Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue No. 44 - Evidence - May 22, 2018
OTTAWA, Tuesday, May 22, 2018
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other acts, met this day at 7 p.m. to continue its consideration of the bill.
Senator Art Eggleton (Chair) in the chair.
The Chair: Welcome to the Standing Senate Committee on Social Affairs, Science and Technology.
I’m Art Eggleton, a senator from Toronto and chair of the committee. I would like the rest of the members of the committee to introduce themselves.
Senator Seidman: Judith Seidman, deputy chair of the committee, from Montreal, Quebec.
Senator Poirier: Rose-May Poirier from New Brunswick. Welcome.
Senator Mégie: Marie-Françoise Mégie from Montreal, Quebec.
Senator Dean: Tony Dean, Toronto, Ontario.
Senator Omidvar: Ratna Omidvar, Toronto, Ontario.
Senator Petitclerc: Chantal Petitclerc from Quebec.
The Chair: Welcome back, Senator Dean.
Senator Dean: Thank you.
The Chair: You are looking healthier than ever.
Today we continue with 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. We are particularly focusing today on packaging and product promotion.
Here to help us along are four witnesses: first of all, here in our committee room, Ryan Forrest, Policy and Advocacy Officer, Framework Convention Alliance for Tobacco Control, who has also recently co-authored a report in Maclean’s magazine on the very subject we’re talking about; from Organigram Incorporated, Greg Engel, Chief Executive Officer; and then, by video conference, welcome to Professor David Hammond, Associate Professor, University of Waterloo, and Dr. George Sam Wang, Assistant Professor of Pediatrics, University of Colorado, Children’s Hospital Colorado.
Let me ask each of you to give us an up to seven-minute opening comment and then we’ll dialogue between you and the members of the committee.
David Hammond, Associate Professor, University of Waterloo, as an individual: Thank you very much. It’s a pleasure to be with you this evening. I’m a scientist and, for the last 20 years, I have been conducting research on the impact of product labelling and warnings in tobacco, food and, most recently, cannabis. In addition, for the past eight months, we have been monitoring cannabis products and prices through hundreds of illicit retail outlets in Canada.
Just so you know, I accept no industry funding and I don’t represent any organization for or against cannabis legalization.
I will talk about three things today. The first is restrictions on marketing, the second is health warnings, and the third is product labelling.
Of all the areas covered in the act, I would suggest that marketing promotion can have the biggest impact on who uses, what types of products are used and for what reason.
The marketing restrictions, as you know, that are proposed in the act are modelled on those for tobacco products in Canada. Like tobacco legislation, the act seeks a balance between allowing product information to reach adult consumers while prohibiting marketing that promotes use, especially to young people. In terms of how to accomplish this balance, I would like to touch upon some of the lessons we’ve learned with tobacco marketing over many decades.
The first lesson is that branding has the greatest impact on young people, those whom the act seeks to protect.
The second lesson is that limited marketing restrictions have limited effectiveness. When most traditional forms of tobacco ads were prohibited, marketing expenditures didn’t stop; they simply shifted to other channels, particularly packaging and the retail environment. For this reason, that’s why we have Bill S-5, which requires plain packaging for tobacco products and which received Royal Assent just last week.
Now, plain packaging is an effective public health measure. Not only does it reduce the promotional appeal to young people, it also enhances the effect of health warnings. If the government were to pursue its cannabis objectives without plain packaging, it would find itself with the responsibility to police thousands of individual packages to ensure that the brand imagery doesn’t increase appeal among youth or promote a positive lifestyle. That is not only resource intensive and difficult, but it proved ineffective for tobacco products, as it almost certainly would for cannabis.
The third lesson from tobacco is that once marketing promotion is allowed, it’s very difficult to scale it back through regulation or new legislation. Consider that it’s taken 50 years up until Royal Assent of Bill S-5 last week and multiple legal challenges for Canada to achieve the current restrictions on tobacco marketing. It’s much harder to restrict marketing after it’s been allowed than it is to loosen restrictions over time. Once it’s been allowed, the effective marketing can persist long after its removal. In short, it is very difficult to put the genie back in the bottle.
I think it’s worth noting for those of you who have been following the media that several cannabis companies have already gone on record stating that they intend to stretch the existing regulations as far as possible, through things like augmented reality technology and brand stretching for other consumer products.
The fourth lesson is that the removal of branding does not promote illegal or contraband sales. Now, testimony to other committees has suggested that restricting cannabis branding would make it more difficult for consumers to distinguish between illegal and legal products. That is simply not accurate. In fact, the opposite is true. Cannabis products acquired through legal retail outlets will be clearly distinguished by health warnings and other labelling requirements. If you’ve seen the images of what is proposed, I think you will agree with me. It’s simply not credible to associate reduced branding with an advantage for illicit products. The same argument has been made by tobacco companies to oppose plain packaging laws, and this argument has been refuted in multiple legal rulings, including several cases on which I’ve testified.
Overall, if the government wishes to prevent lifestyle advertising and promotion to young people, the act must include plain packaging.
I briefly want to talk about health warnings, which are another essential component of labelling policies. We have done work, and most Canadians, most youth, are uncertain about the risks of these products, and they actually want this information. Health warnings are the most cost-effective, self-sustaining way of communicating with Canadians about cannabis. The six primary messages that have been proposed in the proposed regulations, I would suggest, represent important harm reduction messages.
I would also suggest that warnings are a chance to provide support for addiction. In Canada, for example, every single cigarette pack includes a telephone help line number and a website for Canadians who wish to quit. We have evaluated it and it works. I would urge the government to display the same services on cannabis packaging to demonstrate its commitment to reducing addiction.
Lastly, I would like to speak briefly about labelling on product contents and dose. There is strong consensus that THC levels, the numbers, should be displayed on packages, but we can’t simply rely on providing numbers to consumers. I would ask the committee how many people intuitively understand what 40 milligrams of THC means. Is that a little? Is that a lot? We just asked a thousand Canadians, and even most regular users don’t know the numbers well.
You might also know that Canada is about to start using high symbols on food packages for sodium, sugar and saturated fat, and they’re doing this because it is easier for consumers to understand and use. The same principles should apply to cannabis labelling. If it’s important enough for canned soup and sugary drinks, it’s important enough for cannabis products.
The THC and dose labelling should be reflected on the actual packaging. When edibles are eventually sold, each dose should be individually packaged — think about different packs of gum where you push them out of the cellophane — which is a requirement in at least one U.S. state.
Overall, I will conclude by saying that I think the public health impact of cannabis will be determined not by whether it’s legalized but how it’s regulated in the legal market. Comprehensive restrictions on advertising, marketing and promotion should be given precedence. Overall, I think these measures will demonstrate the government’s commitment to ensuring that cannabis legalization benefits public health.
Thank you very much.
The Chair: Thank you very much, Professor Hammond.
Greg Engel, Chief Executive Officer, Organigram Inc.: Good evening, senators. My name is Greg Engel. I’m chief executive officer at Organigram Holdings Inc. Since 2013, Organigram has been a leading licensed producer of medical cannabis based in Moncton, New Brunswick.
It’s my pleasure and privilege to speak with the committee this evening about Bill C-45 and the questions and issues this legislation raises related to the promotion and packaging of adult use recreational cannabis, most specifically, Part 1, Division 2, Subdivision A on promotion and Subdivision B on packaging and labelling.
Canadians are at once curious and cautious in respect to the legalization of recreational use cannabis. While some reports suggest 68 per cent of Canadians favour legalization and that as many as 40 per cent of Canadian adults will use legalized marijuana, almost 60 per cent also have concerns about children and youth having greater access to the product.
I, along with many of my industry colleagues, have long believed that no system of growing and selling cannabis can work without explicit, strict and enforceable rules. Likewise, any policy decisions must reflect a deep respect for, and response to, Canadians, their concerns and their continued well-being.
For this reason, Organigram is an active member of the Coalition for Responsible Cannabis Branding, a group made up of 17 of Canada’s leading licensed producers who, together with the Canadian Medical Cannabis Council, the Cannabis Canada Association and Advertising Standards Canada, have proposed Guidelines for the responsible branding and promotion of cannabis, which copies have been provided to you for your review.
