Dope Tech: Cannabis, Innovation, and the Impact on Consumers

Ellen Xu, 
LTEC Lab Student Writer
JD Candidate, 2019 

On Wednesday, March 20, 2019, Windsor Law LTEC Lab and the Technology and Intellectual Property student club (“TIP”) hosted a panel discussion: Dope Tech: Cannabis, Innovation, and the Impact on Consumers, featuring three panelists with diverse knowledge and expertise in the field. The panelists were Bill Bogart, Distinguished University Professor and Professor of Law, University of Windsor, Faculty of Law; Laurence MacPhie, Partner, Bereskin & Parr LLP; and Jovana Mitich, Auditor and Consultant, Animal Welfare, Food Safety, and Quality. Aaraf Dewan, Windsor Law Dual JD Candidate 2019 and President of TIP, moderated the discussion with other TIP members. The panel addressed various issues relating to the recent legalization of cannabis in Canada, including innovations in the cannabis industry and the future possible impacts on consumers.

The first series of questions centred on the recent changes to the regulation of cannabis in Canada. Professor Bill Bogart began by offering an overview of the current situation by, discussing the three types of cannabis: legal recreational cannabis, illegal recreational cannabis, and medical cannabis. Three levels of government are involved with legal recreational cannabis: federal, provincial, and municipal. The federal government is responsible for quality control and regulation of production, i.e. the RCMP and border control, the provincial government is responsible for sale and distribution channels and collecting taxes (an amount jointly agreed upon by the federal and provincial governments), and the municipal governments are agents of the province, and therefore have a part in the regulatory scheme and peripheral services related to cannabis legalization, such as education and counselling regarding cannabis use. The three levels of government share different law enforcement responsibilities , e.g. with respect to the black market of cannabis. The legalization of cannabis has not eradicated the entire illegal market of cannabis. Only about 20% of the former cannabis market is now legalized. The division between the legal and illegal markets may be due to a number of factors, such as price, quality, supply, and access to supply. Current prices, supply, and access to supply seem to benefit the illegal market. Supply in particular seems to be a big issue for the legal market, whereas there is a fair amount of supply in the illegal market. In Ontario, the only place where large quantities of supply seem to be readily accessible is online. Quality however, is an advantage of the legal market, as production is controlled and not tainted, but it is not determined how big a factor quality is to consumers. There is also medical cannabis, which has been available in Canada since 2001. Medical cannabis operates under a different regulatory scheme. 

There are still a number of outstanding issues regarding legalization. Cannabis criminalization has fueled a lot of racial discrimination, and there has been a big push from activities to move beyond pardons and amnesty. A major factor fueling this debate is the fact that since the legalization of cannabis, many people who were formerly advocating to incarcerate those involved in the sale of cannabis are now the same people making a lot of money from the legalization shift.

In response to a question asked later during the panel, Bill Bogart pointed out that legalization is not driven by the belief that cannabis is harmless, but rather that criminalization causes more harm. He stated that the position should be “permit, but discourage,”  youth in particular, from engaging in cannabis use. Furthermore, legalization allows research and regulatory agendas to be pushed forward.

In terms of how regulators have succeeded so far at working to protect consumers, Jovana Mitich finds that regulators have done a good job at regulating what is available so far. Both enforcement and licensing are well covered. With respect to good manufacturing practices, Mitich is of the view that what is most important is ensuring consistency amongst supply, keeping consumers safe, focusing on eliminating any issues with access to supply, and ensuring consistency in the THC content of cannabis products. In terms of oversight, this is probably the only industry to head its own oversight, actively taking steps such as putting up surveys on Facebook to gather consumer input, which demonstrates a desire by those in the industry to establish a good system. Comparing regulatory models, Mitich views cannabis as more comparable to tobacco than alcohol, from a quality control perspective. For example, under alcohol legislation, there is no third-party oversight yet, whereas for tobacco, many of these controls have been in place for a long time.

Reflecting on the effects of legalization on consumer patterns, Mitich pointed out that when cannabis was legalized in Colorado, US, there was a 20% decrease in alcohol use. It is likely that we will see a reduction in tobacco use as well, following the legalization of cannabis. Canada has one of the highest cannabis consumption rates worldwide, with different trends in different age groups: lowered use in 15-17 year-olds since 1960s, steady rates in 18-24 year-olds, and increased use in 25-44 year-olds. 

In response to a follow-up question presented later during the discussions, Mitich discussed the known research in cannabis so far, and what is not available yet but needed. There are currently studies for mental health illnesses in pre-disposed individuals that the World Health Organization (WHO) has published, but there are no studies on cannabis being used for nausea, chemotherapy, MS, PTSD or anxiety. Hopefully, there will be research in those areas in the future. Legalization will help push forward the research agenda, such as making the process of obtaining research ethics’ board approvals easier. 

Laurence MacPhie emphasizes that the cannabis industry is already heavily regulated. Licensed Producers (LPs) take quality control very seriously, partially due to concerns of pathogens. Under the Ontario regulations, there are already heavy restrictions on packaging, labelling and product promotion. Cannabis cannot be advertised to young persons, full stop, cannot receive endorsements using persons, and cannot depict any glamourous lifestyles. Considering that cannabis has only been legalized since October 2018, these are positive factors from a regulatory perpective, to the credit of the government. That being said, there is still more work to be done on the front of regulation and education on the effects of cannabis.

