Failure to launch: What happened to Canada’s ‘cannabis strategy table?’

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Image of the entrance to the C.D. Howe Building

Innovation, Science And Economic Development Canada is housed in the C.D. Howe Building in Ottawa, Ontario.

A proposed cannabis “strategy table” appears to be stuck in bureaucratic and political gridlock in Canada’s capital, more than a year after it was first announced.

In April 2022, the planned strategy table was unveiled in the country’s federal budget to provide a forum for government officials and cannabis industry executives to come together to discuss steps that could bolster the legal industry – this at a time when many companies were struggling financially.

The lack of open communication channels between the cannabis industry and the Canadian government comes at a pivotal time for the sector, with a majority of federally regulated companies unable to keep up with excise tax payments to the federal government, soaring profits at government-owned marijuana businesses and widespread failures among privately owned enterprises.

When the strategy table was announced, the industry embraced the opportunity for more open dialogue with the government, even though executives had been hoping – and lobbying for – more substantive reforms, particularly to the onerous taxation regime Canada imposed on cannabis producers.

However, the forum still hasn’t launched 13 months later. And the government in Ottawa won’t say what’s causing the delay.

Emails obtained by MJBizDaily via Canada’s Access to Information and Privacy (ATIP) law show that the senior bureaucrats involved the creation of the forum appeared to believe it was on schedule as far back as 10 months ago – in June 2022 – and even produced a list of proposed members.

Cannabis industry sources say the fact that talks have failed to start is symbolic of the hands-off approach the federal government has taken when it comes to supporting the sector.

The missing forum also comes as the most recent budget delivered by the federal government, in April 2023, made no meaningful commitment to solving government-imposed hurdles facing businesses.

Shane Morris, founder of Ottawa-based Morris and Associates Consulting, said the industry is in dire straits and needs urgent attention from the federal government.

“One would have hoped that considering the pressures the industry is currently under, it would have taken less than a year to get the table up and running,” he told MJBizDaily.

“The question now is, what is the point of the table, if a year later, it’s not operational yet?

“Plus, at this pace, it will take years to have any recommendations.”

The strategy table appeared to be a last-minute addition to the 2022 budget to give the impression the government was doing something, Morris suggested.

‘Impossible to understand’

Innovation, Science and Economic Development Canada (ISED), a federal department responsible for regulating industry and supporting economic development, was tasked with launching the cannabis strategy table forum back in early 2022.

ISED wouldn’t directly answer MJBizDaily’s questions on the forum’s composition and when it might begin its work.

“Innovation, Science and Economic Development is undertaking economic analysis, gathering business intelligence, and actively building inter-industry and inter-government coordination and collaboration,” the department wrote in emailed responses to queries from MJBizDaily.

“These activities serve as recognition of the economic and business context of the sector, as well as the importance of building a sustainable legal cannabis sector to achieve the objectives set out in the Cannabis Act.

“Development of the cannabis strategy table is ongoing and updates will be provided publicly once they become available.”

ISED does not regulate the cannabis industry; that responsibility falls on a separate federal department, Health Canada.

Pierre Leclerc, director general of the business group Quebec Cannabis Industry Association (AQIC), said it’s “strange” the government is taking so long to get the forum up and running.

“It’s absolutely impossible to understand why it’s taking so long,” Leclerc said in a phone interview with MJBizDaily.

“I am getting impatient to be quite frank. Thirteen months is too long. They need to get this roundtable working ASAP, especially where the industry is right now. We can’t wait for this work to start any longer.”

This wouldn’t be Canada’s first economic strategy table, which brings industry and government together, but it appears to be the slowest to become operational.

Canada’s 2017 federal budget promised the creation of six economic strategy tables.

All six were launched within seven months.

The emails

MJBizDaily acquired hundreds of pages of emails from ISED via the ATIP law covering the period between early April 2022, when the planned strategy forum was announced, and the end of June, three months later.

Since the emails cover a short period of time, they don’t fully reveal why the forum has not yet been launched.

They do, however, paint a picture of a government department that appeared to be surprised it was given the task in the first place.

One email was sent on April 11 by Eric Costen, now senior assistant deputy minister, industry sector, at ISED, to Sheryl Groeneweg, director general for ISED’s Manufacturing and Life Sciences Branch.