The measure of success for both public policy-makers and the industry will be how well we protect ourselves and our children from any potential harm while encouraging the operation of a free competitive market that balances commercial and social success.
Informed by the Task Force on Cannabis Legislation and Regulation, existing laws and regulations, key learnings from other jurisdictions and the recreational cannabis experience, we know that we need a common-sense approach to protecting youth and the safety of all Canadians. We must also create an environment that allows companies the opportunity to explain why the products they develop are better and safer than those from illegal sources, and packaging and labelling guidelines are at the heart of this issue.
If we are to successfully introduce Canadians to legal cannabis from trusted sources, we must offer cannabis producers and marketers a reasonable degree of flexibility to inform consumers of their choices when it comes to cost, quality and product attributes. From a policy perspective, this means that the legislative framework provided by Bill C-45 must allow for responsible use of creative design and packaging.
I’ve also handed out and please see the sample packaging I’ve given to everyone, which shows some examples of the current black market package that is being used today and the relative examples of the samples of current packaging that would meet the specs under Bill C-45.
Right now, well-packaged and -branded products exist at illegal dispensaries and through illegal means, both online and in person, across Canada. Starving the illicit market means competing with it. Unfortunately, the proposed regulatory framework released in January 2018 places strict restrictions on the promotion of legal cannabis that are clearly counter-intuitive to our collective mandate to eliminate the black market. Brand development and differentiation will only become more important as cannabis consumption moves away from dried flower and toward edibles, oils and topicals, as we have seen in more mature markets such as Colorado and Oregon.
Although safety and education need to be the top priorities, there needs to be more room for companies to brand and package their products responsibly. Licensed producers like Organigram have indicated time and again that they’re onside with investing in advanced child-resistant packaging solutions, but the consumer use experience is important to control as the purchase occasion. Providing consumers with a package they are embarrassed to hold will result in the use of other potentially unsafe storage solutions, as well as overpopulated landfills due to packaging switching.
The cannabis industry in Canada supports — and in many cases advocated for — controls focused on education and safety. For instance, as represented by the coalition, we agree that marketing should not be directed to persons under 18 years of age, we agree that all advertising messages should contain responsible use statements, and we agree we should adhere to the provisions of the Canadian Code of Advertising Standards.
Keeping cannabis out of the hands of youth must remain an absolute collaborative priority for all those involved in the cannabis industry. Add to that the age-validated approach proposed in various provinces and the retail environment, a requirement for pre-packaged child-resistant and tamper-evident containers and the vigorousreinforcement of the rules, and we can find ourselves creating an environment that allows for both safety and commercial success.
Brands and social responsibility need not be mutually exclusive. Canadians should feel confident that these kinds of reasoned and reasonable guidelines can and do strike the necessary balance between protecting public health, even the environment, while ensuring the legal cannabis industry has the tools it needs to effectively counter the illicit cannabis market in this country.
Policy decisions that reject reasonable parameters for packaging and branding thwart the development of an emerging and thriving industry. At this time, Canada is seen as a global leader and has the opportunity to develop a system that includes the public and private sectors’ shared, non-negotiable commitment to responsible and appropriate communication. As we move toward legalization, we need to have reasonable and reasoned discussion, but we can’t be ruled by fear. Let’s proceed judiciously, but let’s proceed. If we are truly to embrace an adult recreational market in Canada, we must take care to look for opportunities to allow a legal, responsible industry to succeed and not shackle our shared success before we’ve even begun.
Thank you for your time and consideration.
The Chair: Thank you, Mr. Engel.
Ryan Forrest, Policy and Advocacy Officer, Framework Convention Alliance for Tobacco Control, as an individual: Good evening, honourable committee members, and thank you very much for the opportunity to speak to you here this evening.
Though I’m speaking to you today as an individual, I work as a policy and advocacy officer at the Framework Convention Alliance for Tobacco Control here in Ottawa. In that role, I support the implementation of evidence-based, population-level tobacco control policies that are prescribed in the World Health Organization’s Framework Convention on Tobacco Control in countries around the world.
I would also like to note that my remarks this evening were prepared in collaboration with my colleague Dr. Daniel Myran, who is a Canadian family physician and who is currently completing a Master’s of Public Health degree. He is specifically examining alcohol control policy in Ontario as part of that course of study.
I would like to focus my remarks tonight on what I see as some of the critical public health concerns that should be considered as part of the committee’s study of Bill C-45, in particular, its provisions with respect to the promotion of cannabis products.
Let me begin by saying that the government’s commitment to taking a public health-oriented approach to cannabis legalization should be lauded. In particular, I congratulate them on their desire to focus on protecting Canadian youth, for whom the status quo is currently failing. However, I would like to express my concern that the provisions of the act with respect to the promotion of cannabis are insufficient to achieve the bill’s policy objectives in relation to public health and protecting youth.
The act proposes a number of restrictions on cannabis promotion, including a specific prohibition on marketing that appeals to youth. At the same time, however, the bill would allow some ads that prevent facts or promote brand preference, provided that these ads are shown only in places where youth are not legally allowed or can be broadcast if reasonable steps have been taken to ensure that they cannot be accessed by a young person.
Although the text of the bill sounds reasonable as it currently stands, I would like to underscore that based on what we have seen in the fields of tobacco and alcohol control, these proposed partial restrictions may in practice do little to actually prevent cannabis marketing from reaching youth audiences. This is of particular concern as there’s very strong evidence from the tobacco and alcohol literature that the marketing of these products has strong impacts on young people, even where the content and the messages are not necessarily targeted at youth audience.
Multiple longitudinal studies have found that youth exposed to marketing drink and smoke earlier and heavier. We also know that both the tobacco and alcohol industries work aggressively to circumvent partial restrictions on advertising, as is already underscored by Dr. Hammond, including those that allow advertising in only certain locations, in certain media, or using messages that do not appeal to youth.
It has been demonstrated that where partial restrictions of these types have been put in place rather than comprehensive bans, tobacco and alcohol companies simply switch their marketing efforts to unrestricted outlets, or they pursue alternative, more indirect forms of marketing, like brand stretching, offering promotional discounts, providing free samples, sponsoring online content and so on. While some of these many examples might be prohibited based on what’s currently in the act, I have no doubt that the Canadian cannabis industry would find other creative ways to circumvent these partial restrictions on advertising.
Partial restrictions of this sort can also be very difficult and costly for governments to enforce. Governments become implicated in a game of cat and mouse with these industries, with the onus on the government to consistently monitor these promotional activities, to stay aware of shifting tactics and to impose penalties or sanctions accordingly.
Health Canada has also recently released their proposed regulations on cannabis. I was surprised to see that this document was light on details with respect to how the agency plans to further regulate cannabis promotion and advertising. I found that many aspects of what will be allowed and will not be allowed are still somewhat unclear.
At the same time, the Canadian cannabis industry has also been quick to propose their own self-authored set of guidelines that they claim will ensure the responsible branding and promotion of their products. These guidelines are contained in the document entitled “Adult Use Cannabis Advertising and Marketing Self-Regulatory Guidelines for Licensed Producers.” That document was released in November 2017 and was authored by 17 of Canada’s licensed cannabis producers, in conjunction with Advertising Standards Canada, which is an advertising industry self-regulatory body.
In the document, these companies outlined their interpretation of the cannabis act, including the ways in which they will market their products in ways that they claim will not appeal to youth. The document outlines a voluntary agreement where cannabis companies would only advertise on television, radio or on any websites or social media platforms where at least 70 per cent of the audience is over 18 years of age or over a province’s or territory’s legal age for purchase, measured on a pre-media buy basis.
Similar standards are used in many countries for alcohol advertising, and the evidence is, once again, that they do not work as intended. It is also critical, I think, to underscore how low of a bar a 70 per cent threshold represents. For example, based on these criteria, the magazines Sports Illustrated and Rolling Stone would represent acceptable media outlets for cannabis advertisement.
The industry has also proposed that licensed producers will ensure that they use a method of age verification for adult consumers to access their websites. A spokesperson for Health Canada has also made public statements suggesting that this would be their chosen method for restricting youth access to cannabis marketing on online media. However, the literature has demonstrated that the current age verification methods used for alcohol websites are not effective and that youth are unsurprisingly able to provide a fake age and simply enter these websites.
