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How the Canucks Can Get Legalization Right

By: Nick Zaiac - @NickZaiac - Oct 21, 2015, 1:13 pm
Incoming Prime Minister Justin Trudeau will have the opportunity to set a global example in federal marijuana legalization.
Incoming Prime Minister Justin Trudeau will have the opportunity to set a global example in federal marijuana legalization. (@TheIndyPeople)

EspañolThis week, the Canadian Liberal Party swept to victory, returning a progressive government to power after about a decade of conservative rule. The Liberals, compared to their counterparts across the Anglosphere, have a pretty solid record on passing sound public policy, including rounds of corporate-tax cuts.

Following in this tradition, the Liberal Party platform includes the legalization of cannabis at the federal level. Moreover, the incoming prime minister has promised action “right away.” This would make Canada the first major country to pass nationwide legalization of the substance.

Moreover, the New Democratic Party also supports the move to legalize, as does the Green party. Collectively, the three parties, which all include legalization in their platform, hold 229 seats in the legislature, compared to 99 votes for the anti-legalization Conservatives, and 10 votes for the decriminalization-supporting Bloc Québécois.

If legalization is offered, it would take a near-unimaginable defection of Liberal and NDP members of parliament for such a bill to fail.

So the question is less “if” and more “how,” when it comes to Canadian cannabis legalization. Getting the rules right at the federal level will matter. So, how should the promised legalization be handled?

First and foremost, it’s important to remember that Canada has among the most federalist government systems in the world; far more than even the United States. This matters in drug policy just as much, if not more, than other policy areas. Any bill offered should not attempt to impose any kind of top-down model, and should delegate most regulatory power to the provinces.

This includes production-facility inspection, potency-testing rules, and the general minutia of business regulations. Labeling and packaging requirements would be best left to the provinces as well, allowing experimentation in what labels and package types best provide for the health and welfare of Canadians.

The same should be true of rules relating to the internal organization of the newly created cannabis industry. This means, contrary to anti-corporate feelings, allowing for multi-province cannabis businesses. The federal government should not attempt to force either vertical integration between cannabis growers and retailers, nor should it ban this integration.

It makes sense to allow cannabis businesses. This would avoid some of the most obviously problematic rules which have challenged such businesses in the United States. Moreover, it would be reasonable to bar provinces from creating province-run cartels in cannabis sales, as such stores are typically less sensitive to consumer demand, while creating an entire new system of provincial employees.

Taxes are a notable place where the federal government will be involved. A federal cannabis excise tax is unwise, but will likely be part of any bill. The key will be keeping this tax simple, low, and with a broad base. The federal government should avoid creating categorical “boxes” of products taxed at different rates, and instead use a simple sales tax on all cannabis products.

The tax would work well with provincial taxes, which would keep the compliance burden low and minimize both red tape and the need for costly bureaucratic staff to administer the tax program.

Canada is on the brink of taking an unprecedented move, one that will be watched by the world. It is imperative that Justin Trudeau’s administration is careful in crafting any legalization bill. The federal government must keep the system simple and transparent, and the tax and regulatory burden low, while giving provinces freedom to implement sensible health and safety regulations.

It’s not often that one gets to craft policy which could set a worldwide example. It’s on you, Trudeau. Take the best lessons of the legalizing states in the United States, and don’t propose a law that is doomed to fail.

Nick Zaiac Nick Zaiac

Nick Zaiac is a public-policy researcher in Washington, DC. He also serves as a policy analyst at the Maryland Public Policy Institute. His column, The DC Leviathan focuses on the often-ignored bureaucratic agencies, from the Department of the Interior to the General Services Administration. He has been published in the Baltimore Sun, City AM, CapX, and other outlets. Follow @NickZaiac.