Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue No. 41 - Evidence - April 25, 2018
OTTAWA, Wednesday, April 25, 2018
The Senate Standing Committee on Legal and Constitutional Affairs, to which Bill C-45, was referred, met this day at 4:15 p.m. to continue its study of Parts 1, 2, 8, 9 and 14 of the bill.
Senator Serge Joyal (Chair) in the chair.
[Translation]
The Chair: Honourable senators, welcome.
[English]
It’s my pleasure to welcome Senator McCallum, who is replacing Senator Sinclair for our afternoon session. Welcome, senator.
[Translation]
I am very pleased to welcome Jean-Marc Fournier, Minister responsible for Canadian Relations and the Canadian Francophonie and Quebec Government House Leader.
You are familiar with the procedure for our study of Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other acts, since you are often the subject of our discussion. I would ask that you make an opening statement, after which my fellow senators will be given the opportunity to ask questions and share their comments.
Hon. Jean-Marc Fournier, M.N.A., Minister responsible for Canadian Relations and the Canadian Francophonie and Government House Leader, Government of Quebec: Thank you. It is a pleasure to be here today.
The Quebec government promotes dialogue and collaboration with the federal government. It used to appear only rarely before the federal House of Commons and Senate committees.
In its Policy on Québec Affirmation and Canadian Relations, unveiled on June 1 of last year, Quebec announced its intention to take every opportunity to make its voice heard across Canada, including before federal parliamentary committees when necessary. The federal minister of Justice said she wanted to create a Canada-wide regime to legalize cannabis, which we believe is beyond the legislative powers of a federal parliament acting alone. She also intends to support those who would challenge the constitutionality of certain provisions of Quebec’s Bill 157.
In this context, I felt compelled to accept your invitation so that I could explain the Quebec government’s point of view. I will begin by addressing home cannabis production, and then I will discuss the integrity of producers and financiers.
The federal government has decided to remove certain, although not all, cannabis-related activities from the Criminal Code. The Parliament of Canada has exercised its legislative jurisdiction in matters of criminal law to decriminalize the cultivation of up to four cannabis plants at home, now making growing five cannabis plants or more at home a crime. The new legislation concerning cannabis raises questions that need to be answered, for example as concerns its production and marketing. These questions are under provincial jurisdiction, and the fact that Ottawa and Quebec are passing legislation on the same matter does not mean that there is necessarily a conflict.
In the application of the doctrine of federal paramountcy, a provincial law is constitutionally inapplicable when it conflicts with a federal law. There are two types of conflict: conflicts of objectives and conflicts of application.
Let’s consider the objectives first. There is a conflict when a provincial law is incompatible with the objective of a federal law. This raises the question of whether the provincial law hampers the achievement of the objectives expressed in the federal law. The federal government says that it is acting to protect public health and safety. The objective of the federal law is not to authorize the possession or cultivation of cannabis for personal use, but rather to protect young people and public health and safety. The summary of the federal bill reads as follows:
The objectives of the Act are to prevent young persons from accessing cannabis, to protect public health and public safety by establishing strict product safety and product quality requirements. . .
Moreover, a backgrounder published in April 2017 by the Government of Canada states, and I quote:
The provinces and territories would license and oversee the distribution and sale of cannabis, subject to minimum federal conditions. Provinces and territories, together with municipalities, could also tailor certain rules in their own jurisdictions, and enforce them through a range of tools such as tickets. These rules may include:
...
Setting additional regulatory requirements to address issues of local concern. For example, provinces and territories could set a higher minimum age or more restrictive limits on possession or personal cultivation, including lowering the number of plants or restricting where it may be cultivated. . .
Arguing that prohibiting the cultivation of more than four cannabis plants at home constitutes an authorization to cultivate cannabis would contravene the Supreme Court of Canada’s decision in Rothmans, Benson & Hedges Inc. v. Saskatchewan, which states that the federal government’s authority to legislate in matters of criminal law can be exercised and interpreted only to prohibit acts and not to authorize them.
To begin with, the federal bill involves the federal government’s authority to legislate in matters of criminal law. It also involves amending several sections of the Criminal Code. Yet paragraph 8(1)(e) of the bill can only be interpreted as a prohibition to cultivate more than four plants and not as an authorization to cultivate one to four plants.
In the case of Canadian Western Bank v. Alberta, judges Binnie and LeBel, speaking on behalf of the majority, said that courts must be prudent when analyzing potential conflicts of objectives between provincial and federal laws, and I quote:
The fact that Parliament has legislated in respect of a matter does not lead to the presumption that in so doing it intended to rule out any possible provincial action in respect of that subject.
In fact, the opposite is true, even in this case, when you look at all of the elements put forward in this matter.
It is clear that the Government of Canada does not intend to work to its full scope of practice concerning the possession and cultivation of cannabis for personal use. It is allowing provinces the freedom to add restrictions based on their respective priorities and circumstances. For its part, and taking into account the amendments made to the Criminal Code and the decriminalization of certain cannabis-related activities, Quebec is creating its own authorization regime under its own legislative jurisdiction, in particular in matters of property and private law.
Quebec also intends to pass legislation to protect public health and safety, particularly when it comes to young people. Because we need to protect public health and safety, we propose permitting the production of cannabis only by authorized producers for a number of reasons.
The first is to limit access and prevent the trivialization of cannabis for minors and young adults, since access is the major determining factor in cannabis use.
The second reason is to be able to provide relevant information at points of sale. This would allow us to assess whether some customers need to be referred to appropriate social services. Home production prevents us from providing relevant information and assessing whether some customers might have special needs associated with cannabis use.
The third and final reason is to limit the illegal sale of cannabis and avoid creating networks of personal producers.
It is obvious that both our governments have the same intentions. Therefore, there is no conflict of application. We are exercising our respective powers to protect public health and safety.
Neither is there a conflict of application between our bills, which will eventually become law. A conflict of application is a situation in which a citizen breaks one law by trying to obey another.
Here, the federal government has chosen only to add greater flexibility to the application of the Criminal Code, but it continues to prohibit certain related activities. For example, it is against the law to produce cannabis without first obtaining a licence from Health Canada. Producing without a licence is still a crime. No more than four plants can be grown at home. Growing five, six, seven or more plants is still a crime. The same holds true for the possession of cannabis by adults and minors.
What the federal government has done is establish a new framework for cannabis within the Criminal Code by, for example, requiring producers to obtain a licence so that it can inspect the quality of the facility and product and ensure the product’s traceability from seedling to processing and sale, and so that it can conduct research on the product.
The provinces will add their own complementary rules to these. It is therefore not a matter of excluding our rules; we have the right to authorize and to set authorization criteria. Quebec has established rules for ensuring product quality, making sure that producers are registered and educating the consumer — all measures aimed at avoiding the trivialization of cannabis.
Ottawa’s actions have given Quebec the leeway it needs to exercise its powers in matters of private law by allowing only authorized producers to produce cannabis. Can a citizen obey both laws at the same time? The answer is yes. Quebecers who do not grow plants at home will be obeying both the provincial and the federal law. In fact, Quebecers who obey the provincial law will automatically be obeying the letter of the federal law. In this case, there is no conflict of application. The federal government did not state and cannot state that it authorizes one, two, three or four plants at home, since this is a matter under provincial jurisdiction. It only prohibits having five or more plants at home. Criminal law is prohibitive. The federal government can only exercise its power by prohibiting acts, not by authorizing practices.
The federal Minister of Justice appeared before your committee, I believe, to say that the federal bill is an attempt to create a Canada-wide regime for the legalization of cannabis. I don’t think that is accurate. The minister can decide to review the provisions of the Criminal Code concerning cannabis. She can decide to review the rules against cannabis. However, when it comes to managing the effects of the decriminalization and legalization of cannabis, both our governments are concerned and must work together: one to set the limit for prohibition, and the other to grant authorization.
Once again, this is consistent with Supreme Court rulings, notably in the Rothmans case I referred to earlier, which states that, in matters of criminal law, the federal government prohibits, and the provincial governments grant authorization under their own legislative jurisdictions.
We can only conclude that there is no conflict of intention or application between the laws. Consequently, no legislative amendments are necessary to enable the Quebec government to achieve the objectives of its bill.
However, and this partly explains my presence here today, the federal minister’s statement encouraging future challenges to the provincial law causes a problem. The federal government is clearly telling citizens that it will take their side if they decide to challenge the provincial law. In our opinion, the statement was unfortunate as well as wrong in fact and in law. The minister is encouraging challenges. That is the exact opposite of what we might call cooperative federalism.
I came here to say that, in our opinion, we have the constitutional jurisdiction that allows us, within the framework of our own authorization regime, to decide where we will allow the production of cannabis. We have decided that we will not allow the cultivation of cannabis at home, but only by authorized producers. Moreover, we believe that the Minister of Justice is incorrect in claiming that the federal government can implement a Canada-wide legalization regime, and that she is encouraging Quebecers to challenge our bill. We think the bill should be more specific so as to avoid unnecessary legal proceedings. You could clarify it in order to prevent legal challenges and show that you prefer federal and provincial governments to work together rather than against each other.
I have addressed the issue from a legal standpoint until now, so let’s talk about the political aspect and the co-operation I would like to see between our governments. The decision to amend the Criminal Code is up to the federal government. It obtained a mandate to decriminalize and legalize cannabis, and we are not challenging that mandate. We have accepted the decision. Will it be easy? No. Will we have to work hard to adjust to the new reality? Yes. We will do it because we are part of a federal system in which governments are required to cooperate, each according to its jurisdiction, in the name of cooperative federalism.
I invite the federal government to join us in respecting the principle of cooperative federalism, in this case, by respecting the provinces in their legal and legitimate choices.
The federal government is confusing the federal system and unitary system when it claims to create a Canada-wide regime for the legalization of cannabis on its own. In a federal system, the levels of government are equal, and their dealings must be based on respect and reciprocity. We must respect each other’s legal and legitimate actions. Quebec is doing everything it can to work with the federal government’s decision. It respects the legal and legitimate nature of Ottawa’s action. It expects reciprocity when, in the exercise of its powers, it decides on an authorization regime that permits cannabis production only by authorized producers.