These are just two examples of the ways in which the act and the regulations as they currently stand leave room for interpretation and for cannabis marketing to proliferate in ways that will reach young people.
If some cannabis advertising is allowed, it will be inevitable that some youth will be exposed. A key question, I think, will be: How much is acceptable? If the government would like to adopt an approach to regulating cannabis that is truly in line with public health, one that places health concerns above the pursuits of profit, then the answer to this question, I think, should be “very very little.” As such, the partial restrictions in the act, I feel, should at the very least be expanded to include a ban on the promotion of cannabis on television, on the radio, in magazines, in newspapers and in online media. It will also be important that the act is accompanied by detailed regulations, robust systems for enforcement and meaningful penalties for violations.
Thank you very much. I look forward to your questions.
The Chair: Thank you very much.
Dr. George Sam Wang, Assistant Professor of Pediatrics, University of Colorado Anschutz Medical Campus, Children’s Hospital Colorado, as an individual: Thank you very much for inviting me to come speak tonight. I am a medical toxicologist and pediatric emergency medicine physician, and my academic background has been evaluating the impact of legalization of both medical and recreational marijuana here in Colorado.
As some of you will know, our state has been kind of the first in the forefront in trying to evaluate the proper regulations that should be in place while we legalize. We legalized medical marijuana around the year 2000, although the proliferation of medical marijuana did not happen until about the end of 2009 with the release of the Ogden memo. The retail marijuana industry became legal here in January 2014.
The industry here has been prolific. In 2017, there were about $1.5 billion in sales on all marijuana products, and as previously mentioned, marijuana products not only just involve the standard flower buds that are smoked, but the industry now includes many edible products, topicals and concentrated products that are vaped with higher amounts of THC.
Now, what we’ve noticed in our state and in other states that have legalized medical marijuana is an increase in regional poison centre calls for young pediatric exposures. Typically, pediatric exposure is around two to three years of age, and many of them involve edible products. Edible products pose a unique problem, as they are very palatable and attractive. They appeal because they do not look any different than a cookie without marijuana, and many can have high amounts of THC that with a large dose ingested in a young child can lead to severe symptoms. We have actually seen children who have needed mechanical ventilators to help them breathe because of the severe symptoms from a large exposure.
Now, the increase in exposure rates in our state has not been epidemic by any means. We went from seeing zero in about five years prior to the proliferation of medical marijuana to seeing about one or two a month, although recently we have seen a doubling of hospital visits in our children’s hospital this past year, along with another 50 per cent increase in our regional poison centre calls within our state.
As far as adolescent exposures, overall across the nation, larger survey studies do not show there has been a significant increase in immediate adolescent use or abuse; however, their perception of risk for marijuana use has declined pretty dramatically over the past five years. Washington may be one state that has shown a small increase in use after legalization of retail recreational marijuana.
We did a study looking at ER visits in our hospital with cannabis-related diagnoses from a medical standpoint of behavioural health, and we saw an increase over the past several years, correlated with both medical and retail legalization of marijuana-related diagnosis codes and positive marijuana screens on their urine drug screens. Despite the overall surveys not showing increased use in adolescence, we are starting to find that it may impact adolescent health in other ways.
There have been other recent studies released looking at teenagers, specifically adolescent boys, who had an increased risk of poly-substance abuse as adults if they started using marijuana at a young age, and exposure to medical marijuana ads actually increased risk for marijuana use in adolescents as well, as shown in a live study done by the RAND Corporation here in the States.
What have we done in our state to evaluate or try to curb some of the impact it has been having in our children? Well, we have passed in our state legislature that we’re not allowed to have any design or any branding to appeal to children, specifically targeting the population less than 21 years of age, including but not limited to cartoon or similar images.
Recreational products must exit a dispensary in a child-resistant package, and that child-resistant package must meet Consumer Product Safety Commission regulations, standards and definitions. There should be warnings that say, “Keep out of reach of children.” We do not allow mass marketing campaigns of any kind.
In our recreational products, we actually have dose limitations of how much THC, the psychoactive component of marijuana, can be in the product. Currently we have a 10-milligram limit for a serving size and a 100-milligram limit for a whole package. The only difference with the medical industry is there are no limitations to how much THC is in their products.
There are some other things we’ve recently passed in the past couple of years. Initially, after passing the retail marijuana, we had a rash of unintentional misadventures, so to speak, in the adult population with mostly edible products, where things were not intuitively designated as serving sizes. What happened is a small peanut butter cup candy would have 10 servings in it or 100 milligrams of THC. It would have ten 10-milligram servings, so it would not be intuitive for someone to break off a tenth of that small portion or even a tenth of a cookie. So we also passed rules and regulations that require that a single standard serving of marijuana of a multiple-serving edible product must be demarcated in a way for a reasonable person to intuitively determine how much of a product constitutes a single serving size of active THC. An example of that would be a scored chocolate bar, where a small bar would be a serving size rather than a cookie, where there would be no scoring and you would be unable to determine the serving size.
We’ve also recently passed symbol requirements. Whenever feasibly possible, we are labelling our products with a diagram that says “THC” and exclamation points so people are aware when they come across a product that it is marijuana-infused. We have also banned candies, specifically gummies in the shape of animals, fruits, cartoons and humans of any kind to try to decrease the appeal to the pediatric and adolescent populations.
With that, I look forward to the discussion tonight, and I am more than happy to answer any questions as we go forward.
The Chair: Thank you very much, Dr. Wang. Now we will get on with questions from my colleagues, starting with our deputy chairs.
Senator Petitclerc: Thank you all so much for being here and for providing information.
Mr. Hammond, you mentioned brand stretching. The way I understand it, Bill C-45 does allow room for some brand stretching, so that would mean having some brand names or logos that would be on products like T-shirts or iPhone cases or things like that. I am familiar with how it is more restrictive in Bill S-5, for example. I want to have your perspective on whether it should be stricter in terms of brand stretching for cannabis products.
Mr. Hammond: Thank you for your question. I apologize that I haven’t read it recently. My understanding of the brand stretching is that it would allow some branding on cannabis-related paraphernalia but not in a way that it would cross over into lifestyle branding. What we have seen is some companies bringing out cannabis-flavoured products now so they can start to build some brand identity, which would then carry over when they can’t use it on the packaging.
The general rule is you need to restrict brand stretching if you want to restrict youth promotion and lifestyle advertising. We have had several decades of tobacco companies doing clothing lines, concerts, bar evenings, things that reach more than just adults alone. As a general rule, I think that would violate the spirit of the act, and it makes sense to allow some branding on cannabis-related product paraphernalia but probably not much beyond that.
Senator Petitclerc: I’m not sure who wants to answer this. If we want to restrict promotion to consumers, should we also restrict promotion to retailers? I believe it is also possible to do that in terms of incentives. How important is it to provide access to a regulated product versus to help grow a market? I’m looking at everybody. Mr. Engel, do you want to answer that?
Mr. Engel: I think there are two key points to consider. One is that the majority of provinces have gone with an age-gated approach for the retail environment. That is critical in ensuring people entering the retail environment in most provinces have ID checks and no one under the age of majority in that province would be allowed in. So what happens in the retail environment, you have already predisposed that person to going in and having an interest. That’s critical.
The second thing to consider in terms of that environment and the whole communication that happens is it depends on the structure. I think from Ontario through to Atlantic Canada, other than Newfoundland, will be provincially run retail locations. We will see, in general, more controls in that structure than in the private retailers in Western Canada. Not to say that there won’t be the same restrictions, but each province will have its own infrastructure.
So your point is well taken in terms of making sure that if information and education are allowable in the retail environment, it is appropriate. That is a key aspect. It will certainly vary by region.
Senator Petitclerc: Ms. Forrest, some organizations have mentioned, in terms of the awareness messages, that there is not one that specifically addresses secondary smoke of cannabis. Would it be relevant to specify the specific risks of smoking on the package in the awareness messages?
Ms. Forrest: I’m going to say the health warning aspect of things is somewhat outside of my area of expertise. That may be one that Dr. Hammond would like to field.
