Canada’s Conservative Party under its new leader Pierre Poilievre needs to decide what it thinks about cannabis. It is arguably the most consequential domestic policy reform of the Trudeau government, and if there is a change of government in Ottawa, the incoming administration will inherit all of the costs, complaints, and challenges of the legalization model that the Liberal government left behind.  

The fact of legalization—creating a regulated, adult-use model for cannabis—is not contested. The industry has a raft of understandable complaints about how the reform has worked out in practice, and the pledges of what legalization would deliver have still not been met in full. But Canadian public opinion is settled—large majorities favoured legalization before it took effect and even larger majorities support it now. This includes older voters and those who voted Conservative. There would be no traction in pledging to reverse the whole agenda or to make it harder for Canadians to legally consume.  

This leaves the Conservatives with an opportunity to improve on the framework of the Trudeau government without feeling like their own voters want them to roll legalization back.

The Tory Party is already making solid inroads with the younger electorate. Another dynamic that is no longer a factor is the gratitude of voters who supported legalization in 2015 and were expected to reward the Liberal Party in 2019. Even if it remains one of the only positives that voters spontaneously mention in focus groups about what Trudeau has delivered, cannabis legalization was never a dividing line with the Opposition and is no longer a cause that Liberals can rely on to mobilize their electorate.

The Canadian model

For a policy that will have a social and economic impact for decades to come, the Canadian model is still evolving, but four years after legal sales started, the overall policy impact is already a good one: consumption is up slightly (not drastically), but illicit market share is way down; drug-impaired driving has not risen (as far as we can tell from current statistics), and the law change has directly led to the creation of hundreds of thousands of new jobs and billions in tax revenue. We have also seen progress towards important public health goals like increasing product traceability and quality, and the regulation of previously grey market behaviour like dispensaries. 

None of this would be all that apparent if you spoke to people in the sector.^{1The delegates who gathered to debate the state of the Canadian industry at the LIFT conference in Vancouver last month were downbeat. Delegates at the last conference—in January 2020 just before the world changed—were confident that the industry was expanding and new brands were thriving. Investors back then were exuberant about the growth potential in both Canada and the USA and the soaring stock prices of companies like Tilray were generating headlines around the world.}  

But after the bubble burst and the industry endured two years of disastrous performance by cannabis companies in the public markets, the failure of major licensed producers, the crippling impact of excise taxes, and the prospect of U.S. federal legalization looking as far off as it ever was, the 2023 conference was much more muted and introspective, and delegates seem much more realistic. Campaigns to promote craft producers and to rally together as an industry to push for excise tax reform to make it easier for smaller producers to thrive were front and centre. Many licensed producers and retail brands have gone bust since 2020, and some big licensed multi-national suppliers have retrenched and left investors with massive losses, but the industry as a whole is now talking in real terms about jobs created and a story about rural development and diversification. 

The complaints from the sector seem quite justified. The taxation model is hopeless and needs to be scrapped and replaced. It is not supporting public health goals (with excise taxes levied by weight, so not discouraging higher potency products), and it is set too high to enable independent producers to become profitable, let alone to innovate. The marketing restrictions were deliberately tight, but they have prevented the licensed sector from competing with enough of the illicit market. And the taxation of medicinal cannabis has alienated those who quite reasonably wanted a clearer demarcation between therapeutic products and what consumers were being sold by recreational producers.  

Federal regulations aside, even the provincial dimension has generated a lot of disquiet, with anti-competitive government-owned wholesalers in many provinces taking big margins and preventing cultivators and retail stores from getting quality product to consumers at a reasonable price—a form of gatekeeping that free marketeers should oppose. Small steps to improve consumer choice with the relaxation of rules on retail storefronts and home-delivery options in Alberta, and “farmgate” sales to enable craft producers to sell direct in British Columbia, do show some progress is being made, but there is still a lot of regulations that have proven unworkable and need fixing.  

Conservative opportunity

The Liberal Government is conducting a long-delayed “legislative review” of the original Bill C-45, but there is still much outside of that review’s scope. So under a government led by Poilievre in 2025, how will Conservatives view the industry that Trudeau created, and what policy changes might align with conservative principles? Is there a policy agenda on cannabis that will speak to the supporters the Tories already play to, and the voters under 40s that they need to attract to form a working majority at the next election?