I’d like to say a quick word on the financial aspects, if you will allow me. The Quebec government is concerned about financial interests related to the production and marketing of cannabis. As a result, we added elements to our bill that ensure the integrity of cannabis interests. Until the Autorité des marchés publics is up and running in a few months, the Autorité des marchés financiers will be responsible for managing a certification regime based on UPAC’s policing authority and the investigative powers of Revenu Québec, which has ties to the Canada Revenue Agency. Both producers and company directors will be subject to verification, as will every shareholder with 10 per cent or more of the company’s shares regardless of whether it is private or publicly traded. Shareholder companies of producing companies will also be subject to verification. In that case, verification will apply to every shareholder with 20 per cent or more of the company’s shares.
In comparison, the verifications Ottawa intends to conduct before issuing a licence are the same as those in effect now in the case of therapeutic cannabis. They apply only to directors, and not shareholders, of publicly traded companies. In the case of private companies, they apply only to shareholders with 25 per cent or more of the company’s shares. You can see that Quebec’s probity measures are much more comprehensive than those conducted by the federal government. Our understanding is that Quebec may be the only province with such a regime, the other provinces being content with the process used now in the case of therapeutic cannabis.
We have also incorporated a second level of security by including in our cannabis bill the powers to investigate and seize provided for in the Criminal Code in order to be able to use evidence derived from such investigative means to prosecute criminal offences under provincial legislation. You can see that we have added robust probity measures in order to prevent people from getting around the law. We would like the federal law to be as robust as ours in ensuring the probity of cannabis producers.
That was what I wanted to say. I am open to questions and I thank you for your invitation.
The Chair: Thank you, Mr. Minister.
Senator Dupuis: Welcome to the committee, Minister Fournier. My question concerns one of the aspects you mentioned. In fact, you addressed it in your letter to the federal ministers. The Quebec government is of the following view:
The new provincial and federal legislative provisions that will eventually be enacted must be exempt of all ambiguity in order to be applied effectively.
We have received information from officials at Justice Canada and Health Canada that was subsequently confirmed by the Minister of Justice herself, saying that the federal government intends to defend the federal law if any Quebecers challenge the application of the provincial law respecting the ban on growing cannabis at home. Can you explain what you mean by ambiguity? Today you mentioned that clarification is needed to avoid unnecessary legal proceedings. Can you tell us what type of clarification would be acceptable to the Quebec government?
Mr. Fournier: Had it not been for the federal minister’s comment, there would be no ambiguity. That is why I am here before you today. Under the Criminal Code, the federal government can decide that Canadians are not allowed to have five plants or more at home. It can prohibit five plants or more at home. Where there are limits to its power is in the case of authorization. That comes under private law. Authorization is under provincial jurisdiction, under Quebec’s jurisdiction.
Our decision is based on the reasons I mentioned. It is aimed at preventing the trivialization of cannabis and ensuring that we can monitor producers, educate users and help people with problems. We decided to limit production to authorized producers only so that users will purchase the product at controlled points of sale. Saying that prohibiting the possession of five plants or more means that you can have between one and four plants and that zero plants does not come into play is a provincial prerogative. This is a constitutional error.
It is ambiguous because, not only did the minister claim the contrary, but also, as I understood her comments, she encouraged Quebecers to challenge the provincial law. I don’t think that is useful. Do we want our two governments to enact separate laws with one minister hoping that the other government’s law will be challenged? I would like to remind you that we are passing this law because the federal government had a commitment to fulfill. Had it not been for that, Quebec would not have needed to pass a bill.
The clarification would ensure that the bill complies with the constitutional rule. We would have two governments working together for citizens who pay income tax to both Quebec and Ottawa instead of telling them that they can spend money to challenge one of the laws in court. There is something wrong with that.
Senator Boisvenu: Welcome, Mr. Fournier. It is always a pleasure to see you. I understand from your argument that the minister’s position on health is entirely incompatible with home production. Your argument is based on that point, is it not?
Mr. Fournier: It would be more accurate to say that the authorization to have zero to four plants at home is not a matter of federal jurisdiction, but of provincial jurisdiction. The federal government can prohibit actions under criminal law, but it cannot manage the authorization regime. That is under provincial jurisdiction.
Fundamentally, I understand that the federal government’s position is that allowing plants at home would prevent people from purchasing cannabis illegally. That is a matter of opinion. The most important argument for us is that home production is not only difficult to police, but, first and foremost, it fosters access to the product, which will automatically lead to its trivialization.
The objective of our law and the federal government’s law is to avoid trivializing cannabis. The objective is to decriminalize cannabis and hope that a reduction in cannabis use ensues. However, we are using a different approach. I am no longer addressing constitutional issues, but arguments. That was the argument that led us to prohibit home production.
Senator Boisvenu: Practically speaking, though, Quebec is prohibiting home production, which goes against the minister’s position that there is a limit to zero tolerance. We are maintaining the criterion of four plants at home, and Quebec does not want to get involved in a legal challenge.
The other practical approach would be to remove this provision from the federal bill. Would not removing the possibility of growing plants at home in the federal bill not be the simplest and most practical way of avoiding all conflict?
Mr. Fournier: I would prefer to allow each level of government to make its own decisions. However, I will say this. According to our interpretation, invoking the Criminal Code means prohibiting actions. Whether the federal government decides to prohibit having five plants or more at home is not a problem, because it is within its rights. But then, what happens with four plants or fewer, or no plants at all?
We examined this question in Quebec, but not all of the other provinces came to the same decision. Manitoba and Quebec made one decision, and other provinces made other decisions. That is federalism. For our part, we chose not to trivialize the entire issue.
What’s the answer? I am not here to pass legislation in your place, but one thing is certain: had it not been for the minister’s comment, I would almost certainly not be here today. Everyone would understand that the provinces can set the number of plants allowable at home, either one, two, three, four or none at all. However, because of what was said, in addition to the minister’s encouragement to challenge the law, I am here to say that, if there were an amendment specifying that the provinces have a choice, it would be welcome. There is a nuance here. I do not want to ask for an amendment, because I believe we are right. The problem is that citizens will have to go to court to make sure. Can we avoid going to court? Maybe you can help Quebecers keep their money in their pockets.
The Chair: Mr. Minister, you say that there would not be a problem if the federal minister had not made the comment, but I noted in your presentation that there is also the matter of organized crime and the identity of the companies. We would have liked to hear your views on these topics.
Senator Carignan: Exactly. As one of the reasons for banning home production, you spoke about trivialization, but you also mentioned limiting illegal sales by home growers. You also said in one of your answers that it would be difficult to differentiate between legal and illegal cannabis. That is what I understood from what was implied. Can you tell us more about the reasons why the Quebec government decided to ban home production in addition to trivialization, which you have dealt with at length, in particular those relating to illegal sales by home growers and the difficulty tracking the product, which is an important factor in quality?
Mr. Fournier: I don’t know how to answer that. It’s just common sense. Let’s go through it together. Are there a lot of homes? Yes, there are. How do we know what people are doing at home? That would involve the authorities, in particular the police, who would have the power to verify what people are doing with cannabis. Never mind product quality, because home producers are not authorized producers and do not meet the required standards. There will be standards, there will be quality, and there will be other things that will also be needed. Forget that. You will be getting an artisanal product. If it is so difficult to monitor, you can imagine that people might get together, or be forced to get together — you can make any assumptions you want — and form a home production network.
Right now, the federal government is passing legislation that stipulates that a federal licence will be required; we want to have a certification regime in Quebec to control the product as much as possible. You are making an exception that can get out of hand. You will tell me that it may not get out of hand. Yes, but my question is this: who is policing all this, since home production, by definition — think about it — will require vast numbers of police officers to monitor?
I submit that we may get there one day. The bill we are currently considering implies a transition. We are going from a position where everything cannabis-related is a crime to a position where some cannabis-related activities are no longer a criminal offence. Fine. Do you really have to open the door so wide right away? You won’t be able to close it later.
After three years, we will look at the provisions and take stock. You thought about it, and I’m pretty sure everyone has thought about it. When we went from prohibition to legalizing alcohol, we did not open the door so wide right away. If it weren’t for the production of craft beer and similar products, you would never know there are rules in place. We are old enough to know that that wasn’t how it always was. Not to mention the fact that, when we went to get alcohol at the Liquor Commission — those of you who are my age will understand — we didn’t get to browse the shelves. We had to ask for the product at the counter. Why? I think it’s because there were certain concerns, and we needed a transitional system. It doesn’t have to take 50 years, but we could put a transitional system in place.
Senator Gold: Welcome, Mr. Minister.
I might be changing the subject. Quebec is a large territory and, according to the information we have, there will only be about 20 stores to begin with, and only in the Montreal and Quebec City areas. Can you tell us about your plan for access in regions outside the major metropolitan areas and the related costs? The product will be available on the government agency’s website, but it will be expensive to send a month’s supply up to remote areas of Quebec like James Bay or even further.
Mr. Fournier: Before answering your question, allow me to address another aspect. The bill will be ready. We are doing everything we can to get ready, but we can’t do everything at once. There is also parliamentary privilege. The state, the executive branch, the public administration cannot do anything before the act takes effect. We can do certain things beforehand, but there are limits. We cannot start opening outlets before the bill is passed. In answer to your question, yes, we will be ready, but seriously, it would be helpful if we had the time to take the necessary measures in order to be as effective as possible in the achievement of our public health and safety objectives. It would help if the act took effect a few months after it was passed.
Once again, I do not want to meddle in your affairs, but that would be helpful. Yes, there will be a few outlets at first. The objective is to be able to speak to qualified people in the stores, and more will be added over time. Of course, the stores will not all spring up instantaneously. We will see how Internet sales go. The site will provide some information. We will be able to monitor purchases a little bit, but not as much. That is part of the regime.
Will it be expensive? Of course it will be expensive, but the related public health issues can also be expensive. We need to make sure that the purchase and use of cannabis is monitored, and see what effect it has on the population in terms of increased use. I don’t know how it will turn out. We’ll see.
To answer your question, we will try to open as many stores as possible, within reasonable limits.