Mr. Hammond: I think you’ve pointed out a very important issue, which is that there is excess risk to smoke to the direct user and to users around them. Part of what we can try and do is educate people. One of the six warnings references toxic chemicals in smoke, but that should probably be more prominent. People should know that they can reduce the risk if they do not take their drugs with smoke. That’s independent of any drug. That’s why we have a vaping act that talks about vapour in nicotine and not smoke in nicotine. You have highlighted a very important issue. Whether it is on a warning or another educational campaign, Canadians should know that.
Dr. Wang: There is some recent research that shows passive smoke exposure for marijuana in children. Actually, children can absorb it, and it can be detectable in their bloodstream. In a small subset of the population studied in our emergency department, they were at increased risk for respiratory-sensitive conditions — asthma exacerbations, viral respiratory illnesses, ear infections — similar to cigarette smoke. That’s starting to come out, and it is a very important future issue going forward.
Senator Seidman: Thank you all very much for your presentations.
My question is for you, Mr. Hammond. Bill C-45 makes several distinctions in relation to promotion, packaging and labelling of cannabis products, for example, allowing the production of branded products as long as they are not considered to be appealing to youth, or the promotion of cannabis in circumstances where the promotion could not be seen by a young person. This makes sense in theory, but do you believe it will work in practice, or do you think cannabis companies will get creative in working with these restrictions? The bottom line is: Would you be in favour of a total ban on cannabis advertising in these early stages?
Mr. Hammond: Thank you for your question. I think the critical component of Bill C-45 is not only does it say you can’t do the lifestyle and you can’t make it appealing for kids, but it says you cannot communicate any of that outside an adult-only venue. That is the key piece that the companies would like to change. They would like a 75 per cent threshold. As Ms. Forrest indicated, that’s the threshold we have for unhealthy marketing to kids for food. A lot of you will know that that has not been effective, in the least, to the extent we are developing a new act.
At a minimum, it has to restrict any advertising and promotion that will reach children. I think the act is quite reasonable in that it is modelled on the tobacco marketing regulations in Canada. You will be able to do it in a bar and you will be able to do it direct to individuals.
Maybe the best answer to your question is that that is why the package is so important, because the package is a travelling billboard. The package goes around with people, it sits in people’s homes, and it’s on the table and in their pockets. That’s why plain packaging is so important at closing that loophole.
So will they be creative? Yes. Do the existing regulations go far enough? I certainly would suggest they should not be weakened any further, and they provide a pretty good platform. But the key is banning it to any channel that may reach children. So no TV, no print, et cetera.
Senator Seidman: What about Internet? That’s pretty impossible.
Mr. Hammond: Well, it is and it isn’t. As with tobacco now, the rules can say that no companies can have a paid promotion. They can’t do it through a third party. That is important. We can’t regulate people posting themselves or reading blogs. That’s qualitatively different than paid Internet. I have three kids, and I get pop-up ads and they get pop-up ads. That’s different than pursuing a blog. There are ways of restricting Internet. It doesn’t mean we remove everything, but those are an important component.
Senator Seidman: You mentioned packaging, and I would like to pursue that for a moment. When you spoke to the House of Commons Health Committee last year, you did talk about the importance of plain packaging, as you have for us this evening. The government released its plans for cannabis packaging, and there are some notable differences when compared to the plain packaging regime for tobacco products outlined in Bill S-5, including colours and brand elements. In your view, is it necessary for cannabis packages to have colours and brand elements in order to — the excuse it has given — shift sales from the black market?
Mr. Hammond: Let’s be very clear: The black market is driven by price and product availability. It is not driven by packaging. I can say that because we have multiple countries that have brought in plain packaging for tobacco products. So that is a convenient narrative, but it is not an accurate one. Full stop.
To your second question, I called the regulations for cannabis plain packaging “ish” because, as you know, it still allows some branded imagery but no bigger than the government symbol that says “cannabis.” It says it has to be one colour, but you can make it pink.
Look, I have spent more of my life testing whether pink packages target young girls compared to others. That still allows them an opportunity to target it. It’s not up to me to tell the government what to do, but that allows quite a bit of leeway between an image and the use of different colours for different products to target products. If you are asking me whether that’s possible to make that appealing to more kids, I would say yes.
Senator Poirier: Thank you all for being here.
My question is for Ms. Forrest. In the article that you co-authored in Maclean’s, you say:
But our approach to alcohol regulation, which is the model that Canada’s legal-marijuana plan is copying, is similarly failing to prevent use in underage users, the exact population we are most concerned that marijuana will harm.
Can you expand on your thoughts? In your opinion, are we exposing ourselves to underaged use of cannabis to increase as well as it has with the alcohol?
Ms. Forrest: Sure. Since the time that we wrote our article, there has been some additional details released by Health Canada about how they plan to regulate cannabis. I’m not sure I will still say the approach we are going with is most closely aligned with alcohol. I would say it’s moving perhaps a little closer to tobacco. But as I mentioned in my statement before, I think there are still some loopholes that are created by the current regulations and by the act as it currently stands.
Senator Poirier: You also mentioned in that same article the marketing done online and the lack of regulations of alcohol marketing on the Internet and where the research suggests that this marketing is normalizing binge drinking and underage drinking. With Bill C-45 the way it is right now, are we at risk of repeating the mistakes of alcohol promotion and marketing but for cannabis instead?
Ms. Forrest: I have some concerns, I guess, the way that the act is written, about the ability of industry to circumvent what is in the regulations and in the act. Personally I have some concerns. I think that we risk kind of creating a lot of cannabis marketing that youth could see and that could incentivize increased consumption.
Senator Poirier: Also, from my understanding, it will be developed through closed door regulatory processing. In your opinion, should these regulations be in the law?
Ms. Forrest: I’m not too sure how to answer that last point. I would like honestly to see more details. I thought that the regulatory note that came from Health Canada was a little bit light on detail about how exactly promotion and marketing was going to be regulated, and I think that there are a lot of loopholes that could be created. There are some things you could do in the act to tighten those restrictions. I think I talked about calling for a ban on advertising on TV, on the Internet, in newspapers, on the radio, but allowing for informational point of sale marketing so adult consumers can have access to the information they need to make an informed choice about their cannabis consumption.
Senator Poirier: Thank you.
My next question is for Mr. Hammond or actually even Dr. Wang if he wants to jump in on this. I know we’ve already touched it. I think it was Senator Petitclerc who maybe brought up the second-hand smoke and the effect of the second-hand smoke from cannabis and youth brain development. In your professional opinion, will the second-hand smoke affect the children in the brain development? I know in New Brunswick, for example, we have a law already in place that we should not be smoking tobacco cigarettes in close proximity to a child. Should we be looking at this also with cannabis, for example, inside a home, inside a vehicle, a closed-in area like that? I would like you to expand on that a little bit, please.
Mr. Hammond: Let me start by saying there is a persistent myth that somehow cannabis smoke is less harmful because it is from natural herb. The fact is that most of the toxicants come from lighting anything on fire. It’s combustion. If I lit my tie on fire, you would see some of the same carcinogens. Pound for pound or litre for litre, cannabis smoke is just as toxic as tobacco smoke. That is the message that people should get. You don’t see the same level of lung disease because cannabis smokers just don’t inhale as much smoke as your average fifteen-cigarettes-a-day smoker, but in terms of its potential threats to children, you can think of it as being the same. Consumers and municipal bylaws should not discriminate between tobacco and cannabis smoke. If we’re protecting kids from smoke, that’s the bottom line, and that should include tobacco and cannabis.
Dr. Wang: I totally agree and mirror those sentiments. Going forward, old marijuana compared to new marijuana and how frequently people will be smoking going forward, there needs to be a lot more research done on how it’s going to impact youth, passive smoke exposure. In Colorado, we have a paradigm. No one is allowed to use marijuana in public places. So where do they use it? They use it in their home. But if they use it in their home and they have children or families, they are exposing their families and children to potentially second-hand smoke. It’s a not as straightforward as just saying you can’t do it because if you can’t do it private or in public, where do you do it? I agree those are some of the concerns with passive smoke exposures.
Senator Omidvar: My first question is for Professor Hammond. I take it from your presentation, professor, that you are not against marketing or branding or labelling. You just want to legislate it or regulate as per your presentation. Am I correct in understanding that?
