to ensure appropriate enforcement of this limit, introduce new revocation authorities that would allow the Minister to revoke the excess production licences issued with reference to a site authorized under more than four (4) other production licences. The advantages of this option are that it restores a certain level of control over the production of marihuana under the auspices of the MMAR, while not imposing any new restrictions on licensed producers. This option also mitigates the potential health safety and a security risk associated with the large-scale production of marihuana while respecting the original intent of the program, i.e. enabling seriously ill Canadians to have access to marihuana for medical purposes.

Benefits and costs

The cost-benefit analysis assumes that failing to restore a limit on the number of licences will result in larger amounts of marihuana being produced under the auspices of the MMAR at one site, which would lead to increased risk to public health, safety and security. Quantification and/or monetization of these impacts are, however, limited by the availability of quantitative data.

Benefits

In general, social benefits are not limited to reductions in expenses or increased earnings but also include non-monetary gains to society such as avoiding the pain and suffering of illness. In this regard, they can be assessed and measured in terms of avoided social losses.

The three main groups within the Canadian public who will benefit from the amendments are production licence-holders (either PUPL or DPPL), persons who are authorized to possess marihuana for medical purposes, and other Canadians. More specifically, production licence-holders may be able to achieve some economy of scale by growing in common with other production licence-holders up to the point where four (4) licences to produce may be issued with reference to the same site. Persons who are authorized to possess marihuana but who do not hold a licence to produce may also benefit but only if they obtain their supply from someone who produces in common with other production licence-holders.

Canadians at large also benefit from the re-establishment of tighter controls on the size of production operation of marihuana for medical purposes because of reduced exposure to the potential health, safety and security risks, including, but not limited to, the risk of theft, diversion and/or fire hazards that could be associated with the production of a significant number of marihuana plants in one site.

Costs

The ability for four production-licence to be issued with reference to a single site may result in a small “economy of scale” for the holders of the licences and this may, if anything, decrease the overall production price for marihuana and therefore the costs borne by PUPL- and DPPL-holders. Thus, there is not expected to be any increase in the costs borne by authorized persons.

The incremental costs to Government associated with the amendments are those related to minor administrative/program adjustments in order to monitor the number of production licences issued with reference to the same site. The costs associated with these changes will be absorbed using existing resources.

The overall costs of these amendments on society are expected to be negligible. There is also, given the nature of the MMAR, no anticipated impact on competition or domestic/international trade resulting from these amendments.

Rationale

Establishing a means by which the Government can control the size of the legal production of marihuana in Canada is consistent with its policy direction on controlling the production and distribution of controlled substances. It also underlines the message that the production of marihuana under the auspices of the MMAR must be limited at providing reasonable access to Canadians suffering from serious illnesses who are authorized to possess marihuana under the same regulations.

In addition, without a reasonable limit on legal cultivation of marihuana under the auspices of the MMAR, the current street price for marihuana (e.g. $10–15 per gram) and the wide use of marihuana as a recreational drug could make large-scale marihuana production operations more vulnerable to theft and diversion, which may result in potential risk to public health, safety and security.

Consultation

Federal partners support the introduction of enhanced controls on the production of marihuana for medical purposes, especially given the increasing numbers of production licences being granted under the MMAR.

The RCMP stressed that the possibility of production licence-holders being allowed to cultivate high numbers of plants in common with an unlimited number of other licence-holders would increase the likelihood of more licence violations (e.g. where the amount of marihuana being produced is far more than what has been authorized via licence).

In additional consultations further to the SCC’s dismissal of the Government’s request for leave to appeal and subsequent motion for a stay, the RCMP stressed its concern for potential situations in which a single site could house multiple authorized persons and/or designated persons all licensed to produce increasing numbers of plants. They also reiterated that, any time production licences under the MMAR allows for the cultivation of more than 50 plants, their ability to distinguish between licensed production and illicit “grow ops” is seriously hampered. In correspondence to the Department, the RCMP indicated its support for any changes to the MMAR that Health Canada could make expeditiously, thereby avoiding a situation where there would be an influx of current and/or prospective licences issued in reference to a same site further to the invalidation of section 54.1.

Similar views were expressed by the Canadian Association of Chiefs of Police, the Canadian Association of Fire Chiefs and the Office of the Ontario Fire Marshal, with the latter two being particularly concerned with the potential risk of fire in situations where large amounts of marihuana for medical purposes are being cultivated in buildings which are not wired safely and/or are not ventilated appropriately.

Implementation, enforcement and service standards

Promulgation of the amendments will result in Health Canada having to review each incoming application for a production licence (DPPL or PUPL) carefully in order to ascertain that the proposed production site is not already referenced in four (4) other production licences. The same process will apply for applications to renew or amend a production licence. As mentioned previously, Health Canada does not need to modify the system it uses to track authorized persons, DPPL-holders and PUPL-holders.

The current service standard for the processing of an application from a prospective production licence-holder or an existing production licence-holder wishing to make changes to their licence is eight (8) to ten (10) weeks. Despite the increased administrative burden referenced above, it is not expected that this service standard will change with the implementation of the amendments.

Implementation of the amendments is not likely to have an impact on the present way in which compliance and enforcement with the MMAR is handled. Should a scenario arise where excess production licence are authorized at a site, and/or a licence-holder is found to be producing marihuana for medical purposes at a site or production area not authorized on their licence, Health Canada now has the authority to revoke the non-compliant production licences.

Contact

Daniel Galarneau
Policy and Regulatory Affairs Division
Office of Controlled Substances
Tobacco and Drugs Directorate
Health Environments and Consumer Safety Branch
Telephone: 613-946-6521
Email: OCS_policy_and_regulatory_affairs@hc-sc.gc.ca

Footnote a
S.C. 1996, c. 19

Footnote 1
SOR/2001-227