Senator Pratte: My concern relates to the message you are sending Quebecers. If no clarification is made to the bill, I wonder what they will understand. What message will you be sending Quebecers who wish to grow cannabis at home and who are confronted with two governments and two different interpretations of the law? One government is saying that they are not allowed to grow cannabis plants at home, and the other is saying that they can grow up to four. What message is the Quebec government sending?
Mr. Fournier: The act has not yet been passed, but if it were to be passed with its current wording, we would obviously have to disseminate information about our own act. The provisions about which we will provide information include the prohibition of home cannabis production, because we permit production only by authorized producers. Consequently, citizens will be faced with two interpretations, and probably two sets of information.
I imagine that the federal government will also launch information campaigns. Quebecers will wonder why our two governments can’t agree on an interpretation — and I’m not saying it wasn’t thought out. That’s another matter entirely. It is almost deliberate. Why would we want to deliberately place Quebecers in a situation like that?
You could ask why the Quebec government does not accept the federal government’s position, which would be far simpler. The difficulty is that Quebec has jurisdiction over authorization. Why doesn’t the federal government just respect the division of jurisdictions, and why won’t it accept that the provinces have different solutions? Perhaps we will be able to learn from the different solutions in three or five years because we will be able to see how they turned out. That would be a healthy embodiment of a federal system.
We are in a federal system. Let’s take advantage of it. Right now, we can take different approaches that take our different populations into account. I will ask again. Why, in this case, doesn’t the federal act make the clarification and dictate that our governments work together?
[English]
Senator Eaton: Minister, last February you wrote a letter to the federal justice minister. Not only did you talk about home cultivation, but you also called for a delay in the coming into force of the legislation, considering that roadside detection devices are still not available. We have heard a great deal about that from various police associations.
Have you heard back from the minister? Are you going to pursue asking for a delay in the legislation?
[Translation]
Mr. Fournier: You want to know if I have heard anything as a result of the letter. I am happy to say that, when I got off the plane earlier, I was informed that we received an answer in Quebec.
Senator Eaton: I was going to ask.
Mr. Fournier: Thanks to technology, I have the answer, and I can send it to you if you want.
As far as I know, the police don’t yet have access to roadside drug-test devices. We are in the planning phase. My colleague responsible for public safety in Quebec told me that police officers will receive training — before they get the technology — on how to test for cannabis-impaired driving. Then, offenders will be referred to specialists, who will do the necessary tests. We hope that we will get the equipment soon.
Concerning time, we are not only waiting for the equipment: we need to set up systems for certification, the investigation of producers and the financial aspect. That will take more than a few minutes.
Senator Eaton: There is something else specific to Quebec —
The Chair: I am sorry to interrupt. In theory, the minister is with us until 5 p.m., and other senators would like to ask him questions.
Senator McIntyre: Welcome to the committee, Mr. Minister. Since last fall, Bill 157 has gone through several stages at the National Assembly, and several amendments have been adopted. Can you tell us more about where the bill stands now? What are the topics and concerns that come up most often?
Mr. Fournier: Concerning the bill we have been studying since the fall, the most important work was done before it was introduced. My colleague Lucie Charlebois who is the minister in charge of the bill, held several consultations with specialists and the public during a tour of the regions in June 2017. She held public consultations, after which we wrote the bill. That is not always how we do things. But this time it was the right approach, because the issue is very important and raises a certain number of legitimate concerns.
The bill was introduced even though we had already held consultations. More consultations were held during the parliamentary process. The principle of the bill was debated and adopted. It is now being studied section by section, and certain elements are being looked at. One of the elements we have almost finalized, I believe, concerns where Quebecers will be able to use cannabis. Certain proposals have been made, and we may propose a major decrease in places where it can be used. I think that the public really wants us to show prudence when it comes to determining where cannabis can be produced and used. I think that we have done what the public asked.
Once again, we will see in time whether we were too strict. Otherwise, we believe that had we been less strict, it would be very difficult to put the genie back in the bottle.
[English]
Senator Batters: Thank you very much, Minister Fournier, for being here today. I just briefly want to go back to that.
You wrote to the federal justice minister on February 23. Five weeks later, the federal minister came to this committee, and our chair Senator Joyal actually asked about your letter. The federal minister surprisingly said that she had not read your letter yet, at that point.
It’s now one month later. I want to be sure I heard you clearly on this because I was listening through the translation. Did you say that the federal minister responded to your February 23 letter today, the very day that you are appearing in front of our committee? Did you receive it today?
Mr. Fournier: Well, we received the letter today. I don’t know when she answered it. I just know that we received it.
Senator Batters: Would you be willing to provide us with a copy of that?
Mr. Fournier: Yes, of course. I don’t have it, but we’ll give you a copy.
Senator Boniface: This is a great discussion. I am just curious, and I have a very short question.
How will you prosecute up to four? I assume that will be under provincial legislation and that will be non-criminal, and then criminal will be five and above.
Mr. Fournier: Yes. Of course, we cannot decide to stipulate a criminal act.
[Translation]
There will be criminal offences. To ensure the best possible application of our legislation, we have included in our bill the possibility of using search, seizure and investigation methods that are in the Criminal Code for criminal offences. We will import them into an act that will deal with criminal offences. Our legislation will not create criminal offences. We will import them to have the most means possible to ensure that these offences are respected. We are going from a system where everything was a crime and we are bringing part of it toward the penal sector. We believe that, as part of this transition, it is necessary to equip ourselves with stronger tools.
[English]
Senator McCallum: Thank you for your presentation. My question is related to First Nations people and how the provincial law applies to a First Nations jurisdiction in terms of bylaws.
If they decide to go with more than four plants, or they go against what the province is saying, what is your relationship to the bylaws of First Nations and who would prosecute the First Nations?
Mr. Fournier: I am not sure I have an answer for your question. If you go in the tobacco field, we may have to look in some places where they have a special commission, that follows the commercialization of tobacco products.
[Translation]
We will need to work with band councils and the various nations. The answer is different in urban areas and in remote northern regions. I don’t know how we will monitor home production in some remote areas. Therefore, we will need to have a discussion with the First Nations to see how they will be able to ensure that these federal and provincial laws are respected. We will need to work together for this. I have no other answers at the moment.
There is a legal desire. The laws apply to the entire province. Your question relates mainly to the application of these laws, especially on First Nations territory. Sometimes, distance can become a significant problem and bring some difficulties. Sometimes, there are some demands. For the Crown, it is important to find the right ways to ensure the application of the act with the help of a constructive dialogue with the First Nations.
[English]
Senator Pate: I want to ask a supplementary to Senator McCallum’s question, if I may.
As you are undoubtedly aware, the Cree-Naskapi (of Quebec) Act was negotiated and passed. It came into being earlier this year. Clause 56 of your bill talks about the Quebec government being able to conclude agreements with governments. They already have, in fact.
Picking up on the point that Senator McCallum raised, if the Cree-Naskapi people decide that they don’t agree with the provisions of your bill, whose would take precedence in your opinion?
As you’re thinking of that, I’ll tell you the question that I actually wanted to ask.
Mr. Fournier: That one was good.
The Chair: It was a good introduction.
Senator Pate: I am interested in some of the regulation around the legalization you have been considering.
What kind of work has been done around the treatment options that will be available? What collaboration is there? What is available? What are your plans to create more opportunities for people to actually engage in treatment, so some of your interests in public safety can be met that way as well?
Mr. Fournier: Let’s answer the last question first.
[Translation]
The minister responsible for health and social services is the one in charge. You understood that she has a significant concern about the social services offered to people who could have difficulties following a cannabis overdose. Consequently, she is already engaged in a process. I would let her tell you more about it if she was here, because she would do a better job. She is already dealing with this issue and, with the public health authority, she is ensuring that she has the tools needed.
Once again, the purpose of this process is to ensure that the law allows us to help people who could have difficulties related to the use of cannabis. Home production means that citizens will use their own product and so will not go to points of purchase, access a website with information or be in contact with any government authority whatsoever. Obviously, it will be difficult to help them.
I would therefore answer that yes, this will represent significant amounts. However, we would be better off if we all helped each other.
As for your first question, I wouldn’t venture to comment on a scenario where we are not able to find common ground. Both First Nations and Quebec government leaders have an obligation to find common ground for the well-being of our citizens, whether they are First Nations or not. Our sense of responsibility means that we will do everything we can to keep the scenario you mentioned from happening. That is my hope, in any case.
The Chair: Thank you very much, minister, for your appearance this afternoon. On behalf of all my colleagues around the table, I want to express our gratitude for your candour in answering our questions and for the contribution you provided in submitting your brief. We will wait for the copy of the letter, as requested by Senator Batters. Your input will help us achieve the best bill possible. Thank you very much.
Mr. Fournier: I thank you as well, and wish you good luck.
The Chair: Honourable senators, we continue our meeting today with two witnesses I am pleased to introduce to you. First, we welcome Marwah Rizqy, assistant professor in the tax department of the Université de Sherbrooke’s School of Management. Welcome, Ms. Rizqy. We also welcome Miville Bédard, Retired Member of the Sûreté du Québec who specialized in organized crime investigations.
I believe you already know the procedure; both of you have already been before committees like this. Ms. Rizqy, please share your thoughts concerning Bill C-45. The floor is yours.
Marwah Rizqy, Assistant Professor, Department of Taxation, Université de Sherbrooke’s School of Management, as an individual: Thank you very much. I will try to be brief, since we have only 45 minutes to hear two witnesses on a rather important subject, the infiltration of the legal economy by organized crime.
Is it one minute to midnight, or is it already past midnight? Not to be defeatist, but we are already past midnight if we consider so-called therapeutic cannabis. To this day, although there have not been any prosecutions yet, I believe that it is very likely that organized crime is already present in the therapeutic cannabis market. How do the checks work? We know that Health Canada issues the licence and that we have asked the RCMP to confirm the security clearance. But who are we actually checking? We screen the person in charge, the person responsible requesting the licence, as well as the officers and directors of the company. That is all in terms of screening.
