Focus: Medical marijuana continues to be source of litigation

There has been one constant since the Ontario Court of Appeal struck down the prohibition against possession of marijuana for medical reasons in 2000: the subsequent rules imposed by the federal government have been subject to repeated court challenges.

The courts have found the regulations that govern medical marijuana to be invalid on more than one occasion and there are two current proceedings before the courts that could again require the federal government to go back to the drawing board.

A Federal Court judge in British Columbia is presiding over an ongoing challenge to regulations that require those authorized to possess medical marijuana to buy from approved producers in the private sector. Late last month, the Supreme Court of Canada reserved its decision in an appeal from British Columbia on whether the rules permit only cannabis in dried form for medical marijuana patients.

The result is ongoing uncertainty in an area where the government has rarely addressed the complaints of the medical marijuana community without a court challenge. At the same time, it’s a field where a number of private sector investors are eagerly trying to get into what they see as a growth market with even Health Canada officials estimating there could be at least 400,000 legally registered medical users by 2024.

To add to the complicated legal landscape, a Tax Court judge ruled last year that even approved medical marijuana is subject to the goods and services tax because it’s more like an over-the-counter product than a prescription drug.

Meanwhile, a new medical marijuana policy adopted earlier this year by the College of Physicians and Surgeons of Ontario states that approving cannabis use for a patient is equivalent to a prescription.

For both people who are registered medical users and individuals and companies seeking to grow cannabis, it’s a confusing time. “I sympathize with the patients,” says John Fowler, a lawyer and president of Supreme Pharmaceuticals Inc., a Toronto-based company seeking a production licence.

“We have had Band-Aid solutions,” he adds.

The Federal Court trial, which began in February in Vancouver, stems from an action launched by Neil Allard and three other individuals legally authorized to possess or produce marijuana under the marijuana medical access regulations that the government repealed in March 2014. The new framework, the marijuana for medical purposes regulations, requires users to obtain their medicine from a licensed producer.

The new framework doesn’t allow patients to produce marijuana for themselves or obtain it from an authorized caregiver as was possible under the previous regulations.
The plaintiffs obtained an injunction last year, which the Federal Court of Appeal upheld last year in Canada v. Allard 2014.

The ruling permits licensees under the old scheme to continue to produce marijuana for medical patients until the constitutional challenge makes its way through the courts.

The Federal Court proceeding has heard evidence so far that the costs for patients could be four to five times higher if they have to buy from private producers as the new regulations don’t regulate price. As well, certain strains of cannabis they have developed to deal with their symptoms wouldn’t necessarily be available.

In the meantime, Health Canada is continuing to slowly approve new producers for the medical marijuana market under the new regulations.

Health Canada had received almost 1,200 applications for a production licence as of the end of 2014, according to an affidavit filed in the Federal Court proceeding. It receives about 15 new applications each week. So far, Health Canada has issued production licences to 23 companies.

These companies have registered nearly 15,000 clients, says Health Canada, and had sold about 1,600 kilograms of medical marijuana by the end of last November. The court documents also suggest the price can vary wildly from less than $2 per gram to as high as $15 per gram, although some companies offer discounts to low-income individuals.

Fowler, whose past experience was within the medical marijuana community, says he understands the suspicion towards the private sector.

“It will take some time before people transition,” says Fowler. However, he suggests the old approach was a “broken system” that didn’t serve patients well with many of them having to obtain their medicine on the black market.

“We have a friendly black market in Canada. But there is no quality control,” says Fowler.

“The quality of medicine will improve dramatically over the next few years,” he suggests, citing the prospect of private sector competition.

His publicly traded company has a large property in southwestern Ontario and a management team that includes a horticulture professor, business executives, and people with ties to the medical marijuana community.

Fowler agrees that securities and health regulators need to have a strong oversight role to ensure the burgeoning industry has the confidence of investors and medical users. “The more we regulate, the more credibility there will be in this industry and the better it will be for patients,” says Fowler.

Jennifer Thorne, a defence lawyer in Kelowna, B.C., who also advises clients seeking production licences, says the best regulatory framework would treat marijuana similarly to other prescription products available at a pharmacy. “It should be dispensed in a medical setting, where you can consult with someone who knows the product,” says Thorne.

In addition to deciding exactly who can produce for the medical marijuana community, there’s still the unresolved issue of what form cannabis must be in to gain the legal approval of the federal government.

The Supreme Court of Canada heard arguments on March 20 in an appeal by the federal government over a decision that found a prohibition on oral or topical cannabis products, such as oils, was unconstitutional.

The B.C. Court of Appeal ruled 2-1 last year in R v. Smith that the restriction was arbitrary and there was no evidence that cannabis use in edible products, teas or oils presented any greater a risk than smoking dried marijuana.

One of the interveners at the Supreme Court representing three HIV/AIDS organizations argued the onus is on the state if the use of a therapy might attract criminal sanction. “If a patient sincerely believes that the use of an alternative unapproved drug therapy might alleviate their pain and suffering, section 7 of the Charter prevents the state from criminalizing that patient’s choice of medication,” wrote lawyer Paul Burstein in arguments filed with the court.

The federal government disagrees. There’s no right under the Charter of Rights and Freedoms “to obtain or produce drugs based on a subjective belief in their therapeutic value,” wrote Paul Riley and Kevin Wilson, two government lawyers involved in the case.

The Supreme Court’s decision in Smith may turn out to be the most significant court ruling related to medical marijuana because it could significantly expand the industry, Thorne suggests. “If we are talking about a medical product, it should be available in the form that is most effective,” she says.

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