Mr. Hammond: Plain packaging allows product information on the package. Another common myth is they think that you can’t write anything. You can still write things about your product and communicate product information. What you can’t do is use brand imagery to the full extent to appeal to people. I think it’s just a question of what public health purpose does that type of advertising and brand imagery serve. I think the answer is none. I have been studying this for decades. I don’t think it will help to accomplish the government’s public health objectives, and it has the potential to undermine it. Companies will still have the ability to communicate the product information and attributes. They just cannot do it with pink flowers on it, for example.
Senator Omidvar: Do you have a copy of this? Can you see this, Mr. Hammond? This is from Mr. Engel. It’s proposed packaging for adult use market. It looks like medicine to me, but maybe that’s the objective. What is your response to this kind of plain packaging and labelling?
Mr. Hammond: Unfortunately, my eyes are not as good as they used to be. I can almost see it. Could the video person put it up on the screen?I’m sorry, I can’t see it well enough to comment. I apologize.
Senator Omidvar: Thank you.
My next question is to Ms. Forrest. I want to probe and maybe get some more wisdom from you. One of the objectives of Bill C-45 is to deal with the $7 billion illicit market, and I’m concerned about the illicit market not because of the $7 billion but because of the harm it does to individuals who use illicit products, in particular young people. You’ve recommended that there should be a ban on all marketing and promotion and only plain packaging in order to reduce consumption rates. Does it leave a very wide door open for the illicit market?
Ms. Forrest: Thank you for your question. No, I don’t necessarily think that leaves the door open for an illicit market. I think that under the regime for sales that’s currently envisioned by the act and by the systems being set up by the provinces, it will be very clear to consumers what is legal tobacco and how to access it and that will be easily recognized in clearly market outlets. I think people are already using marijuana and I don’t think that advertising in that way is a necessary way of drawing sales away from the illicit market and, in fact, risks harming youth.
Senator Omidvar: You have recommended that we follow more closely the regime for marketing and branding tobacco versus alcohol?
Ms. Forrest: Yes.
Senator Omidvar: Yet we also know from the regime that governs tobacco that there continues to be an illicit market. Do you have any insights into that, and are there any proposals you can make to us based on the experience with tobacco?
Ms. Forrest: I’m not an expert in tobacco illicit trade and what the factors are that drive the illicit tobacco market. I know it’s largely price. I wonder if this might be a question that’s better handled by Professor Hammond.
Mr. Hammond: I think you hit the nail on the head: It is price. That is why, as I understand it, our federal government is very concerned about coming in at a price that is no greater than the illicit marketplace. We just looked at hundreds of retail outlets, and we found that the average price per gram is about $10. That and product availability will determine illicit trade. Packaging will have no impact whatever. As you pointed out, we have an $8-billion illicit market, and for most of those years, the packaging was baggies. It hasn’t driven the illicit market on its own, and it won’t determine whether people buy through legal or illegal means. That is very much a red hearing.
Even for tobacco, where there is a massive price differential, it has been shown that plain packaging does not increase contraband tobacco. Again, that has been tested in several courts of law and has been the ruling among experts and judges.
Senator Mégie: I have a question for Mr. Engel. From your brief, I can see you are aware of everything that happened in Colorado and Oregon. The purpose of the bill is to give the public access to marijuana of controlled quality. You have witnessed the small illegal dispensaries that popped up in Colorado. They are also popping up every day in Canada. What was your experience of that in Colorado after marijuana was legalized? We would like to get an overview of what to expect here.
Mr. Engel: First, I’m Canadian, but I am familiar with the Colorado cannabis situation. One of the two big issues in Canada with the black market or illegal source with dispensaries that are increasing right now is that it is not only dispensaries. There is also rampant and robust online access such that any Canadian can currently purchase an illegal black market product.
The most critical way to eliminate that is, one, through education, as noted in my document, in terms of making sure people understand what a trusted source is, that the product they are getting undergoes rigorous testing, that they can be confident the product they are getting from the legal sources has gone through that rigorous testing and they can see the test data. Another way to eliminate them is through banking measures. One of the key aspects of both the online trade and also the black market dispensaries that exist is that eliminating their ability to process payments in any way beyond cash would have an impact. I understand that is being considered now as well.
One of the keys, though — and I would counter what Professor Hammond said — is that I think there is a big difference between — and I gave out samples of the current black market packaging. It does appeal to people. I gave out samples, and this is a sample of what would be an approved package today.
We have two stated goals of the program: one is to protect youth and the other is to eliminate the black market. One of my critical concerns, and we hear this consistently from potential consumers and from medical patients today, is that this is not a package that they would share or bring out in a social situation. Cannabis is very much a social drug that is shared with others, either within the home or at parties or other things. Again, it’s a large market today. Unfortunately, we will tend to see a lot of people take their product and put it in a secondary packaging. We have heard that feedback consistently. Packaging will make a difference and that, unfortunately, will continue to push people toward the black market.
The Chair: I’m going to inject a question here, building on that. Regarding the diagrams or illustrations of the packaging — the one you held up, Mr. Engel — what is the difference between that and what the examples are? I’m trying to look at the examples here from the proposed regulations from Health Canada. What is the difference in the packaging you are proposing that the industry wants versus what is being proposed by Health Canada?
Mr. Engel: No, I’m sorry, Mr. Chair, this is the compliant packaging. I just wanted to share it as an example of the compliant packaging in comparison to the black market. There is no difference. This is Health Canada-compliant packaging.
The Chair: Are you asking for something different?
Mr. Engel: There are two challenges with this. First of all, in order to meet the regulations in terms of copy and font size that need to be on here, and with no peel-back label allowed, the provinces are asking for very small sizes. This is a 5-gram size. We actually need to put 1 gram or 3.5 grams, because those are sizes they’d like to see as well, in this package. There are a lot of environmental ways to get all the necessary documentation in this size. That’s one issue.
The second issue is, as I said, that there will be issues where consumers will immediately transfer the product from a child-resistant package to a non-child-resistant package, because it’s not appealing. We support the use of child-resistant packaging and warnings, but it is limited in terms of appeal to a consumer. I think there is a balance between the two.
The Chair: Okay. Thank you.
Senator Munson: Thank you for being here.
I’m almost the same age as the chair, but I’m thinking of advertising and Fred Davis and “Front Page Challenge”: “Smoke Du Maurier for real smoking pleasure. Smoke Du Maurier, a cigarette of good taste.” That’s still in my head after 50 years. Talk about marketing. So what you said is important, Mr. Engel.
I have one question for all of you, and perhaps Dr. Wang can start off. We have been listening to a lot of witnesses for a couple of months now, and we have another week of this. There are pros and cons, and everybody has a point of view, from education to health. Believe me, I can’t even believe we are talking like this, especially as a child of 1960s and 1970s. However, there are folks who want to see this delayed by a year, and there are others who believe we should get on with it. In Colorado, we have seen what has taken place, and we have seen what has taken place in Washington State. We now have the issue at the forefront in the State of Massachusetts. I would like your point of view: Do we get on with it and learn as we go, or is Canada ready for this great experiment?
Dr. Wang: That’s a great question. Being in a state that was and is at the forefront of legalization, we have had a lot of interest in what we have done and what has worked and not worked.
As far as the timeline of when the rollout happens, as witnessed by this meeting this evening, you just have to be cognizant of some of the unintended consequences and the public health impacts and make sure you have thoroughly discussed them and looked at states like us to determine what has worked and not worked and what the experiment has been like for us for the past several years. I don’t know if I have a great answer for you outside of when it’s time to roll out, you have to make sure you have had these public health discussions like we are having tonight to make sure you’re doing everything to curb that impact.
Mr. Hammond: Like you, I’ve been a part of a lot of these discussions. There is a risk in thinking that legalization is inventing cannabis. We already have these products on the market. You can go into any big city and order by mail and have it at your door the next day, or walk into a store. The question I’ve heard people express is, “Well, if it happens right away, we might still have 50 per cent of the black market for the first year or two.” Fifty per cent is better than 100 per cent.
It’s also worth remembering that a lot of U.S. states that went through the process took a couple of years before they even had their retail framework established. It has been a talking point of the government — because I’ve heard it a lot — the phrase “this is a process, not an event.” Whether it is a talking point or not, I think it’s absolutely true. I would point again to the fact that we are now in our 50-something year of regulating tobacco. I don’t know if you ever reach a point where you say everything is going to be in place. I understand the rush and the pressure that this has put on provinces and territories and municipalities, but I’ve also been impressed with the conversation being framed around public health and I don’t see a huge advantage in delay.