In fact, we do not check who are the true and ultimate beneficiaries of these companies. We don’t track them back to the beginning. If we have 10 businesses, the first owns the second, which owns the third, and so on. So there are levels. At the end of the line, we can even find trusts. In the end, we never check who are the actual licence holders. If the regulations on so-called recreational cannabis look like the regulations on therapeutic cannabis, the loopholes are huge.
Additionally, we never dedicated enough money to fight organized crime. Our Crown prosecutors and the people supposed to investigate were never paid enough. Therefore, the private sector can quickly recruit the cream of the crop. In fact, when you look at law schools, most of the time, those at the top of the class choose to work in the private sector. I must confess that is what I did.
That said, in the case of therapeutic cannabis, for which regulations are already in place, we never considered annual checks. Screening is done every five years. A lot can happen in five years.
In addition, the greatest danger you will face are the lawyers. First of all, lawyers benefit from attorney-client privilege. Being a lawyer is neither a right nor a privilege, it is a mark of confidence in our institutions. Unfortunately, some lawyers are impenetrable tools at the service of organized crime. In other words, organized crime uses a lawyer to be its front man, who will act as a front and head all the entities. Oftentimes, when the police are investigating, as soon as an attorney-client conversation comes up, they stop the electronic recording. What they should do, however, is keep it going, seal it and hand it over to a judge to decide whether the conversation is legal in nature and therefore protected by attorney-client privilege, or whether it is illegal in nature and, consequently, not covered by this privilege.
Additionally, our penalties have never been very serious in Canada. We are not known internationally for our effectiveness at combatting organized crime or money laundering, known as white-collar crime. In fact, an excellent article in The Globe and Mail from March 2017 indicated that, every time we tried to prosecute these crimes in Canada, it ended in failure or an 18-month sentence for multi-million-dollar fraud.
Senator Pratte spoke earlier about the message we are sending to Canadians. If there is any message we should be sending, it’s that, even though it has its flaws, our justice system is good in Canada and actually quite good. However, we need the necessary resources to deal effectively with the small number of individuals who want to infiltrate this new industry.
I will stop there and answer your questions to the best of my ability.
The Chair: Thank you.
Miville Bédard, an investigative sergeant at the Sûreté du Québec who specialized in organized crime investigations. You have the floor.
Miville Bédard, Retired Member of the Sûreté du Québec, as an individual: First, I need to state that I was not supposed to be here this afternoon, but rather Inspector Sylvain Tremblay, who is responsible for a large project in Montreal. He asked me to replace him because he was travelling abroad. I decided to step in for him this time, because I have a great deal of police experience.
I want to thank the chair of the Senate committee, Senator Joyal, for inviting me to discuss my police experience in the context of Bill C-45 and to express my desire for an independent commission of inquiry to examine the ins and outs of this bill. I will explain why.
As mentioned, my name is Miville Bédard, I am 67 years old and I am retired from the Sûreté du Québec. I ended my career as an investigative sergeant in the joint infiltration team, after more than 35 years with the Sûreté du Québec. I must say that I do not represent the Sûreté du Québec. I am here as an individual, as a regular Canadian citizen who has had extraordinary police experiences, and as an experienced and passionate policeman, always committed to the respect and enforcement of the law, the protection of life and the fight against crime.
I am also here as a father and grandfather of two grandchildren, so that they, like all children and Canadian citizens, like your children, can continue to live in a great country where people are safe and protected by just laws, without fear of becoming addicted to drugs.
I’m going to give you an overview of my career, because I’m here to talk about organized crime. I will tell you what I did in life. I started my career in 1973 at the Laurier-Station detachment. I held all the positions and was an investigator for six years in the unit. From 1991 to 1996, I was an investigator on the new organized crime squad of Quebec, Escouade du crime organisé de Québec. I was on a team assigned to street drug trafficking. I have participated in hundreds of police operations, several wiretaps and searches. I have conducted multiple arrests and interrogations of drug users and traffickers of all kinds, and I have also participated in the dismantling of several cannabis production facilities, hydroponic and otherwise.
I developed and monitored dozens of sources in the community, which allowed me to know more about the drug community. These sources are unanimous in saying that, before sinking into the world of drugs, they started using cannabis and then turned to harder drugs. I have seen on the ground the social distress of these people in the face of organized crime, the poverty in which they live and the high level of violence they regularly experience.
From 1996 to 2004, I was a member of Quebec’s Wolverine squad, as an investigative sergeant, when it was created in 1996, to try to end the bloody war of criminal biker gangs — the Hells Angels and the Rock Machine — for the control of the sale of narcotics, a war that caused dozens of deaths, including several innocent victims. I held that position for eight years and was very active in all provincial operations, such as the Roma project, the Henri project and the Spring 2001 project. I will not list them all, but I participated in the majority of them.
I met with informers, and developed and oversaw several sources, who helped us arrest several members in good standing of these criminal biker gangs, to end that bloody war, to dismantle several drug dealing networks, and to seize and destroy two biker gang-owned premises in the Quebec City area. It also brought social peace back to the province.
From 1992 to 2004, I was trained as an undercover officer and took a number of advanced courses in this field. I worked across the province in multiple spheres of organized criminal activity, at all levels. I worked in the following fields: narcotics trafficking, prostitution and strip clubs, underground speakeasies, illegal casinos, theft, extortion, trafficking in weapons and explosives, home invasion and murder plots targeting important witnesses and their families.
From 2004 to 2008, I was a permanent undercover agent. In 1998, I was trained by the RCMP as a major crime undercover officer to work in Mr. Big-style operations to try to solve unsolved murders. I participated in the first operation that was successful in 1998.
Subsequently, after the success of that operation, in 2004, a joint infiltration unit was formed, made up of members of the RCMP, the Sûreté du Québec and the SPVM. I was the first permanent undercover officer at the Sûreté du Québec to join this new unit. I participated in several such operations in Quebec and across Canada; we were able to solve a number of past murders, and arrest and convict the perpetrators who believed they had committed the perfect crime.
I will conclude by saying that, in 1999, I received the Quebec Police Award for my involvement in the Roma project. In 2004, I was sworn in as a special constable for the Ontario Provincial Police and appointed as a temporary undercover officer with the Royal Canadian Mounted Police.
The Chair: Thank you. I see that you have also submitted a French document. It will be sent for translation.
Senator Dupuis: I have two questions, and the first one is for Professor Rizqy. You talked about a number of things that do not work. You referred repeatedly to the licensing regime — which currently exists, by the way — for the production of cannabis at home for medical purposes. Can you refer us to any studies that you have done or reports you have contributed to on this issue?
I also noted that you mentioned huge flaws in the medical system. Could you be more specific? You said that the infiltration of organized crime into the production of so-called therapeutic cannabis was very likely. Could you give us more specific details on that?
Do you have any information that organized crime has infiltrated the so-called therapeutic cannabis market? Do you have specific information on the huge flaws in the medical system?
Ms. Rizqy: Senator Dupuis, I did not talk about the medical system, but about cannabis for therapeutic purposes. I was talking about companies, not about people who were growing cannabis at home.
As for whether I have knowledge of what you’re talking about, the answer is yes, I do. However, at this point, I will have to invoke attorney-client privilege.
Senator Dupuis: Who are your clients?
Ms. Rizqy: When you invoke attorney-client privilege, it means you cannot say who the clients are, or anything else.
Senator Dupuis: So, you are not able to give us any information about your assertion that organized crime has infiltrated the so-called therapeutic cannabis market. You said that it was very likely.
Ms. Rizqy: I repeat: I invoke my attorney-client privilege.
Senator Dupuis: You say that there are huge flaws in the system for so-called therapeutic purposes. Are you able to clarify that statement or not?
Ms. Rizqy: Clarify how?
Senator Dupuis: Can you clarify what you call huge flaws in the so-called therapeutic system?
Ms. Rizqy: For example, under the regulation authorizing the security clearance, the licence will be issued after the agent, the director of the company and all senior executives have been screened. All officers and directors are also screened. However, a company is owned by its shareholders, so why do not we screen the ultimate shareholder of the company?
Senator Dupuis: That is one of the flaws. Are there others?
Ms. Rizqy: That is the main flaw.
Senator Dupuis: Perfect. You did not say it that way, so thank you for the information.
I now have a question for Mr. Bédard. You have a lot of experience in the fight against organized crime. Are you able to tell us, based on your experience, what can be done, in the context of legalizing cannabis, to ensure that the current infiltration by organized crime decreases or stops? That it diminishes, at least.
Mr. Bédard: I am entirely against this legislation. No legalization that allows the cultivation or sale of cannabis will have that effect. I am entirely against it, and I am not the only one in this case.
Senator Boisvenu: Thank you to our two witnesses.
Ms. Rizqy, in April 2007, Radio-Canada claimed that individual cannabis producer licences had been issued to members of the Hells Angels and that other members had applied for production and distribution licences. We will now issue licences for recreational production. Do you not think that people who already have a licence to produce for medical purposes should be subject to the new regulations for recreational production licences, since those checks are more thorough?
I am thinking of Quebec, where the checks will be more extensive in the case of producing cannabis for recreational purposes, whereas the licence to produce for medical purposes, which is under the control of the federal health department, is subject to basic controls, if I can put it that way.
There is a risk that there will be two regimes. The first will be fairly controlled in Quebec and very rigorous in terms of recreational cannabis. The second, for medical purposes, provides for a minimum of control, thus facilitating infiltration by organized crime. Should we not integrate the two to ensure that marijuana licences are issued according to very strict rules?
Ms. Rizqy: Indeed, in an ideal scenario, I would go even further than the Quebec regime because it checks only shareholders who hold 10 per cent of the assets. All shareholders should be checked because, of course, attempts to get around the 10-per-cent threshold will result in several shareholders acting together. In an ideal world, we should have the highest standards of control across the country, making it clear that having a licence is not a right, but a privilege.
Senator Boisvenu: I’m going to accept your argument, because I have a company here that has about 25 sources of funding with amounts of 25,000, 30,000, 40,000 or 50,000, and therefore, below the 20-per-cent threshold. So, yes, you are absolutely right.
In that sense, you are one of the people who publicly revealed that, in Quebec, 40 per cent of the investments had been made with money from tax havens. As I listened to your comments in the media, I understood that you were suggesting the creation of a public register of investors. Would you like to tell us more about this?
