Government aims to keep organized crime out of legal cannabis market — but may license minor offenders

As the federal government inches closer to legalizing recreational marijuana by next summer, it is still figuring out where to draw the line on how much previous criminal history should disqualify someone from taking a senior role in the industry.

In draft regulations released this week, the government proposes requiring everyone in “key positions” at licensed marijuana companies to hold a security clearance issued by the health minister’s office. But it’s also asking for feedback on whether people with “histories of non-violent, lower-risk criminal activity” should be allowed to pass security checks.

Police forces have been urging the government to set up even tougher rules on security clearances than currently exist for medical marijuana licence holders.

“Health Canada’s security clearance processes do not go far enough to prevent the infiltration of organized crime in the medical marijuana industry,” said Rick Barnum, deputy commissioner of the Ontario Provincial Police, in testimony to the Commons committee that studied the bill earlier this fall.

“Starting with the large grows that will be regulated and licensed, it’s important to recognize…that is what organized crime will target. That’s where the most amount of money they could make would be, and that’s our biggest opportunity to get them out.”

Thomas Carrique, who chairs the organized crime committee of the Canadian Association of Chiefs of Police, told MPs that Canada currently has a $7-billion illicit marijuana industry, and some of it will inevitably continue after legalization.

“There are over 300 criminal organizations currently involved in the production, distribution, importation, or exportation of cannabis,” he said. “We can mitigate it, but we cannot eliminate it.”

The draft regulations contain multiple measures to stifle the influence of criminal groups, including mandated security systems at marijuana facilities and a national Cannabis Tracking System that would monitor the entire supply chain to prevent diversion into or out of the legal market.

It at least shows an open mind that the government has right now to creating some kind of amnesty provisions.

Ottawa lawyer Trina Fraser

The proposed security clearances would apply to anyone holding a designated “key position” in companies licensed to grow, process or sell marijuana. These positions would include the top manager, the chief of security, the master grower (for cultivators) and the head of client services (for retailers). It would also apply to the company’s directors and officers, and to shareholders who own more than 25 per cent of the company.

In general, the proposed security clearance regime is stricter than medical marijuana when it comes to company ownership, but more lenient in the actual business operation (currently, a security-cleared employee must be present whenever medical marijuana is being handled).

Getting a clearance would include not only a criminal record check, but also a review of any relevant files held by police agencies, including “intelligence gathered for law enforcement purposes.”

Crucially, the consultation document suggests that clearances could be given to people with non-violent criminal histories, such as charges of possession or small-scale cultivation of cannabis.

“I frankly wasn’t expecting that, because I really hadn’t gotten the sense that was something that was on the radar screen and they were willing to address,” said Trina Fraser, an Ottawa lawyer who has advised many cannabis businesses.

“It at least shows an open mind that the government has right now to creating some kind of amnesty provisions for those types of offences.”

Fraser said most U.S. jurisdictions with legalized marijuana have included some level of amnesty. The California city of Oakland has even used its licensing system as a form of reparations, giving priority to marginalized communities disproportionately affected by previous cannabis convictions.

But it’s not clear how far the Canadian government is willing to go in forgiving transgressions. For example, many people who were arrested in connection to illegal marijuana dispensaries were charged with possession with intent to traffic, which may not count in the amnesty.

Kirk Tousaw, a Vancouver lawyer specializing in cannabis, called the consultation document a “major step” in the right direction, but remained skeptical given his experience dealing with Health Canada’s security clearances.

“I’ve seen people denied for pretty vague reasons,” he said. “No criminal contact themselves, just sort of having been with someone else who got busted for growing cannabis. So, that kind of stuff needs to get cleaned up, and I think it’s important the government is recognizing the public may have something to say about that.”

Fraser said some hard thought needs to go into whether it makes sense to exclude people with “grey market” cannabis experience from the soon-to-be legal market.

“Depending on how you look at it, I think they’re going to be more of a risk to public health, safety and security if they’re not subject to regulation,” she said. “If you look at it from that perspective, you should cast the net as wide as possible.”

The government will be taking feedback on its proposed regulations until Jan. 20, 2018.

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