Ms. Forrest: From a public health perspective as well, I think that the criminalization of marijuana has led to, on its own, a number of public health harms. I would say that delaying would kind of propagate those harms and would be a mistake.
I would just add that legalization is a social experiment, and we won’t know for many years what the long-term public health effects of legalization are. But we do have a very long track record, as Dr. Hammond said, of regulating tobacco and alcohol, so I would just urge the committee, I think, to consider some of the lessons learned from both tobacco and alcohol in their study of the bill.
Mr. Engel: There are two key points I would make. One is that we look at protecting youth as one of the objectives of the legislation. If you were to ask a teenager in high school today what’s easier to get, alcohol or cannabis, it’s much easier for them to get cannabis. I think having a regulatory framework on alcohol does impact their ability to access it, so putting that program in place, as Professor Hammond said, we already have a $6, $7 or $8 billion market today in the illicit market.
I think the other key factor as well is that there are key learnings, as Dr. Wang went through, that we’ve learned from Colorado and other states, such as making that shift from serving sizes, for example, in 2019 when edible products and those products come to market. Many of the issues they faced in year one, such as having serving sizes for edible products and having unintended consequences of overconsumption, we’ve already learned from that, so making sure that having those programs in place and having serving size restrictions and child-resistant packaging.
Again, it is going to be an evolution. There will be key learnings along the way, but we do have an advantage to take advantage of what we’ve heard from Colorado, Oregon and other states.
Senator Dean: Thanks, everybody, for being here this evening.
My question is to Dr. Wang. We have heard from you this evening that on the basis of your experience in Colorado — and you do have several years’ experience — that there was, I think relatively recently, a new approach to getting at advertising and branding. I think I heard you say no branding appealing to kids; recreational products must be in childproof packaging; health warnings on the product; THC levels posted; single serving sizes, 10 milligrams; nothing in the shape or size or look of edibles that might look like kids’ candy.
Our draft regulations in Canada, as they exist today, based on extensive consultation, cover all of those restrictions, so we’ve obviously learned something from Colorado and the many states that have moved in this direction before us. Let me put it this way: We’re coming out of the gate with all of the restrictions that you have put in place after several years. Do you think that’s a good start for Canada?
Dr. Wang: I think it’s a great start. If you look at our history in the past almost four years after retail legalization, all that stuff was not ruled out from the start. We learned from mistakes. We found out, “That happened. We have to change it.” I think our state was really good, and honestly the industry too was good at working with the state, seeing what the public health impacts were, figuring out what needed to be changed, so we implemented those things.
I think some of the things you just mentioned are great. Other states that followed us have also implemented similar regulations, and those seem intuitively like they should work, as they have applied to other things like tobacco, alcohol, other pharmaceutical products, things that potentially could be dangerous to children. So it just intuitively makes sense to implement them in cannabis.
Now, I think going forward it’s equally as important to continue surveillance to say what is making a difference and what is not, because we don’t want to unnecessarily spend money on the industry to make products what we think is safer but actually doesn’t work versus things that may make a bigger impact. I think it’s a good start, but I think it’s vital for the government, legislative bodies, public health surveillance, to continue to re-evaluate how are we doing in curbing some of this stuff, specifically as it appeals to young people.
Senator Dean: I’m going to follow up with a second question. It picks up right where you left off, pre and post legalization and regulation surveillance and monitoring.
Our officials and policy advisers in Canada also learned, I think, from U.S. experience in making sure that they have developed and are developing a very good sense of what the pre-legalization landscape looks like.
So we now have Statistics Canada, the national statistics body, Health Canada, one of the lead departments, we have funded university research projects and we have the Parliamentary Budget Officer in Canada all out surveying for the last several months on behaviour of consumption, purchasing, pricing, things of that nature, right across the age spectrum. I understand this is something that wasn’t done, and I can understand why, in many U.S. states. What are your observations on Canada’s approach to pre regulation and legalization benchmarking in this way?
Dr. Wang: I was made aware of that, I think probably last year, when some of the members of Health Canada and your poison centres contacted me. I think that’s great because that is true. I think our surveillance methodology prior to legalization wasn’t perfect, and other things we haven’t discussed today, like impact on, for instance, motor vehicle accidents or violent crime and other aspects of society, marijuana use or how it may or may not have been involved was not always routinely obtained. Some of that pre and post, as you alluded to, is difficult for us to monitor. It’s more of us now looking at the trends and going forward, collecting that data to say how is that impacting some of those aspects of society.
I think it’s great that all of those government bodies are trying to evaluate what’s going on prior to you guys rolling out. I think that’s a great start. Trying to standardize some of the ways you guys collect that data is going to be important going forward as well.
Senator Bernard: I’m not sure who is best positioned to answer this. I came late, so I missed, and I apologize for that.
One of the things that we heard from the non-smokers’ rights association was that smoking tobacco has decreased from 50 per cent of Canadians in the 1960s to 15 per cent of Canadians in 2013. We don’t have that data disaggregated by socio-economic class, by race or by gender even. However, in my work in social work, I’ve certainly noticed trends, and those trends would be that there’s a high prevalence of smoking with people who have mental health issues, in poor communities and in racialized communities.
I’m wondering if we have had so much success in the general population but we really don’t know, because we don’t have the data, we don’t have that disaggregated data. How do we do it differently with the legalization of cannabis? If we’re talking about protecting the most vulnerable of our population, those are some of the most vulnerable. If we haven’t done it well with smoking and we’ve been at it for 50 years or more, how do we do it with cannabis? Would any of you like to weigh in on that?
Mr. Hammond: You make a very good point. In fact, we do have some of that data for tobacco use. I was just looking at it last week. You’re absolutely right that our smoking rates are about twice as high among the lowest-income Canadians compared to the highest. But there’s another part to that story, and it is that the smoking rates have been falling at about the same rate among highest and lowest. So it’s good news and bad news. The bad news is that we still have the disparity and we haven’t narrowed it. The good news is that smoking rates are going down across all levels.
There are two important exceptions to that, and the most important one is among First Nations. Our smoking rate among First Nations is about 50 per cent, and I would guess that could be the highest rate in any population in the world. Where we’ve fallen down is in working with Indigenous Canadians.
The other area where we know very little is from our northern territories. Very few of our major surveys cover our northern territories.
Now, I’m one of those academics that’s been running around trying to collect all the data that we can. The previous senator referenced many of the efforts to collect data, and I have been impressed by them, but I am not at all convinced that we have addressed the issue of monitoring this adequately among those with the greatest need and at greatest risk. I think it’s possible that we can minimize the disparities, but we don’t even have the basic rates to know how well we’re doing in those two priority populations, and that surely has to be an urgent priority.
Senator Bernard: If you have any specific studies that you could refer us to, I would appreciate that, and any specific recommendations would be very helpful. Thank you.
Mr. Hammond: Yes. Absolutely. I would be happy to do that.
Mr. Engel: Senator Bernard, I think of two key things. One is that there was a publication in the International Journal of Drug Policy in April of last year that looked at one of the licensed producers in Canada. It looked at their existing patient population. In that, they found that the preferred method of ingestion of the products available today is actually vapourization over smoking. We do see a trend away from smoking in general. But the second point would be that it does highlight the importance of moving away from a smokeable form. We already know from the data from Colorado and other states that oral ingestion products and others are the predominant ingestion form. We are definitely seeing a shift away from smoking, and vapourization is a preferred form.
Senator Bernard: Again, is that data disaggregated? Do we know how that plays out in First Nations communities?
Mr. Engel: The population was too small to give a meaningful view, but we know in the overall population that there is a trend away from smoking towards vapourization, which is at a much lower temperature and potential of releasing fewer airborne —
The Chair: I would ask Dr. Wang if there is any kind of that disaggregated information in Colorado.
Dr. Wang: It’s a great question. I was just looking that up. There was a study published it looks like in 2016 in the Journal of Drug Issues, looking at overall U.S. population marijuana use in the lower socio-economic classes mirroring cigarette use. I don’t know about our state. I don’t know the recent data. What’s interesting is that we found out when we were looking at young children with ER visits in trying to evaluate the home smoke environment, both cigarette and marijuana use, the marijuana use demographic was actually much higher. It was the middle income, higher educated who were more likely to admit to smoking marijuana in the home.