“You may have seen that the budget included a bit of a surprise in the form of a ‘new cannabis strategy table’ to be led by ISED,” Costen wrote to Groeneweg.

Costen was a prominent figure in cannabis regulation over the past decade or so, having held positions such as executive director of the Office of Medical Cannabis, director general of the Cannabis Legalization and Regulation Secretariat.

He later headed up overdose crises and drug policy at the Controlled Substances and Cannabis Branch.

Much of the April 11 email is redacted.

“Obviously we need to scope out the work and potentially will have resources to bulk up the team (this is TBD). I’d like to have a brief meeting during the week to discuss the project and agree to some basic next steps,” Costen wrote.

The emails – hundreds of pages in length altogether – mostly deal with the early stages of organizing the strategy table forum and engaging dozens of bureaucrats across multiple ministries, including Health Canada.

Some of the emails contain insight into the thinking of influential bureaucrats such as Costen.

That’s relevant because the medical and recreational cannabis industries in Canada are heavily regulated, and even the smallest regulatory pivot has the potential to impact access for thousands of patients or revenue opportunities for legal businesses.

In an email dated May 30 to ISED senior policy adviser Paul O’Keefe and a number of other people, Costen shares his thoughts about a document titled, “Canadian Cannabis Sector Backgrounder.”

In his email, Costen identifies some of his “long standing pet issues” regarding the cannabis industry.

“There is no such thing as ‘medical’ cannabis, there is only cannabis, which is sometimes used (for) medical purposes,” the former medical marijuana regulator wrote.

“Similarly, ‘recreational’ cannabis is a nonsensical term IMO – we’d hardly ever talk about recreational alcohol.”

On track?

By the end of June 2022, the senior bureaucrats overseeing the creation of the cannabis industry forum appeared to think it was on schedule.

A document dated June 16 and labeled “secret – draft” says the “launch” of the forum is “on track.”

However, no date is listed for an anticipated launch.

The “secret” document, most of which is redacted, describes the strategy table as “an opportunity for the government to hear from industry leaders and identify ways to work together to grow the legal cannabis sector in Canada.”

Another email appears to show the government had completed its list of “proposed” strategy table members as far back as June 2022.

Yet no list of strategy table members, proposed or otherwise, has been publicly disclosed.

The email, dated June 26, 2022, from Costen to his ISED colleagues, says: “Paul O is making a few last minute edits to a package for the minister with proposed members (redacted). The DM reviewed it last week and had only minor comments. The revised package should get routed up this week. The tricky part with this project is (redacted).”

“Paul O” is a likely reference to O’Keefe, the director at ISED, and “DM” refers to deputy minister of Innovation, Science and Economic Development, Simon Kennedy.

‘Cannabis package’

A significant amount of time appears to have been spent creating the so-called “cannabis industry forum package” – an informational package also containing recommendations – for Kennedy and François-Philippe Champagne, federal minister of innovation, science and industry.

The emails show the package wasn’t delivered until the second half of June, almost three months after the strategy table was announced in the budget.

Multiple versions are contained in the released emails.

A report titled, “Advice to the Minister of Innovation, Science and Industry; Development and Implementation Plan for a Cannabis Industry Forum” is marked “CONFIDENTIAL.”

Most of the report, including a section labeled “Next Steps,” is redacted.

The summary contained in the report notes that ISED:

  • “is preparing to stand up an industry-government forum focused on the cannabis sector.”
  • “Has license” to determine the form and scope of the forum.

Interestingly, one of the versions of the report states Health Canada is “currently launching a review of cannabis regulations, as dictated by legislation.”

However, the Cannabis Act – the federal law governing the cannabis industry – mandates a review of the law “and its administration” three years after coming into force.

It did not require a review of the regulations.

This is an important distinction, because the cannabis industry has been requesting a review of certain regulations for years – in particular, packaging rules – but to date, no substantive reform has been rolled out.

The federal government did not initiate the legislative review – which is a completely separate undertaking from the strategy table – until almost four years after the Cannabis Act entered into force – an apparent violation of its own law.

Also separately, Health Canada is conducting public consultations on potential amendments to the federal cannabis regulations.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.