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Will Internal Trade Barriers Hamper Cannabis Legalisation in Canada?

Canada has experienced historic difficulties with trade between its provinces, so policymakers are working to prevent this from occurring with the upcoming legal cannabis trade.

The Canadian government is expected to introduce legislation to legally regulate recreational cannabis on April 13, with sales of the drug to begin by July 2018.

However, as each of Canada’s 13 provinces and territories retain significant control over the sale and distribution of goods and services, the accessibility of cannabis could vary significantly across the country.

The potential problems are perhaps best illustrated by the plight of Canada’s internal alcohol trade. Many provincial liquor control boards operate virtual monopolies, meaning that alcohol can only move in or out of provinces with permission from the board.

For example, it is easier for a customer in the province of Ontario to find a French bottle of wine for sale than a bottle from British Colombia. In New Brunswick, a person can be prosecuted for bringing any more than one bottle of wine into the province from elsewhere in Canada. These rules are often strict, and vary considerably by province.

According to Professor Daniel Bear, Professor of Criminal Justice at Humber College, a similar situation may arise with cannabis, whereby there would be 13 different forms of regulation across the country.

Some provinces could restrict the cross-province import and availability of cannabis to such an extent as to effectively maintain de facto prohibition, making it difficult for Canadians in certain areas to access cannabis legally, thus undermining efforts to eliminate the illegal market.

These potential problems may be contained by the new Canada Free Trade Agreement, which will come into effect on July 1. This agreement resolves to "promote an open, efficient and stable domestic market" and "reduce and eliminate … barriers to the free movement of persons, goods, services, and investments within Canada". It aims to facilitate an open market inside Canada by reconciling differing provincial regulations that currently make trade and labour mobility difficult.

Navdeep Bains, the Federal Economic Development Minister, has said the CFTA will improve economic growth while also providing a clear process for provincial cannabis regulation. The agreement will "[make] sure that there’s more choice and better price points", Bains said in an interview with the Financial Post, "it's really about … having an open market".

Whilst concrete provisions on internal trade cannot be considered until the national government introduces legislation, the CFTA will make it easier for provinces and territories to collaborate in establishing efficient regulation of the domestic cannabis trade, and avoid the problems that have arisen with alcohol.

"We've seen 100 to 150 years of acrimony and debate about the availability of alcohol across the country," said Brad Duguid, Ontario’s Minister of Economic Development and Growth, and chair of the CFTA negotiations. "We do have an opportunity, I believe, to get [cannabis regulation] right from the start."

Successful streamlining of Canada’s future cannabis domestic trade is far from secured by the CFTA, however, the introduction of this agreement suggests that the government is aware of the potential challenges facing cannabis regulation, and is taking proactive steps to address them.

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