As most people are aware October 17th, Canada legalized cannabis but a lot of new laws have come into play. It’s a scary time for people involved in the cannabis industry as we try and see where enforcement will come down.
Small, sometimes family companies that have been operating for years as a grey market company may be on the front line of enforcement now. It was for these unanswered questions that led the owners of Sofa King Good Bakery decided to getting some legal advisors together to share their thoughts at an event in the weeks leading up to legalization.
Before we got into the legal advice, the doors opened early to let people socialize, and account for people who show up late. This was really important, as there were multiple accidents that slowed people down. For those that could make it there was some medicated finger food provided by High Society Supper Club, with non-medicated sandwiches from Subway and coffee and Tim bits from Tim Horton’s.
The event started with an informative talk by Reena Rampersad a representative for Cannabis Amnesty, a group gathering signatures to over turn the current cannabis charges held by Canadians. There are currently 500,000 Canadians with a cannabis charge, and a lot of them where targeted for racial reason. They have gathered over 4,200 signatures, with a goal of 10,000. Please click here to sign the petition to help Cannabis Amnesty with their important endeavor.
Russell Bennett was the first to speak to the legal side of things, being a cannabis lawyer and medical patient who has worked on many cannabis projects over the years, including his own documentary (Stoner: Hemp Nation on Trial), play (The Reefer Man), and has helped a number of cannabis companies with legal issues.
Russell emphasized the 7 main issues small businesses face: 1. Partner Agreement, 2. When/Why do you incorporate, 3. Bad Debts, 4. CRA (Pay your taxes), 5. Data Protection, 6. Product Liability, and 7. Intellectual Property. Each topic was touched on and brought up for discussion, I’ll bring up the main points, but to get the most benefit you definitely needed to be there. This was a quick introduction to what Mr. Bennett would go through to help ensure your business is ready for success in a meeting. In an individual meeting it would be a lot more detailed, but he gave us a quick overview.
In a Partner Agreement it’s important to have your roles and responsibilities, money flow, and what happens if someone wants to leave the business. When/Why incorporate is best done when you are looking to sell the company and/or there are multiple shareholders with different weights of opinions. Incorporating also adds extra taxes and requires annual filing. It was also brought up that some companies should hire “independent contractors” rather than employees, as employees are hired indefinitely and require vacation time, etc.
The third thing was Bad Debts, which is always an issue but can be limited through getting half the money up front to cover costs. If the cost is less than $25,000 than you can handle it in small claims court. The issue of the CRA was stressed, make sure you pay your taxes! You can even transfer your tax money into a different account to make sure you have enough to pay.
In our day and age, data protection is important, with the lawyer pointing out you need to have a reporting system in place. It was brought up by someone attending that their data was stored in a third party website like MailChimp, and hoped that this helped protect them from liability. There wasn’t a concrete answer at the end for this. Product liability is a big potential issue with products being made at home. Not many companies have it, but insurance can be bought to protect your company from liabilities.
For intellectual property it can fall under copy right/patent, industrial design, or plant breeder rights. When talking about plant breeder rights it’s important to be able to point out the specific ailments that strain can help with. There are also industry secretes like the recipe for CocaCola where if it gets out, anyone can make it.
Raymond Lee Hathaway closed up the event, being a paralegal and medical patient with lots of experience helping Toronto dispensary employees navigate the court system. Being a patient first he has experienced the same issues you have of waiting on the phone with Health Canada, lost records, etc.
Raymond shared lots of his experience and knowledge with those in the room. Things like never plea guilty, always ask for a trial. Trials can be over turned, but a plea can’t. Being well acquainted with the court system, he has seen a number of the issues people have. Pointing out you should have a legal advisor/lawyer prepared because if you get arrested the police wont let you communicate with your business partners.
Raymond mentioned he had done a constitutional challenge for SoCo (Social Collective) but lost. He feels that if more dispensaries did constitutional challenges, eventually dispensaries would have won. Raymond offers his legal services for a flat monthly fee, rather than most lawyers who have large fees that jump up on clients out of nowhere.
It was also mentioned that after legalization Toronto police would have increased powers for raiding dispensaries and events, claiming evidence was no longer needed. Raymond predicted a lot of raids on Oct. 18th.
As the event started to wind down, the floor opened up for questions with both legal advisors giving their thoughts. One individual asked about the large fee their lawyer was asking to prepare some paper work, and if there was anyway to save money. It was suggested he could ask what the price would be for you to draft the paper work and have him go over it before submitting.
It was also brought up that you can actively go after the government, suing them for not having all products available like suppositories, edibles, concentrates, etc. This would put a legal pause on the enforcement of these products until the court can decide their legal standing. There were lots of other topics brought up, with Raymond and Russell giving the best answers they could.
Now that legalization is here and 5 Toronto dispensary raids have happened we need to see what happens in the court system. From there people both medical and recreational will have a better idea of what our legal cannabis system will look like in Ontario.
For those seeking legal advice from either Russell Bennett (RBennett@CannabisLaw.ca) or Raymond Lee Hathaway, (LeeHathaway@gmail.com) please contact them through the emails provided to set up a meeting.