Ms. Rizqy: In a world where we want to combat tax evasion, fraud, corruption and human trafficking, we must take into account that all organized crime groups launder money in tax havens. Subsequently, again, through tax havens, people will channel the proceeds of crime to industries such as cannabis. It’s not just in the cannabis field; it’s in every industry where you can launder on the stock market.
The news report you are referring to indicates that millions of dollars are coming in from the Cayman Islands; in fact, 90 per cent of the amount reported came from the Cayman Islands, according to both the Journal de Montréal and another publication, La Presse, if my memory is correct.
With a public register, the best way to fight against this is transparency. It allows journalists to investigate fully and without barriers.
In addition, the register must list the ultimate shareholder and, in order to determine the ultimate shareholder, the incorporation of shell corporations must be discontinued. Quebec and Canada allow the excessive incorporation of companies that serve no purpose other than to filter money through tax havens. Then, it is also necessary that the interests of certain elected officials be made public. If there are family ties, it is important that any risk of conflict of interest or appearance of conflict of interest be reported in the same register.
Senator Carignan: In preparing for today, I was comparing the registries and the companies of those with licences now, and I could actually see that there are numbered companies that control numbered companies. There are companies registered in Panama and in several tax havens. This is easily found.
To close these gaping loopholes, shouldn’t foreign ownership of cannabis companies be banned? In any case, it’s illegal all over the world, so it’s not really a problem, because it will be allowed only in Canada. Do you think that by banning foreign ownership of companies producing or distributing cannabis in Canada, while exercising the probity checks we talked about, it would help to control and fix these flaws?
Ms. Rizqy: Your question is very good and so is your comment. I could only support that if the government were inclined to move away from the free market system. It must be understood that there is also an interest on the American side to invest in the Canadian cannabis market. I understand that, but what we should ban are investments whose origins raise significant doubt or are impossible to know.
In addition, there should be a Canadian list of tax havens that is affected. The European Union has recently released a new list of tax havens. You would have to be very naive to think that the Cayman Islands have many legitimate businesses.
Senator Carignan: In any case, we are not allowed to export it; it’s set out in the legislation, except for research purposes and for specific things. Since it is illegal everywhere else, the question of free trade does not arise. So, by putting a ban on foreign ownership, in addition to addressing the aspects related to tax havens, I think we would have a fairly robust regulatory regime at that point.
Ms. Rizqy: I believe so, and if you go in that direction, you should know that the stock market likes foreign capital. If we limit ourselves to Canadian capital, we get to the point pretty quickly. If you limit foreign ownership, this could cause problems and you could face more opposition. I would instead suggest that foreign capital be targeted. The list of tax havens is known. If we limit ourselves to that, we would have already taken a big step.
Senator McIntyre: Mr. Bédard, my question concerns companies that have a licence to produce medical cannabis compared with companies that would obtain a licence to produce recreational cannabis. In your opinion, should companies that have a licence to produce medical cannabis be screened for a licence for recreational cannabis? The reason I’m asking you this question is that Bill C-45 would automatically allow them to obtain a licence to produce recreational cannabis.
Mr. Bédard: I’m wondering about how licences are issued, to whom and how. Why does this person have a licence while another person does not? Some applications are refused; there are people who have received licences and, for a given reason, have received more than someone else. These are questions I have.
Senator McIntyre: Ms. Rizqy, do you have any amendments to propose to the committee?
Ms. Rizqy: Yes. I would have a list of solutions. Those who have already obtained the therapeutic licence should be subject to review, up to the ultimate shareholder. If a lawyer interferes, check with the lawyer in question. They will have to take clear action to show that the client is real and that fake directors are not involved.
In terms of solutions, you absolutely must create a public register of the beneficial owners of the company. If, at that time, you see a trust in a structure, refuse the licence. Why? Allow me to explain. Recently, it was brought to my attention that some trusts do not respect the three certainties rule. The purpose of the rule is to ascertain the object, that is, who the beneficiary of the trust is.
We can have a language that is broad enough to identify the beneficiary. Recently, I noticed that in the instruments of some trusts, the language was so clear that it was possible to change the beneficiary, whereby the trust became invalid and the profits were thus returned to the person who created the trust. Often, the person who created the trust is the one trying to hide their identity. So, if there is a trust in the company’s structure, it might be wise to refuse the licence, since you are not able to determine with certainty that the security clearance is valid.
I would impose harsher rules on professionals because all occurrences of money laundering involve accountants. You know that accountants have to report to FINTRAC when their clients make certain transactions. Lawyers do not have to report to FINTRAC, and that is a danger. I think the vast majority of my colleagues are honest, but unfortunately there are exceptions. We must legislate for these exceptions. In securities, I think lawyers should have to submit reports on their clients to FINTRAC, particularly with respect to cannabis. In addition, if it were up to me, I would do it for all security transactions, that is to say, transaction reports of the amounts that go through their clients, including inbound transactions. Transactions that come from outside should be checked at all times. If you were to do that, you would already be taking a major step forward in the industry.
There is no way to verify on the spot, abroad, the value of the information we receive. The Autorité des marchés financiers, the Ontario Securities Commission and the British Columbia Securities Commission sign memorandums of understanding to verify certain information on the spot. In fact, only practices in the industry are checked. Memorandums of understanding should be strengthened to allow for on-the-spot verification in those countries to ensure that the shell is a real corporation with substance.
We could also stop signing certain agreements. You could add a complete list of tax havens. I would encourage you not to use the OECD list. With all due respect to the OECD, it has several conflicts of interest within its organization. The list has been greatly reduced as a result. I propose the one that was established by a number of economists, including the Nobel laureate, Mr. Stiglitz; it contains about forty countries.
Let’s get back to basics. The goal is to remove the proceeds of crime and to promote prevention. It would be useful to create a fund, using the revenues generated by cannabis, to achieve the objectives of the prevention component, but also those of the law enforcement component. If the police cannot afford to investigate, the whole thing will be doomed.
Senator Gold: Thank you both for being with us today. You mentioned a lot of things, such as the lack of resources for investigators and the problem of tax havens. We are talking about cannabis and Bill C-45. If I understood you correctly, there are money laundering problems across all industries. Your recommendations, of course, apply to the cannabis industry. Am I right in understanding that your recommendations are more general in terms of how you verify the source of the money, the shareholders and everything, regardless of the industry involved, and who is the beneficiary of the investment? If I understand correctly, your concerns are much broader.
Ms. Rizqy: You are absolutely right, my concerns are always very broad. However, the purpose of Bill C-45 is to stop the profits of crime. To do this, we must have the resources.
You are right to point out that I believe this type of infiltration is found throughout the economy and all publicly-traded businesses. Since recreational cannabis is a new industry today, we must seize the opportunity now to raise our standards so that they are truly worthy of a G7 country.
Senator Gold: Forgive me if the question has already been asked. Mr. Bédard, do you have concrete recommendations to offer to our committee? We are here to study the bill and try to improve it. You said you are against the bill.
Mr. Bédard: Yes, I did.
Senator Gold: That is your right. Having said that, do you have any suggestions to improve the bill so that it minimizes or reduces the presence of organized crime on the street? Do you have any recommendations or thoughts to share?
Mr. Bédard: This law will not change organized crime. The legalization of cannabis will not change street crime. It will further promote the use of cannabis. It will allow each property to grow up to four plants. Imagine how many houses there are in Canada. Do you know that a cannabis plant produces a kilogram of marijuana? Four plants are therefore equivalent to four kilos. With 100,000 homes, we get 400,000 kilograms of marijuana.
In my opinion, the term “medical cannabis” is used mainly to hide the sale of narcotics. You will never fight organized crime and, on the contrary, you will force it to organize further.
Senator Gold: You do not have a concrete recommendation?
Mr. Bédard: No. My recommendation is to reject this bill. It might be viable in another form, but not this one.
Ms. Rizqy: I would like to comment on two tax aspects. It would be appropriate for investigators from the RCMP and the various police forces, when they issue a security clearance, to have access to the tax records of the individuals they are investigating. They should have automatic access and not on request. An immediate exchange of information must take place as soon as a person applies for a licence.
On the revenue side, I forgot to point out that under the Income Tax Act, we cannot ensure that future capital gains from foreign investment will be taxable in this case. The definition of “taxable Canadian property” should ensure that cannabis-related shares become taxable Canadian property and, therefore, subject to tax.
[English]
Senator Boniface: Thank you both for being here and for your presentations.
I come from a similar background as you do, Mr. Bédard. We’ve had some experience in law enforcement with respect to the establishment of casinos in many locations over the last number of decades.
Is there anything to have learned from that process in terms of vetting in suchlike that would be helpful to this committee?
[Translation]
Mr. Bédard: I cannot answer you on casinos.
Senator Pratte: Ms. Rizqy, you suggested a number of changes in practices. I would like to read what is in the bill and ask if you think that changes should be made.
The bill indicates that in order to obtain a licence, an organization’s financial information must be provided, including information about shareholders, members and who controls it directly or indirectly. If we refuse to give any information, the minister may refuse to issue the permit.
As for the security checks, at the Standing Senate Committee on Social Affairs, Science and Technology, the question was asked of the Department of Public Safety as to whether additional information would be requested under the current regime for cannabis for therapeutic purposes. The answer was the following.
[English]
Health Canada has proposed to expand the list of individuals who would require a security clearance to include the directors and officers of any parent company in addition to those of a licensed company required.
[Translation]
Does this information tell you, in the text of the bill — I do not mean practices, because I understand that practices need to be improved — and in regulatory proposals, that there are sufficient tools to enforce the kind of practice changes you want?
Ms. Rizqy: In the paragraph you just read, the key word is “control,” which is the notion of control. Of course, I can dilute the shareholding enough to make sure that almost no one controls or to divert control. You could at that time carry out an investigation of a field of the company which would be correct, but for the other field held for example to 20 per cent, it is likely that you will not be able to investigate because it is not the person who controls it. But that does not prevent it from being a person who may have interests related to organized crime.