Marijuana products in Colorado are not cheap. They’re highly taxed, so you have to have a decent income to be able to go to these stores to buy marijuana. At the same time, with the marijuana industry, as you guys alluded to, the black market and other ways people can get marijuana is still prevalent in our state. Overall, my sense is that it is the lower socio-economic classes. However, people who are participating in the legal industry are often higher class.
Senator Maltais: My question is for Mr. Engel. You said earlier that the market will be worth $7 to $8 billion dollars. Is that the potential value or the real value? We will see in a few years.
As Mr. Hammond said, smoking rates among those with the lowest income has dropped a lot. Are marijuana smokers in the 18 to 45 age group or 45 and over? Based on your own studies, what segment of the population will be most inclined to smoke marijuana?
Mr. Engel: I think one key thing to keep in mind is that the data we have today is based on our medical population, and that population is actually of a lower socio-economic class, to Senator Bernard’s question, because those are predominately chronic pain patients and mental health patients. You can’t necessarily draw a parallel to what the adult recreational market would look like, although many people are self-treating. They may not feel comfortable going to a physician, so there may be a significantly higher preponderance in that lower class because they are under-employed or have challenges.
It’s difficult to project. When we look at numbers, many of the projections are based on U.S. state data rather than Statistics Canada data and the most recent survey from the previous quarter. I think what we will see is that it would suggest that roughly 40 per cent of adult Canadians would say that they would use if the product were legal, and that’s the Stats data that we would see to date. If you were to break it down, we tend to see a curve where the predominant use is in the 18 to 45 demographic versus later years, but beyond that I wouldn’t comment because a lot of this data is based on self-reporting or extrapolation from U.S. states. They’re estimates, and the estimates have been anywhere from $6 billion to $22 billion from Deloitte.
Senator Maltais: The other equation is that fewer smokers and less tobacco consumption will mean lower tax revenues for the government. Governments live on their tax revenues. If tobacco is completely eliminated, would the government not be inclined to tax cannabis at a very high rate to recover its lost tobacco revenues?
All governments in every country are doing everything possible to discourage people from smoking, but have they realized that this will also deprive them of tax revenues? If tobacco consumption is wiped out or reduced to a minimum, governments will lose billions of dollars in taxes every year. Will they not be inclined to recover those losses from cannabis smokers? Your revenues would be much lower.
Mr. Engel: I think that’s a question in part you would have to ask your provincial colleagues. My comment would be that the goal of the program with Bill C-45 and the legislation is to eliminate the black market, which is already existing. There is potential for a new tax revenue. I don’t look at them to be aligned in any shape or form, but I know your question is would they increase or improve as a way to offset. That’s never been a discussion point I’ve heard from any of the provincial colleagues at a government level.
Senator Maltais: I do not understand why the government’s potential losses have not been assessed. I have trouble following the equation. If a company loses revenues, they have to be recovered elsewhere, or else the company will go bankrupt. I do not understand why you have not calculated that. I am not talking about detailed numbers, just where the government will get the tax revenues it will be losing from tobacco consumption, if not from you.
Mr. Engel: Again, the goal here —
Senator Maltais: I’m sorry to interrupt you, but Dr. Wang clearly said earlier that cannabis is highly taxed in Colorado. If the tax rate is high, will that not stimulate the black market?
Mr. Engel: I agree 100 per cent. One of our concerns as an industry and one that everyone has is that if it’s overtaxed, it will not eliminate the black market. I agree. It’s very concerning to us as an industry, for example, that the excise tax that is being applied to the recreational use product is now going to be applied to the medical use product. That’s very concerning, especially because, as I said, the majority of those people in that population may be of a lower socio-economic class. But I think that’s in part put in place to prevent a potential shift from recreational use to medical.
The Chair: That completes round one. I have three senators down for the second round, and I can add anyone else who wants to go.
Senator Seidman: My question is for you, Mr. Engel. If I look on the Internet on my iPad, I see a press release from Organigram:
“Trailer Park Boys” Choose Organigram as Strategic Partner.
In fact, your company has a Canadian licensing agreement with the “Trailer Park Boys” as exclusive cannabis producer, business partner and brand developer. According to a recent presentation to your investors:
Organigram will develop branding, packaging and competitive product portfolio for the recreational market.
Of course, we all know the “Trailer Park Boys” is a successful television and movie franchise that is very popular among teenagers. Why is your company developing marijuana packaging and branding that will no doubt appeal to teenagers? Does the “Trailer Park Boys” brand conform to your understanding of the federal government’s proposed regulations for cannabis branding and packaging?
Mr. Engel: That’s a great question. The original agreement was put in place a couple of years ago, before Bill C-45 had been drafted and before fully comprehending what the legislation would entail. Our objective at this point is that we’ve built a brand called Trailer Park Buds that is not involved with them in any direct form. That’s kind of one of the brand names that we have. We’re not looking to target youth or adolescents. It is one of the sub-brands for a certain sub-segment of the target market that we believe appeals to people who are self-deprecating and are going to laugh at themselves, but it is not necessarily targeting youth in any shape or form.
Senator Seidman: Well, if it is a popular and successful television and movie franchise, of course it is directed at youth. Youth watch it, and you have a licensing agreement with the “Trailer Park Boys,” so whatever you develop along with them, do you believe that this constitutes lifestyle advertising under the cannabis act?
Mr. Engel: Again, we’re not looking to use them in any shape or form going forward. Celebrity endorsement is prohibited in the act. We’re not looking to use them in any shape or form going forward in terms of how we will leverage that. We’ve created a brand that links to them indirectly.
Senator Seidman: Why do you have a licensing agreement if you’re not going to use them?
Mr. Engel: We’ve developed a number of different brands for the marketplace, and we wanted to look to see if there was a market segment that will look at this. I certainly understand your question, but we believe it’s in line with the legislation in terms of where if fits.
Senator Seidman: You do?
Mr. Engel: Yes.
Senator Seidman: In that case, okay. Thank you.
Senator Petitclerc: My question will be again for Dr. Hammond, but I would also like to hear from Dr. Wang on the same question.
We talked a lot about lessons learned, and it reminded me that one of the lessons that was learned in Australia when they introduced plain packaging years ago was that they were very quickly surprised by how creative the industry was. Specifically, when all colours are banned, they go with names. What is your thought? Is Bill C-45 restrictive enough when it comes to the branding in names?
Everybody has read the example, and I would consider it lifestyle advertising when you have names like “Everyone Does It” or “Miss Envy” or “Puravida.” Should we be worried about lifestyle advertising or something that may be considered lifestyle advertising when it comes to names, or even the length and the number of words when it comes to a name or a brand?
Mr. Hammond: I think you just heard a great example. I’ve testified in court cases. I don’t know how you could interpret associating yourself with a movie and lifestyle like “Trailer Park Boys” and not consider that to be lifestyle. You can communicate that through brand imagery and you can also do it through words.
I can tell you that in tobacco regulations, you can restrict plain packaging, which is the visual elements of the package. Other countries also have a list of the words that they outright deem to be inappropriate. Other countries provide more general guidance about what may or may not be appropriate in terms of particular terms or descriptors.
You’ve given some examples, and I think we’ll see very quickly companies maximize the use of words to associate themselves with lifestyle and different properties. At the very least, I would recommend that Health Canada provide some guidance specific to that and that they clarify that the principles in the act also apply to brand names. You’re absolutely right. Companies will stretch these restrictions as far as they can. In fact, they’ve already indicated that even before the market has been legalized.
Dr. Wang: I would second that. In Colorado, they’ve basically continued to monitor the market, and there have been brands that have come up that have mimicked candy brands or candy-type names that are very close and are just a couple letters off the name of a candy bar. They’ve come down on regulations on them, so I think you just have to keep an eye on it and keep regulations on it.
Senator Omidvar: I’m looking at that “Trailer Park Boys” thing, too, and I have to admit that I too am challenged about how you can associate yourself with a popular television show and a movie.