Not many people want to see an Americanized, ultra-commercialized model, with few restrictions on advertising. Nor do consumers appear to want a commoditized and oligopolistic industry that displaces craft producers or limits access to just government-run stores. Canadians in this industry want to see more diversity, but as Dan Sutton, one speaker at the LIFT conference remarked: “Diversity in the industry… means empowering small-town cannabis.”

Conservatives should be on the side of small producers and in favour of regulations that enable what younger, responsible consumers want, like places to consume together socially, support for craft growers close to home, more sustainable production, and better access and product options.^{2A more free-market retail model like the one adopted by the Government of Alberta—a province with as many stores per capita now as Colorado—might not suit everyone, but there is no doubt that this approach has generated more jobs and taken a bigger bite out of the illicit market.}

Federal politicians will want to leave as much of the politics of cannabis to the provinces, but there are votes in cannabis insofar as the consumers are now part of the mainstream electorate. There are key ridings where enough voters use cannabis on a regular basis that they would be important to any future election and Tory politicians should be careful not to alienate them in any way. There are also certain communities that are still hostile to cannabis, and where stigma around cannabis use is more pronounced—including in new immigrant communities. So keeping decision-making in the hands of municipalities over issues like where cannabis stores can open makes sense—especially if online channels and home delivery are eventually licensed everywhere. 

The quid pro quo on legalization was clear: regulation and taxation would protect consumers, and at the same time deliver new revenues which would partly be spent on more and better education for young Canadians, and increased drug treatment. We do not yet know if rates of cannabis use disorder are rising, but it is not clear that much of the tax revenue has flowed back into expanded treatment or better education initiatives.^{3If you don’t count the “Drug-free Canada” radio ads.}  

Then there is the biggest missing piece: smarter enforcement. Seizures still happen, but it is not clear if law enforcement has received any dividend with additional resources for border agents and police to improve interdiction of illicit trafficking or organized crime. Canadians would expect that and the legal market deserves it. Parents should feel confident that their teenage children are not being targeted by brazen street dealers. It is no surprise that the number of possession arrests under the new law is very low (and has collapsed in the last few years compared to pre-2018 rates), but there also needs to be visible enforcement of street dealing and breaches of the licensing laws.^{4There is little evidence that prosecutors are using the additional penalties that were made available for people caught trading in illegal product or selling legal cannabis to underage consumers.}

A Conservative policy agenda would look to strengthen enforcement around the illicit market, which would help shore up the legal industry. They could also commit to investing more of the revenue from legal producers into wider drug prevention and treatment programs focused on recovery, and improved roads policing so risks of impaired driving can be kept in check. They could also revise the federal taxation regime to lower the overall burden on small producers and gear it towards potency. This could raise the same if not more revenue, but it would also discourage a race to the bottom where producers gravitate towards the most potent, highest THC products.  

A future Conservative government should also consider exempting medicinal products from taxation and encourage more insurance plan coverage for these therapeutic products. They could also explore new policies that make it easier to facilitate cannabis production and tourism in rural ridings where new jobs and revenues are always welcome. And finally, they should pledge to keep the minimum age where it is, but keep the rules under review, pending emerging data on adolescent mental health impacts, and the experience of Quebec which has adopted a higher age limit of 21 for legal consumption.

There is little doubt that had it been up to them, Canada’s Conservatives would not have legalized cannabis. But the traditional role for conservatives is not to resist all change but to find the best ways to accommodate social change and manage it in the way that best protects communities and the liberty of individuals. Rather than inheriting the legal industry reluctantly, a future Conservative government in Ottawa should be proactive enough to fix the industry’s problems at home, promote it abroad, and make the market work better for Canadian consumers.

This means Tories embracing their free-market instincts and reviving the original goals of legalization where these have been lost: reinvesting the proceeds into policing and treatment services, taking enforcement of the law more seriously while taking a market-based approach to what adult consumers want, and de-regulating wherever possible. After all, trusting individuals and personal responsibility is a theme for Conservative MPs, and it should guide them when they consider what controls to relax and how to encourage entrepreneurs to invest in this industry.