I also had the benefit of reading one of the responses from Health Canada, which indicated that it will still control the directors and officers of any parent company, but people in organized crime never want to be directors or act as a parent company. How will they organize? Take a company that applies for a licence; it will be held for example at 80 per cent. You are going to investigate and, obviously, this is where you will look. But the other part, for example, the one that holds 20 per cent of the shares, will not necessarily be subject to an investigation under the provision. Ultimately, you will face a trust. That’s what we see.
Senator Pratte: I understand your point, but I have the impression that when I read the bill, we can go back as far as we want. It’s a question of practices more than amendments to the bill.
Ms. Rizqy: Could you reread it, please?
Senator Pratte: I’m at your service, Ms. Rizqy. The provision reads as follows, and I quote:
. . . financial information in respect of an organization includes information about its shareholders or members and who controls it, directly or indirectly.
Ms. Rizqy: Yes, but controlling refers to 50 per cent plus one.
Senator Pratte: You’re saying that we should obtain the information of all shareholders.
Ms. Rizqy: Of all shareholders.
Senator Pratte: But Ms. Rizqy, there can be tens of thousands of shareholders.
Ms. Rizqy: Exactly.
Senator Pratte: You are going to conduct security checks on tens of thousands of shareholders.
Ms. Rizqy: First, Senator Pratte, I would be surprised if, in a corporation applying for a licence, there would be thousands of so-called controlling shareholders, that is, those who have the right to vote. You can have different types of shareholders, such as preferred shareholders, C, D and so on, but among those who now have licences, there are not a ton of shareholders. There are a few, and naturally because of the way it’s done and structured, the one that has no control is probably tied to organized crime.
The Chair: Thank you for your contribution, Ms. Rizqy and Mr. Bédard.
Ms. Rizqy, if you have a list of recommendations concerning the problems that you have faced, we would like to receive a copy.
Ms. Rizqy: Thank you very much.
[English]
The Chair: Honourable senators, we are resuming our afternoon session with the Honourable Bill Blair, Parliamentary Secretary to the Minister of Justice.
Mr. Blair, I don’t have to explain the procedure. You’re familiar with the way we work around this table. You have the floor.
Bill Blair, M.P., Parliamentary Secretary to the Minister of Justice and Attorney General of Canada and to the Minister of Health: Thank you for the opportunity to come before you today. I have some prepared remarks, which I will try to get through quickly, because I think the best use of our time is to allow a fulsome opportunity for asking questions and providing answers.
I am pleased to appear before this committee today to assist in your study of Bill C-45. I understand the committee is particularly interested in studying the implications of Bill C-45 and organized crime.
I appear today not only in my capacity as Parliamentary Secretary to the Minister of Justice and the Minister of Health but also, if I may say, as someone with nearly four decades of law enforcement experience, including a decade as the chief of the Toronto Police Service.
Throughout my previous career, I actually had direct responsibility for confronting organized crime and promoting the safety of Canadians. I served in a number of capacities, including the chief of detectives in Toronto. I was responsible and oversaw the formation and management of the largest major organized crime investigative unit in Ontario. I also served on the national executive committee of Criminal Intelligence Service Canada and chaired the Canadian chiefs Organized Crime Committee.
I hope I am able to bring a first-hand account of how the criminal elements in our society have profited from the current regime of cannabis production.
The starting point for any discussion concerning the legalization and strict regulation of cannabis is to acknowledge the current environment. According to Statistics Canada, the estimated cannabis consumption by Canadians as of 2015 totalled over 697 tonnes of cannabis, with an estimated market value of $6.2 billion.
The question must be asked: Who is reaping these profits? During the testimony of RCMPSuperintendent Goupil before this committee on March 22, he noted that about 40 per cent of organized crime groups in Canada are involved in the cannabis market.
As I mentioned, I served for over a decade on the National Executive Committee of Criminal Intelligence Service Canada. That organization identified over 900 organized crime groups, 78 per cent of which had as their primary source of income illicit drugs. As the superintendent has testified, for about 40 per cent of that 900, their primary source of income is the illicit production and distribution of cannabis. The numbers involved in that illicit production are quite disturbing and amount to approximately $20 million a day nationwide.
That is why our government has been clear from the outset that a key objective of the cannabis legalization and regulation initiative is to take these illegal profits from the hands of criminal organizations. That is clearly set out in the act’s purposes under clause 7.
Once enacted, Bill C-45’s legal framework will provide Canadians with a legitimate and quality controlled choice to purchase cannabis: One that will require that cannabis is produced under strict regulation and oversight, and one in which the cannabis has been tested for adulterating chemicals and pesticides and in which the cannabis is of known potency. A competitive legal industry is critical to reducing the scope and scale of the illicit market.
For adult Canadians who choose to purchase cannabis legally, they will be able to do so knowing that they will not be supporting a criminal enterprise and that the profits from their purchases are to be reinvested in legitimate businesses supporting their communities. This will significantly impact the demand driver that currently exists for organized crime to profit. All activities operating outside of the proposed new legal framework will remain prohibited.
A very important point that needs to be re-emphasized is that law enforcement will retain all of the tools they currently possess to investigate and prosecute organized crime groups involved in the illegal production, distribution, import and export of cannabis. All of their authorities, all of the offences and all of the penalties are being retained under this legislation.
Some have pointed to the lack of success in other jurisdictions in stamping out the illicit market and are asking: Why would we be different?
Many of you have heard me say that we are engaging in a process, not a single event. It would be naive to declare that we could displace the entire illicit market overnight. Canadians know that investing in the enforcement of our existing strong laws of creating criminal sanctions for the illegal activities of organized crime and introducing an alternative choice for Canadian adults who use cannabis so that they may make a legitimate choice, a safer choice, and a regulated and accountable choice, will be more socially responsible and create more positive outcomes for all of our communities.
Another issue I would like to address concerns the need to keep criminals and organized crime networks, whether they be domestic or foreign, from infiltrating the legal cannabis market. This issue is closely related to the possibility of investments made by companies through offshore tax havens.
Under the current medical cannabis system, Health Canada works closely with the RCMP to carry out detailed law enforcement record checks that involve engaging with local law enforcement agencies nationwide to look at intelligence gathered for enforcement purposes.
This is very important. This is not simply a criminal records check. This is a very deep dive into all of our intelligence databases and local law enforcement databases so that we may have as much information as is currently available to the law enforcement community, which will inform the decision whether or not an individual should be allowed to participate in this new industry.
These checks are used to surface any additional information that can be brought to bear on the decision to issue a security clearance, including any known associations with criminals or organized crime.
Once the RCMP provides this information to Health Canada, the department considers all sources of evidence to determine whether the individual poses an unacceptable risk to the integrity of the legal production system.
I would point out to this committee that we have four years of very comprehensive experience with this system of security background check. Since the implementation of the MMPR regulations in 2013 and the licensing of medical licensed producers in the country, the RCMP has conducted literally thousands of background checks and a very comprehensive review.
The largest complaint I have heard is how long and how vigorous the background security process is but, quite frankly, it demonstrates the commitment of Health Canada and of our law enforcement officials to ensure there is no infiltration of organized crime.
As part of the new regulatory framework, Health Canada has proposed to expand upon the list of individuals that will require security clearance to include the directors and officers of any parent company. In addition, the licensed company will be required to develop and maintain an organizational security plan that sets out the procedures to be put in place to prevent cannabis from being diverted to the illegal market.
This security plan must be submitted to the Minister of Health as part of each licence application, along with the identity of individuals occupying these senior positions. Physical security provisions, recordkeeping and reporting, participation in a new national cannabis tracking system, and announced and unannounced inspections all contribute to ensuring that licensed producers are highly scrutinized before they are awarded a production licence and on a regular basis thereafter.
I am confident that law enforcement agencies across Canada will continue to maintain their focus on organized crime and associated activities throughout the transition period and beyond. In order to assist them in doing that, we had conversations right from the outset of the discussion of this legislation and its enforcement requirements. We heard very clearly from law enforcement about some capacity issues to deal with organized crime.
In response, our government committed $113 million to be invested in the RCMP to improve, enhance and, in many cases, restore the RCMP’s ability to conduct comprehensive and effective organized crime investigations directly related to the criminal enterprises involved in the illegal cannabis industry, and significant new investments in CBSA to improve border integrity issues to make sure there is no illicit cannabis either being imported into or exported out of Canada.
That concludes my prepared remarks, and I am happy to respond to your questions.
The Chair: You’ve been effective in the time that was allocated to you.
[Translation]
Senator Dupuis: Parliamentary secretary, welcome to the committee. My question is about the experience we have already gained. We have met with police chiefs and police officers. They are already fighting organized crime because there is a problem with the illicit market. In the report of the Task Force on the Legalization and Regulation of Cannabis, the government was asked to review the system of designated persons in the so-called medical market, because information suggests it serves as a point of entry or exit for organized crime. Given the experience that the government and police forces have already had, what will it take to strengthen the fight against existing crime and to ensure that the new system of legalization is not an additional opportunity to expand the activities of organized crime through home production?
[English]
Mr. Blair: Thank you very much, senator. I’ll try to answer succinctly.
With the introduction of what was then the MMAR, Marijuana Medical Access Regulations, in 2002, at that time, in response to a court decision, a provision was introduced for designated growers for personal cultivation.
Quite frankly, in my experience as a police officer, this was one of the areas that was vigorously exploited as a vulnerability by organized crime. They infiltrated that process of illegal production under the guise of utilizing the designated grower provisions of those regulations.
In 2013, the government did a very good job, in my opinion, in responding to that and in creating a new licensed production system that had vigorous oversight, very comprehensive regulations and no provisions for designated growers.
Unfortunately, the provisions of the MMPR regulations were challenged under a Federal Court decision called Allard. In response, the court directed that we restore some of the provisions of the original MMAR regulations, which are now reflected in the ACMPR, the new legislative response. I apologize for all the acronyms.
It still is a concern. I have talked to my colleagues in law enforcement. It remains a concern in terms of how we might more effectively police the designated grow provisions of the medical marijuana regulations.
I wish to point out two things that I think are really important. There is no designated grower under Bill C-45. In the regulations we have brought forward for the licensed production of cannabis, it is strictly controlled. It can only be legally done under strict licence and under the oversight and regulatory governance provided in Bill C-45 and in its accompanying regulations.
