On October 4, 2017, the Alberta government released its draft “Alberta Cannabis Framework,” which outlines the province’s proposed approach with respect to the pending federal legalization of recreational cannabis in July 2018. The proposed Alberta Cannabis Framework is based on the results of extensive public and stakeholder engagement, and focuses on following four policy priorities:

  • Keeping cannabis out of the hands of children;
  • Protecting public health;
  • Promoting safety on roads, in workplaces and public spaces; and
  • Limiting the illegal market for cannabis.

This announcement makes Alberta the third province in Canada to unveil its plan for the provincial regulation of recreational cannabis. As discussed in our previous September 8, 2017 insight, Ontario announced its own proposed plan, and has stated that the sale of recreational cannabis will mirror the province’s approach to liquor sales, with the Liquor Control Board of Ontario overseeing all cannabis retail stores and online sales. New Brunswick is also proposing a similar approach. In Alberta, liquor stores have been privately owned and operated since the 1990s, with the Alberta Gaming and Liquor Commission regulating the province’s alcohol industry. Although there has been widespread speculation over whether Alberta will allow for private cannabis retail shops, like its existing liquor retail system, the Alberta government is currently seeking further input before it makes a decision on who will own and operate cannabis retail outlets.

The key elements of the Alberta Cannabis Framework are as follows:

  • Minimum age: The proposed minimum age to purchase, possess and consume recreational cannabis in Alberta will be 18 years of age, which is consistent with Alberta’s legal age for the purchase and consumption of alcohol and tobacco, and the minimum age set under the proposed Cannabis Act (Canada). Alberta will take a zero tolerance approach to possession of cannabis by a minor.
  • Retail and the purchase of cannabis: Unlike Ontario, Alberta has not made a decision on who will own and operate cannabis retail stores. The government is currently considering between either government-owned-and-operated stores, which would allow for greater government oversight and control, or licensed and regulated private retailers, which is consistent with the sale of alcohol in Alberta. Regardless of whether such stores are privately or government-owned, specialized retail outlets will only be authorized to sell up to 30 grams per purchase, and such outlets will not be able to sell alcohol, tobacco or pharmaceuticals. The retail stores will need to be located a certain distance from schools, community centres, liquors stores and other cannabis retail locations.
  • Online sales: Given the uncertainty around cannabis retail in Alberta, no decision has been made regarding the online sale of cannabis. However, the Alberta government has indicated that online sales may not be available initially and will likely be considered as part of the government’s next steps.
  • Alberta Liquor and Gaming Commission: The Alberta Liquor and Gaming Commission will serve as the province’s central wholesaler in an attempt to ensure uniform distribution costs and a level playing field for both small and large licensed producers. The distribution system for recreational cannabis will be regulated by the government and will be similar to the system the province currently has in place for alcohol.
  • Pricing: Much like Ontario, decisions in Alberta with respect to pricing and taxation have not yet been confirmed. Alberta has acknowledged that the price of cannabis needs to be low enough to compete with the existing illicit market, and has stated that it will coordinate its efforts with the federal government with respect to taxation.
  • Consumption of cannabis: The consumption of recreational cannabis will be permitted in homes and some public spaces where the consumption of tobacco is also allowed. In an effort to protect children and limit secondhand exposure, consumption will be restricted in areas frequented by children, as well as hospitals, school properties, vehicles and any other place where the use of tobacco is restricted. Consumption will also be prohibited in cannabis retail outlets. Albertans have expressed support for cannabis lounges, and although the government does not intend to have any venue in place for the consumption of cannabis by July 2018, it intends to revisit this topic once Alberta’s cannabis system is in place and after the federal government has revisited the consumption of edibles in Canada.
  • Possession limits and personal growth of cannabis: Adults 18 years of age and over may possess up to 30 grams of cannabis in a public space, and such Albertans will be permitted to grow up to four plants per household for personal use (up to 100 cm in height), which is consistent with the federal government’s proposed approach.
  • Impairment: Albertans have expressed concerns about this risks associated with driving under the influence of cannabis and impairment in the workplace. The Alberta government has stated it will work with the transportation industry and law enforcement over the next few months to address the issue of impaired driving, and to increase public awareness of the risks associated with impaired driving through educational initiatives. Alberta also intends to review occupational health and safety regulations, and work with employers, labour groups and workers to ensure the current rules in place for impairment in the workplace are suitable.

Analysis

Despite the starting point that the Alberta Cannabis Framework provides, much uncertainty remains for the regulation of recreational cannabis in Alberta. The Alberta government is encouraging Albertans to provide their feedback and, in particular, is seeking input regarding the debate over private or government-owned-and-operated cannabis retail stores.

Nevertheless, the Alberta Cannabis Framework continues the recent trend of provincial governments favouring a wholesale distribution model. As the production and sale of recreational cannabis is already expected to be implemented as a wholesale model in several of Canada’s most populous provinces, operation scale, production volume, and reliability of supply and quality will become increasingly important to Canada’s licensed producers. We also expect that smaller licensed producers will become intensely focused on branding and licensing opportunities in order to try and distinguish themselves from the larger producers who have the size and scale to insulate from the margin squeeze typically associated with wholesale markets.

As July 2018 draws closer, each of the provinces and territories will need to rapidly formalize their respective frameworks for the regulation of recreational cannabis. Dentons’ leading Cannabis group will continue to work closely with policymakers, licensed producers and other key stakeholders, and provide frequent client alerts and insights on future developments.