Stereotypes are widespread when it comes to cannabis. People assume politicians on the Right may not be big cannabis consumers themselves, but even if that is true, many of their current and future voters are. Besides, the personal choices of Conservative MPs shouldn’t blind them to what Bill C45 has allowed Canada to build, well ahead of many other countries: a large, safe, consumer market that has created hundreds of thousands of new jobs, driven up employment in rural areas, and smashed the illicit market.

Conservative politicians should have no qualms promoting any of that.

Commissioner Paul Rouleau’s report on the federal government’s invocation of a public order emergency is an extraordinary document. It was produced on an exceptionally tight timeline following six weeks of sittings and clocks in at over 2,000 pages, including exhibits.

The nub of the report sees the judge concluding that Cabinet was justified in invoking the Emergencies Act on February 14, 2022: “There was credible and compelling evidence supporting both a subjective and objective reasonable belief in the existence of a public order emergency. The decision to invoke the Act was appropriate.” Its tone is cautious and measured. It is an exercise in pointed diplomacy and balancing, but perhaps wanting for clarity.

First: for Rouleau to have arrived at his conclusion, given the posture of federal Cabinet witnesses at the hearings, implies an extraordinary amount of deference to assiduously shielded government decision-making. The entire basis of Cabinet’s concern that the protests had evolved into an unmanageable situation remained opaque to the Commission. Attorney-General Lametti claimed that Cabinet, in invoking the Act, was acting on the basis of a legal opinion that held that “threats […] to the security of Canada”, were met within the meaning of the Act. It was necessary to refer to this legal opinion because the overwhelming evidence from actors who were receiving on-the-ground intel from Ottawa was the contrary.

During the hearings, we heard that the director of CSIS had concluded the Act’s threshold of “threats to the security of Canada” was not met. We also heard leadership of the Ottawa Police Service, the Ontario Provincial Police, and the RCMP, state that existing criminal law tools were sufficient. No other threat assessment or assessment of the inadequacy of existing legal authorities was performed independently of the country’s law enforcement. There was virtually no substantive basis upon which Cabinet could have concluded that the circumstances in Ottawa met the threshold for invoking the Act.

This opaqueness led to one of the more memorable exchanges of the Commission, when Commission counsel Gordon Cameron demurred at the conclusion of Lametti’s evidence: “Commissioner Rouleau, commission counsel is in a conundrum. We have attempted to find a way to lift the veil that has created such a black box around what has turned out to be a central issue before the hearing.”

Indeed, the issue of assessing the reasonableness of Cabinet’s decision was the whole crux of the matter. Rouleau then addressed Attorney General Lametti directly: “I’m having a little trouble… how we assess reasonableness when we don’t know what [Cabinet decision-makers] were acting on. Do we just presume good faith?” 

Lametti was happy to affirm this, and judging by Rouleau’s conclusion, “presuming good faith” indeed turned out to be sufficient for his conclusion.

A requirement for invoking the Act is that it is a measure of last resort, specifying that “The emergency could not be effectively dealt with by any other federal law.” (Emphasis added.)

The report emphasizes the word “effectively”, calling it an “important modifier”, and seems to confuse this requirement that all other avenues of action be exhausted with a sort of argument of convenience:

There may be situations where other federal laws could technically apply to a situation, but still fall short. Practical considerations must be taken into account, such as whether the resources exist to enforce existing authorities, whether they would be effective in resolving the situation in a timely way, and whether they would address the situation safely.

Evidence of law enforcement was that, at best, the boost provided by the Emergencies Act was helpful^{1I’ve yet to meet a cop who didn’t welcome enhanced enforcement powers.} but did not substantively alter a plan to clear the protests that already was in place by February 13, 2022, in advance of the invocation of the Act to clear the protest using existing policing powers.

Laws under the Criminal Code gave law enforcement the tools it needed—and ultimately used—to clear disruptive protests, compel tow truck operators to remove illegally parked trucks, and call in reinforcement police forces from across the country.^{2The Ontario Civilian Police Commission could have directed the OPS Board to cede control of policing in Ottawa to the OPP. Under the RCMP Act, the RCMP commissioner could have deployed the RCMP to Ottawa to enforce the federal Criminal Code. Furthermore, Ontario itself could have invoked its own provincial Emergency Management Act to order the evacuation of Wellington Street and Rideau/Sussex.} The report both acknowledges and dismisses this: “Although there continued to be laws such as the Criminal Code that, if effectively used, could bring the protests under control, it was apparent that law enforcement had serious reservations.”