Production outside of that licensed production environment remains a serious criminal offence. The trafficking of that drug produced outside of that system remains a serious criminal offence.
We have applied the unfortunate experience of the early MMAR regulations in the development of this legislation. It will simply not be allowed. I will tell you I am very confident in the rigorous care that has been brought to the development of these regulations to address that very issue.
In addition, we have made a commitment right in the bill that within three years we will review the entire medical marijuana system. I can also assure you that Health Canada will not wait three years. We are looking at bringing greater integrity to the existing provisions for medical marijuana designated growers today. It will be informed by the evidence and experience we will have with the new system of licensed production that will be implemented according to Bill C-45.
It is an area to be addressed, but I want to assure senators that we have addressed that in Bill C-45. In the new system for non-medical production, no designated growers will be allowed. There are rigorous criminal penalties for those who operate outside of those rules.
[Translation]
Senator Boisvenu: Welcome, Mr. Blair, to our committee. I was listening to Minister Fournier, who said he was very concerned about home marijuana production. That’s one of the reasons why Quebec is going to ban it; there’s a fear that it’s an opportunity to create an unregulated market — I’m using the term your government likes to use, rather than the term “illegal market.” It will create an unregulated market where the production will be impossible to control. It was Chief Harel, from Gatineau, who told us, and Minister Fournier repeated it earlier: home production will be impossible to control. Furthermore, this production will ensure that the regulated market will be hard for them to access.
Does keeping the production of four marijuana plants in the bill not favour a form of crime, which I would describe as grey in nature, meaning not organized crime, but a form of parallel market that may have consequences on the so-called legal market?
[English]
Mr. Blair: Thank you very much, senator. I want to be very clear. There is no market available in these regulations. I actually worked very closely with the task force when the issue of personal cultivation was extensively canvassed on that committee.
We spoke to many jurisdictions where there was a belief that personal cultivation would allow reasonable access, as the courts have said, for individuals who perhaps couldn’t afford to participate in the regular market because of the cost.
When you use the term “market,” I might suggest that market is an absolute prohibition. It is a serious criminal offence to sell any amount of cannabis produced outside of the licensed regime. If an individual was to grow for personal cultivation an amount of cannabis up to a limit of four plants, any effort to market that, to sell that, constitutes a serious criminal offence under this law. The determination of four plants was considered reasonable, based on our experience in other jurisdictions and under the medical regime. It was a suitable amount of cultivation for personal use, and it remains in effect that it cannot be sold.
We have said any amount of cultivation above four plants will be an offence under Bill C-45, and any effort to sell it or even an intent to sell it would constitute —
[Translation]
Senator Boisvenu: So, you do not agree with Minister Fournier that this could create a parallel market, and that this market will be impossible for Canadian police forces to control.
[English]
Mr. Blair: With great respect, I do not. I will tell you that I have dealt with that criminal market for decades. It wasn’t four plants that we encountered when we went into residences that were given over to cannabis cultivation. It was 400, and in some cases 4,000 plants. The houses had been converted for the sole purpose of growing cannabis, and it was a commercial operation. That activity remains a serious criminal offence.
I take the law enforcement’s point about the difficulty of enforcing four plants. It is precisely the same difficulty, I might suggest, to enforce zero plants. You still have the difficulty of not being able to get into the house without reasonable probable grounds and the benefit of a search warrant.
It is very clear in this legislation that the threshold of what constitutes an offence is more than four plants in cultivation. What becomes a serious criminal offence is either the intent to traffic or the actual trafficking of that drug.
Quite frankly, law enforcement has all the tools they need for investigation, the laying of charges and the prosecuting of those offences, because growing it for the purpose of sale or for actually selling it remains a serious criminal offence within this legislation.
[Translation]
Senator Carignan: I want to talk about another issue: the question of share ownership. I’m looking at the current list of medical cannabis companies that hold the licences. Take, for example, Aurora Cannabis, where $32.2 million comes from the Cayman Islands; CannTrust Holding, where $2 million comes from the Cayman Islands; and Supreme Cannabis Company, where $10.5 million comes from the Cayman Islands. I name the Cayman Islands because we all know that this is a tax haven, but there are others, like Malta.
We do not know who is behind this funding. We want to move towards the objective of limiting the black market and limiting the presence of organized crime, which would endeavour to control cannabis companies and therefore indirectly accomplish what cannot be done directly. But even if we conduct all the desired inspections, these are people who are outside the country, making it difficult to control or verify probity. In any case, as I said earlier, it is illegal everywhere else, and Canada will not have the right to export cannabis, as it is stated in the bill.
So, Mr. Parliamentary Secretary, in order to facilitate control activities and subject shareholders of producing companies to better verification, would you be open to restricting ownership of producing companies to Canadian shareholders only, thus limiting foreign control of cannabis companies?
[English]
Mr. Blair: Quite frankly, senator, your last question is a little outside of my area of expertise, but I can tell you what is currently available. We have regulations in place already with respect to foreign investment and subject to oversight.
I would like to draw your attention to one thing. This bill will require the organizations that acquire and maintain licences for the production and processing of cannabis submit to enhanced financial transparency. Health Canada can obtain the records of these financial transactions and the investments. It’s built right into the bill.
I worked in organized crime for many years. Organized crime doesn’t like transparency. They don’t like the sunshine. They don’t like any possibility that their covert activities will be discovered. We have built protections right into the bill.
There are already systems in place with respect to foreign investment being made in Canadian companies. In these regulations we have very enhanced background checks for the key participants in the corporation and those who are in ownership positions and have influence in the operation of the company in order to maintain its integrity.
I know that law enforcement and all of us are concerned about the efforts of organized crime to try to infiltrate this new market. I would simply point out that for almost a century they have had 100 per cent control of this criminal enterprise. They have profited in the billions of dollars from it every year. Frankly, it’s an unfettered market. They have no competition and very little control placed upon them.
By the implementation of these regulations, by the creation of a competitive industry and by the regulations that we have put in place on background checks, security requirements, security plans, and enhanced financial transparency required in the act, we have created an environment which is not conducive to the activities of organized crime. Yet, we must always remain vigilant.
I would use a phrase I have used a number of times in the past. I see this very much as a process of implementation and not simply an event. There is a requirement on Health Canada, on Public Safety Canada, on the RCMP and on law enforcement to continue to monitor the integrity of these organizations and the entire system to maintain the integrity and the confidence Canadians deserve that this system will not be infiltrated by organized crime.
They have been in this business for a long time. The business is about to become a lot tougher for them with the implementation of this new act. We want to make sure they don’t try to run it by the back door. We have put an awful lot of light and oversight at that back door.
Senator Batters: Mr. Blair, I am not really sure what your role is today. You’re not a minister. You’re not really a witness. You are here to sell your government’s bill.
In my five years on this Legal Committee, we have not had a situation where we have had, first, only officials not including deputy ministers, then the Justice Minister and now a parliamentary secretary, all of whom have been afforded significant time to give lengthy statements selling this bill.
My question to you is this: Your government’s bill allows every household in Canada to have four plants. Currently, if the police see a marijuana plant in someone’s window or smell it in an apartment hallway, you’ll be a long way to having reasonable grounds to search because marijuana is illegal right now.
With your bill allowing that homegrown element to be legal at four plants in every household, you’re making it exponentially more difficult for police to obtain those reasonable grounds to search and to stop the huge grow-op operations we have heard about that exist in states like Colorado where it’s legal. We have seen homes where organized crime comes in, guts the entire home and has the whole thing as a massive grow op, as you talked about in your opening statement.
Why are you doing that?
Mr. Blair: Let me be really clear about exactly what is in Bill C-45. We have created an offence for the cultivation of more than four plants. We have retained the criminal offences for an intent to traffic that which is cultivated in any amount and for actually trafficking in any amount of cannabis grown by an individual.
In our discussions with senior officials at provinces and territories we have been very explicit that they have not only a right but a responsibility to put regulations in place to ensure that can be done in their own communities and in the context of their own communities in a way which is responsible, protects the interests of children, and is entirely consistent with our shared goals.
As I travelled across the country, there is an overwhelming consensus that the current system is failing our kids. We need to do better. Whatever regulations they bring in place for these four plants or however they choose to do, it must be consistent with the goals of keeping it out of the hands of kids and preventing organized crime’s infiltration.
You made reference to some of the American jurisdictions. Quite frankly, in one jurisdiction in particular, they did have a significant problem with organized crime exploiting personal cultivation; but they did not have a licensed production system such as we are putting in place with Bill C-45. Most of their cultivation was taking place in a personal environment and the weakness of that was exploited. We learned from that. We listened to them.
Senator Batters: Why are you taking away the police’s tools?
Mr. Blair: With great respect, we are not taking away any tools. In fact, we are retaining all of the tools they currently have/ We are also providing serious competition to what is right now an unfettered criminal market.
Senator Eaton: I am sure there is a very rational reason for this, but why has the bill criminalized someone who is a day less than 18 for having five grams? Why didn’t they go to a ticketed system?
I have heard answers when we have asked those questions, such as, “If we charge the person who is 17 with having five grams, his parents will find out.” I don’t know why a person of 17 years old couldn’t be ticketed. The police, looking at the age, would say, “I am very sorry, but I have to inform your parents what I have just done,” or would give the ticket to the parents.
What was your rationale for criminalizing kids under 18?
Mr. Blair: Let me be really clear. One of the things we said very clearly is that we wanted to eliminate or reduce the social and health harms surrounding cannabis use and the way it’s controlled.
Senator Eaton: I understand that.
Mr. Blair: One of the harms identified was criminalizing our children. We wanted to make sure kids were not either exposed to or involved in trafficking so we said in the bill that over a certain amount, which was five grams, would remain within the criminal realm.
I have heard a number of different interpretations that are incorrect. I am delighted to have the opportunity to clarify this. We have spoken to every province and territory. We worked closely with the justice ministers. I want to assure senators that in every province and territory in Canada, in every single place, there will be an absolute and enforceable prohibition on the purchase, possession and consumption of cannabis for any young person under the age of majority.