Turning to the changes in the legal field relating to the cannabis industry, Laurence MacPhie reflects on the rapidly shifting industry, and how companies need to keep up if they want to succeed. Good companies are going to need good lawyers, whose main job will be to manage risk. He suggests enthusiasm and hard work, while proceeding cautiously and carefully.

Specific to intellectual property (IP) law, there is a lot of money being spent currently on research and development, which will lead to many patent applications. MacPhie clarifies that inventions related to cannabis have always been eligible for patenting. The patent system, by its nature, deals with novel and non-obvious inventions, and provides a right to exclude others from producing or selling, not a right to produce or sell. In other words, the patent system is generally not concerned with the legality of the activity related to the invention. In practice however, the legalization of cannabis will likely lead to an increase in the number of patents filed relating to the cannabis industry.

Regarding cannabis plants, there are some quirks. In the US, plant protections come in the form of either plant patents – for asexually producing plants, or plant rights certificates – for sexually producing plants (which require seeds). Due to cannabis not being legal in all States, the Federal seed bank in the US will not take cannabis seeds, therefore plant rights certificates cannot be granted as seeds cannot be stored on record at the federal seedbank, leaving only plant patents available as protection. Patenting is also not available for naturally occurring cannabis strains – there must be some sort of human manipulation leading to a mutation. Plant protections are available in Canada as well, therefore this is an area to keep an eye out for in terms of possible expansion of applications for protection. 

The panel discussion then shifted to include international and transnational considerations. One of the international issues outstanding from the legalization of cannabis is reconciling legalization with Canada’s treaty obligations. Bill Bogart explained that Canada’s relevant obligations in the context of cannabis stem from three major treaties, which are all premised on models of prohibition, and essentially obligate Canada, as a signatory, to control illicit drugs, including cannabis, by suppressing use and trade through criminalization. In moving to legalization and regulation, we are now in derogation to our international treaty obligations. If we had decriminalized but not legalized, like Portugal did, then we would still be compliant with our obligations as the supply side would remain in the framework of prohibition. It remains to be seen how Canada will address its non-compliance with treaty obligations. 

Canada is the leader so far in mass scale legalization of cannabis. As both Laurence MacPhie and Jovana Mitich contend, the world is watching. While Uruguay has also legalized cannabis, there are no major retailers looking to move into that market. As most of the world has not yet legalized cannabis however, there needs to be caution when crossing borders. For example, cannabis is legalized in Colorado, but once you leave Colorado, the other States and the Federal government will be watching you, no matter how big your clients are in Colorado.

Shifting the panel discussion to job opportunities in the cannabis market, Laurence MacPhie discussed developments in international IP law with regards to cannabis. Although patents can be obtained for illicit activities, companies should still consider where countries are headed in terms of decriminalization and legalization when looking for expansion opportunities, and Canadian companies, to their credit, are doing that. Trademark applications may be another growing area; a lot of alcohol sales rely on branding, and the same is likely to be true for cannabis. Although there are several distinguishing features and product differences that could be covered by patenting, branding could also be a major factor in cannabis sales. Common to all legal opportunities in the cannabis industry, just as with other legal opportunities, what is most important for future lawyers is to develop core legal skills and knowledge (e.g., contract law, property law, commercial law, etc.). Furthermore, companies are likely to recruit lawyers with 3-4 years of experience to draw from. It is important to not only bring skill sets to the table but to be adaptable as well.

In terms of retailers, Jovana Mitich says that consumers drive change, as demonstrated through interest shown by Coca Cola and Pepsi to release THC infused products in the future. Major retailers abide by third party standards set on their suppliers and brokers, so there will likely be a shift towards organizations to set consumer standards that are objective. Opportunities outside of law most likely exist largely in quality control, but there are opportunities in research and development as well, especially in the growth of “canneceuticals”, or cannabis infused pharmaceutical products.And of course, as Bill Bogart points out, there are also opportunities in the public sector, in government policies, regulations, and prosecutions of the still existing illegal cannabis market.

Finally, the last part of the panel discussion focused on the effects of legalization on the work place. For universities and the private sector, generally speaking, the position has been a hardline of no consumption of cannabis during and around work hours. While it is generally socially acceptable to have a pint of beer and come back to work, the same cannot necessarily be said for cannabis. But, as Bill Bogart points out, lawyers must remind employers that they are not starting from ground zero when it comes to HR policies and cannabis. Human rights codes still need to be complied with, and the courts have been clear on when employers can legally and reasonably administer drug tests to employees, and when they cannot. However, the difficulty with cannabis is that there are two uses: recreational and medical. Differentiating between the two in employee testing can be an issue.

Overall, I found the event to be an informative and insightful discussion not only for law students, but for anyone seeking to learn more about the effects of the legalization of cannabis in Canada, the impact on cannabis users, and the overall impact on the Canadian economy. The panel was helpful in alerting attendants, particularly students about to enter the workforce, of potential work opportunities in the production, distribution, and regulation of cannabis, and the cannabis market, both on the short term and longer-term horizon.

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