I’m going to move on. I think we’re all struggling here with finding the right balances in packaging and labelling between safety, public health and protection of youth, on the one hand, and marketing and branding so that we draw people away from the illicit market into legal, controlled and regulated substance. This is a question to all of you: Do you think the regulations before us in terms of prohibitions on packaging and labelling find that balance as we are starting off? Nothing will be perfect right in the beginning. Can I ask you to weigh in on that?
Mr. Hammond: I think, generally, they do quite well at balancing that. I do have some concerns with allowing a certain amount of brand imagery on the package. I would reiterate what I said before: It is far easier to loosen these restrictions than it is to try and claw it back at a later point. Someone asked me a few minutes ago if we are ready. I think we’re ready for some comprehensive regulations and, if the government and Public Health feel like loosening those over time, we will. What will not work is putting the genie pack in the bottle. If you have a brand associated with “Trailer Park Boys” for a year and if, all of a sudden, you pull that, I promise you those associations will endure, just as associations with Du Maurier cigarettes have endured for decades.
Dr. Wang: We’ve seen it here, too, where there have been certain regulatory issues that we’ve started loose, and it’s hard to bring it back. The ones that we started more strictly, we’ve been negotiating on whether or not those actually make a difference, and then we can re-evaluate. But I think, in general, it’s a good start.
I think the key is continued re-evaluation of how you’re doing with whatever regulations you decide to determine if changes need to be made. You’re bound to do that regardless, even if you start with our regulatory restrictions that took us four years to put into place. I guarantee you within your first year, you will be changing things. But I think the key is being able to re-evaluate that.
Ms. Forrest: I would just reiterate my point before that I do have some concerns about the text of the bill and some of the proposed regulations, that it is not enough, I think, to protect public health, and youth in particular. I would agree with what Dr. Hammond said in terms of it being much easier to start with something stricter and loosen it over time. It’s not easy to put the genie back in the bottle. To me, I’m not sure that the balance is necessarily there.
Mr. Engel: I’m thinking of a couple of key aspects. One is that we have learned from the U.S. states, as Dr. Wang and Professor Hammond outlined, and we have been able to put in place in Bill C-45 a lot of the key aspects: child-resistant packaging, THC symbol and warning labels. All those are very appropriate, and those are key aspects. As we move forward into other forms, such as edibles, having serving size restrictions and child-resistant packages will also be critical.
From an industry perspective, our concern is that, with the current branding and labelling restrictions, it will be challenging in many cases to eliminate the black market, because they are robust. If you go online, as I said earlier, they have comprehensive marketing that they do today, and Canadians across this country are purchasing illegal products either in person or online.
It is a comparison. If there is a relative effect, I support — and as an industry, we support — having strict regulations in place and making sure we follow them. One of the key things we always have to ask ourselves is: Are we going to be able to eliminate the black market, if that’s a goal?
The Chair: Let me follow up on that. The last time I asked you about the difference between the proposed regulations of Health Canada and what you brought here tonight, there seemed to be very little difference. But you said it’s a question that in order to get all this information on the package, you need a bigger package than the actual stuff inside of it. Is there any other problem that you see?
Mr. Engel: That is certainly one aspect, because without a peelable label, or with restrictions, we are going to be selling product that takes up one seventh of the container. With environmental issues, with plastic, that’s a concern.
The Chair: Is that the only issue you see?
Mr. Engel: No, it’s not. The second is that we should have the ability to provide more information — again, we are very restricted in what we can put on there — on the effects and suggested effects, potential. If we talk to the various provinces, one of the key aspects of their learnings when they’ve gone to U.S. states is that, both from the in-store experience and also from what people take away from the stores, understanding the effect is critical. As Dr. Wang outlined earlier, part of the issues that happened in the early days of the program in Colorado was a lack of ability for consumers to understand the product and differentiate. I think there should be consideration to allow for more education on the packaging we currently have.
The Chair: Do you consider that educational information as opposed to promotion of the product, then?
Mr. Engel: I think it is a bit of both. Certainly there is an educational element, and the promotion is about differentiating the product versus the current other products.
Senator Dean: This is for whoever would like to answer it. In Canada it is proposed, and probably required, that we have stand-alone cannabis retail outlets, where anybody who finds their way in there is not wandering in to buy a litre of milk and a chocolate bar. The chocolate bar they can get down the road at the illegal cannabis store today. I passed one last night on a walk home from a restaurant two or three blocks away. People are going in there because they are at least interested in the possibility of buying a cannabis product. In Canada, initially, that will be limited to two things: dried cannabis or oil — both at the low end of THC spectrum in terms of range of products, certainly those available in illegal stores. Some might choose to have a look around and wander out.
If you go into the store, your age is tested at the door. There’s a requirement for training, for counselling for staff. There are now requirements in the draft regulations for all sorts of labelling: health warnings, THC content, all the rest of the stuff. Once I’m in that store, don’t I want to be able to differentiate between brands? Am I going to be in there looking at a number of white packages with the same information on them? I’m in there as a potential consumer of cannabis. I’m not in a grocery store or a variety store. I don’t just happen to be seeing this place also sells beer: “I know; I’ll buy some beer.” I’m likely in there for a purpose. I’m finding it hard to understand why there would not be, from a consumer perspective, brand differentiation within that highly regulated retail environment.
Mr. Engel, why don’t we start with you.
Mr. Engel: It’s a great question, and I made that comment in my opening remarks. The retail environment in Canada is primarily going to be educated. As people enter the retail location, as you said, they’ve either had an interest, expressed an interest or they’re going to make a decision to purchase. The set-up of all the stores, as we understand, will be jewellery store-like, so the product won’t be on display and it won’t be self-serve. But I think it will be critical, as you say, Senator Dean, to have education and brand differentiation, whether or not that’s on the package.
I think many of the questions tonight are looking at the package as the brand. The package isn’t necessarily the brand. There will be potential for electronic information in the store — point of sale material, et cetera — because the retailers are looking for that educational element to help people understand, as you’ve outlined, what is that product, how it is differentiated and what effect can I expect?
I would agree with you 100 per cent. I think that’s one of the critical aspects. We are treating this as if people will be going in there randomly. They are not. They have made a choice, and they’re going into a retail environment to make a decision to either purchase or not purchase, but certainly they want as much information as possible to help guide that decision.
Dr. Wang: I don’t disagree. I think that in terms of the market and the branding here in the U.S., or at least in Colorado, there is no imagery, cartoon labelling or things that appeal to the younger population. Most of what we see is in the label and the names themselves, with a little bit of colour, maybe small symbols, plants. Those can help differentiate the branding, as long as they don’t appeal to the younger population. It seems to be working here.
I agree; people go into these shops for a purpose. It’s not like you browse and you just come across the shop. You go in with the intent to buy and to use marijuana, so we are not increasing the appeal to the consumer. However, I think we still have to be careful that once they leave the shop, we can’t have them appeal to the younger population.
Mr. Hammond: I have a couple of key points. One, there are many measures available, even under plain packaging and the proposed restrictions, that allow for brand differentiation. It is incorrect to say that you can’t differentiate brands under plain packaging.
Second, that may be true while you’re in the store, but packages don’t stay in the store; they leave the store. I can tell you that, like cigarette packages, little children develop brand associations with cigarette companies at a very early age, even though we don’t have TV ads and everything else.
We have done experiments with actual cannabis branding from the U.S. with Canadian youth, and it is very easy to demonstrate that the brand imagery in existence targets youth, makes it seem like more of a lifestyle and lowers the age at which they would be interested in using. Those are experiments that we presented last week at a scientific conference.
I would like to address this argument that you need to maximize the appeal of the product to reduce illicit trade. There is zero evidence for that. I want to be absolutely clear. That is a red herring. There is evidence to the contrary. So the government will do what they wish, but there is no evidence to support that claim.
The Chair: You have the final word, Ms. Forrest, if you want it.
Ms. Forrest: My apologies. I had to step out for a moment, so I hope you won’t mind if I pass on this question. Thank you.
The Chair: That’s fine.
This brings us to the end of our meeting. I want to thank all four of you for being part of this. It has worked well having somebody from Denver, someone from Waterloo and two here in our committee room. Thank you very much.
To the members of the committee, we are back at it tomorrow afternoon at three o’clock, when we will hear from the producers and retailers.