That prohibition will be enforceable through provincial and territorial regulations. That’s a ticketing scheme. It has a civil penalty, a fine, or other restorative justice measures that are available; but it does not result in a criminal record for that kid.
I have heard it suggested that —
Senator Eaton: Could you go more slowly for me? If I am in Manitoba where the age is 21 and I am below 21, you’ll give me a ticket.
Mr. Blair: The provincial regulations will be based on Manitoba’s age of majority. That’s the age that all but one or most of the provinces have settled on. Under the age of majority there is an enforceable, absolute prohibition on purchase, possession and consumption of cannabis, which will be dealt with as a ticketable offence.
By the way, that is precisely how alcohol is dealt with in every province and territory in the country.
Senator Eaton: If I am 17 in Manitoba, I won’t get a criminal record.
Mr. Blair: No, ma’am. It’s not just in Manitoba. It’s in every province and territory in the country. The prohibition is enforceable entirely through provincial regulations and does not result in a criminal record. That’s one of the harms we hope to eliminate.
Senator Pratte: We have had witnesses who appeared before us to express a concern that security checks and investigations might not be able to reach the individuals linked to organized crime, for instance, numbered companies, trusts and so on.
Would you elaborate on the capacity or capability of those investigations to reach individuals who will obviously try to find ways of being behind the companies that are trying to get licences?
Mr. Blair: If I may, the regime that will be in place of background checks for the licensed production of cannabis under Bill C-45 requires a rigorous personal security screening process for all key personnel and all officers and directors of the company. Nobody will be allowed to come in with a numbered company shielding the individuals participating in that. All key personnel, including all officers and directors of the company, must undergo a very in-depth security screening and be granted clearance prior to licensing.
In addition, individuals who hold key positions within those licensed organizations are equally required to hold that same very rigorous security clearance. That includes people involved in shipping and transporting cannabis, the setting or amending of operational procedures within the company and even in sensitive security provisions. The security requirements for these licence holders are very significant, including that they have to file a security plan with the health minister. It is subject to ongoing inspection not just at the point of licence granting. It is ongoing inspecting, checking and oversight.
I also suggested that there is a provision in the bill that provides for very enhanced financial transparency for the money and the individuals investing in these companies, so that information can be known and subject to the background checks. It’s a very rigorous process.
Right now, there is nothing in place. The criminal organizations involved in this business do it in the dark. This will bring the entire production industry under strict regulatory control. It will be subject to oversight, governance, testing, recall and accountability.
Senator McIntyre: Welcome to the committee, Mr. Blair. My question has to do with health care costs arising from the legalization of marijuana.
As we know, provincial and territorial governments have launched lawsuits against the tobacco companies, claiming billions of dollars in health care costs.
That said, since the federal government may be ultimately held responsible for the legalization of marijuana, has the Government of Canada sought any legal opinion, or has the Department of Justice provided a legal risk analysis regarding the risk of potential class action lawsuits against the federal or provincial governments or marijuana businesses for the production and distribution of marijuana?
Mr. Blair: I am not familiar with any particular examination of that issue by either Justice or Health, but I would simply point out that the current system of cannabis control using a criminal sanction has resulted in a situation where we have the highest rates of cannabis use among our kids in the world.
The cannabis they’re using is untested and unregulated. It often contains adulterated chemicals, or even other dangerous drugs and many things unfit for human consumption. Currently, for our kids, it is far too easy to access.
We believe we have a responsibility to the health and safety of those children to provide greater restriction, a regulatory control over the access that they currently have to it, and an enforceable prohibition. Right now the prohibition in place is clearly not working for almost a third of our kids. We’re trying to put something more effective in place.
We’re also making significant investments in public health information. This is a public health framework for the control of cannabis. So far we have announced $108.5 million in investments in public education so that we might provide information to young people, their parents, their teachers, their health care providers and their peers so that they might make healthier and safer choices.
The cannabis that will be available for adult consumption, for the first time, will contain warning labels of the health risks. It will say specifically the potency, content and purity of what is being ingested by adult Canadians. We believe these steps significantly enhance the potential safety of use currently existing in the country.
Through a public education campaign, we believe that we can encourage young people not to begin using this drug, and adults who choose to use it might make lower risk, healthier, safer and more socially responsible choices.
Senator McIntyre: I appreciate your answer, Mr. Blair, but getting back to the issue of legal opinion, could you find out if in fact the Government of Canada sought any legal opinion and if the Department of Justice provided a legal analysis regarding the risk of potential class action lawsuits against the parties that I’ve just mentioned?
If you do find out, would you provide this committee with a copy of all legal opinions?
Mr. Blair: I will make the inquiry, sir. If that opinion is available, my advice to the ministry would be to provide it. I don’t have that authority, but certainly I will take your request back to the minister.
Senator Gold: Welcome again. Nice to have you here.
We had testimony earlier in this hearing about the possible impact of the bill on the fight to minimize and reduce the influence of organized crime in cannabis.
Since you have a long experience with these issues, I wonder if you could elaborate a bit on the consultations you’ve had with the RCMP and police forces, whether at the provincial or municipal level across the country.
What is your sense of how effective the bill will be over time in reducing the presence of organized crime in the cannabis market?
Mr. Blair: Right at the outset, we began meeting with Canadian Association of Chiefs of Police, the Canadian Police Association, and with people actually involved with these organized crime investigations. We also consulted broadly with jurisdictions such as Washington, Oregon and others that have had a somewhat similar experience to try to learn some lessons on what works and what does not.
It’s very important in this legislation that we retained the enforcement and investigative authorities that currently exist within the police. We heard from the discussions we had that the resources to conduct these investigations had been significantly curtailed. We have made commitments to put money back into the RCMP to do organized crime investigations and to help CBSA maintain border integrity. We even made a significant announcement regarding integrated guns and gangs investigations. Almost $100 million are to be invested across the country.
I come from Toronto. An awful lot of the gang activity, and certainly an enormous amount of gang violence we experience in that community, is directly related to the violent disputes that go on among the individuals in those gangs over the territory in which they sell cannabis. The illegal cannabis trafficking that is taking place in our communities is resulting in a lot of organized criminal activity, profit and violence.
Based on my experience with another crime control issue, when I was a young police officer back in the 1970s every police division in Toronto had an illegal gambling unit. I was part of these things. Every night we would knock off illegal gaming houses. At headquarters we would do a couple of wiretaps every year looking at people who were involved in offtrack betting, six for five operations, number rackets, et cetera.
These were a very big part of policing in Toronto back in the 1970s. Then about the mid-1970s, actually beginning with the Olympic lottery in Montreal and then expanding into other things, the government began to change its approach to gambling and began to regulate it, through lotteries initially and then through casinos. I will tell you that today there is no police service in Canada that has a full-standing gaming unit.
We work closely, mostly through the provincial police services and the RCMP, with the gaming commissions in the country. I will not suggest that the problem of illegal gaming controlled by organized crime went away completely; but it has been reduced to an insignificant public safety issue in our communities. It’s because Canadians were given a legitimate alternative, a choice to go to a regulated industry which was safer for them. They weren’t exposed to criminals and the violence associated with that. They made that choice.
I believe that experience can inform us as to what will take place in time with those adult Canadians who choose to acquire cannabis. They will be given a choice to go to a source where they know the potency, provenance and purity of what they’re buying; where they have a competitive price, access, quality and choice; and where it’s legitimate. There’s no social stigma attached to its purchase.
They will make more socially responsible choices. I believe that is a direct threat to the outrageous profitability of the criminal enterprise for organized crime. Taking away the easiest dollars they ever make will make our community safer. I know it will directly impact the amount of violence occurring within our communities among street gangs. Taking profit from those criminal enterprises makes our communities safer, and it does a better job of protecting Canadians and our kids.
The Chair: The only comment I would add to that is unfortunately gaming has no competitor, but cannabis has the competitor of all those other drugs on the market. There will still be incentive for organized crime to remain in the market to sell other drugs that are being sought after by consumers.
We can’t isolate, in my opinion, cannabis consumption from the fact that other drugs will also be made illegal, whereby the organized crime will remain active in selling the other drugs.
Mr. Blair: Let me assure you that the police remain absolutely committed. I’ve worked with them for four decades. I know the people doing the work now are absolutely committed to fighting organized crime and the insidious impact it has in all our communities.
This is very easy money for criminal enterprise, and we’re taking away a significant amount of their current opportunity.
The Chair: Thank you for your contribution this afternoon and thank you for making yourself available way beyond the hour allotted. We appreciate that.
Senator Batters, do you have a point?
Senator Batters: Yes. For tomorrow’s report recommendation discussion, I want to move that we have that in public.
When I brought this up last week, I said that it was important for openness and transparency, given that we’ve had all these hearings in public. We will have an important discussion about the recommendations that might be required in the report so that the public can hear what our reasoning is on both ends of that.
When we had that discussion, Senator Sinclair, a regular member of this committee, indicated that “at this point in time, we were just discussing here that we hadn’t yet discussed the process by which we would discuss potential amendments to this bill.” Then he said, “I think that portion of our discussion should be in public.”
Senator Gold also made his comments which seemed to indicate that the process portion should be in camera, but I think he was leading to the discussion that recommendations itself should be in public.
The Chair: I am sure, senator, we’ll have an opportunity tomorrow morning to start our meeting with that very question.
Are there any other comments, senators? I am going to be adjourning.
[Translation]
Senator Boisvenu: To go back to Senator Batters’ subject, is it possible for it to be addressed in public?
[English]
The Chair: Of course, the first decision is to go in camera. That’s usually the procedure.
Senator Boisvenu: Okay, good.
[Translation]
Senator Dupuis: Last week it was decided that it would be in camera. That is what was decided.
Senator Boisvenu: That was for the meeting.
[English]
Senator Batters: The decision was about the process.
[Translation]
Senator Dupuis: Last week we addressed the decision to discuss the report in camera. That was what we voted on. I don’t see why we’re bringing back an issue that was already decided on.
[English]
The Chair: I will review the minutes of the committee. On that basis I think we will be able to move on the way the decision would have been taken last week when we had the discussion.
If everybody agrees with that, the meeting is adjourned.
(The committee adjourned.)