Really? Not a single law enforcement witness testified that they requested the invocation of the Act, nor that they needed more tools than those already at their disposal.

Rouleau is harshly critical of the Ottawa Police Service in general and of former Chief Peter Sloly in particular, citing breakdowns in communication, incident command, and even a system to ensure its own intelligence reports were disseminated.^{3On Sloly, he is casually devastating: “It seemed to some people, with some justification, that Chief Sloly was too willing to attribute blame to others, while avoiding any blame himself.” Ouch.} All of this appears to be justified criticism. But using his findings about chaos amongst law enforcement, and a type of insufficiency of state capacity to effectively respond to crisis, to bootstrap the invocation of emergency powers sets a lamentable, even dangerous, precedent.

Finally, the report wholly accepts the federal government’s coup de grâce legal argument—that although the Emergencies Act definition of “threats to the security of Canada” incorporates the meaning within the CSIS Act, “two different decision-makers, each interpreting the same words in the context of different statutes, can reasonably come to different conclusions as to whether the threshold is met.”^{4Jody Thomas, the prime minister’s national security and intelligence advisor, first presented this theory in the Ottawa hearings, stating that the CSIS Act’s definition of a threat to national security was “narrow” and did not apply to the Emergencies Act and that the convoy posed a threat to national security, but steadfastly refused to define what a threat to national security is.} 

This argument is dangerously misguided. It clearly strains the well-documented intention of Minister Perrin Beatty and the drafters of the Act in specifying that the definition of “threats to the security of Canada” is the same as that of the CSIS Act, right in the text of the statute. The standard was intended to be, in Beatty’s words, “very stringent, indeed.” But this argument truly goes from misguided to entirely untenable when one considers that we heard evidence from each of the relevant inputs who would have been aware of the on-the-ground situations—and not a single one testified that a threat to national security existed.^{5Perhaps because of all of the hand-wringing surrounding the incorporation of the CSIS Act definition of threats to the security of Canada” into the Emergencies Act, Rouleau proposes that the Act be amended to eliminate this link because “the adoption of the CSIS definition “accords outsized importance to CSIS’ determination.” This acknowledgment seems to undermine his own finding that the two determinations are separate. Moreover, the link to the CSIS Act was deliberate in demanding more than merely the subjective opinion of the Governor in Council. As Beatty explains in the Act’s parliamentary debates, “[…] a step of such far-reaching implications as a national emergency should be based on a more objective foundation than the opinion of the Governor in Council.”}

The report accords Cabinet a wide ambit of reasonableness in invoking the Act that is thoroughly unsupported by the statute’s strict definition. The justice doesn’t quite find that an actual situation presenting threats to national security had crystallized: in his conclusion, he writes that “the situation [Cabinet] was facing was worsening and at risk of becoming dangerous and unmanageable.” In other words, there was a whiff of danger in the air—Rouleau makes a great deal out of the Diagolon paraphernalia recovered at Coutts, Alberta, inferring that it might suggest similar ideologically motivated extremist actors might materialize in Ottawa (no policing witness testified that there was any evidence of such a presence, and Rouleau acknowledges no such links were found)—and, fearful of that whiff of danger, Cabinet was reasonable in invoking emergency powers.

This scope of latitude and deference is the appropriate standard for assessing on-the-ground, contingent actions of police—who, indeed, we rightly accord wide operating bandwidth. However, the same standard is wholly inappropriate for a sitting, properly briefed Cabinet’s sober deliberations in the face of a well-established and rightfully high legal threshold for invoking extraordinary powers to detain peaceful protestors, freeze bank accounts without due process, and suspend insurance throughout all of Canada. 

A federal court judicial review, brought independently (unlike the Commission, which was convened and appointed by government), of the invocation of the Act remains pending. That decision will carry the binding force of law, unlike the Commission report. The matter is not yet finished, and there may yet be consequences for the government’s actions.