The international dimensions of Bill C-45 are of utmost importance not only for Canada itself but for many countries around the world that are moving in the direction of legally regulating the cannabis market. The position Canada will take vis-à-vis the UN drug control conventions could well be a crucial moment in the long and troubled history of international drug control. Inter se modification appears as a legitimate safety valve, and perhaps under current circumstances the most elegant way out for a group of countries to collectively derogate from certain cannabis provisions.

Martin Jelsma of TNI and John Walsh of WOLA testitified before the Standing Senate Committee on Foreign Affairs and International Trade at a Meeting regarding Bill C-45 as it relates to Canada’s international obligations on 19 April 2018. Canada could play a significant role in efforts to improve the UN drug control system in respect of human rights and public health, one of which is by initiating cooperation with other countries to resolve tension regarding cannabis regulation. An inter se agreement on cannabis regulation, as outlined in a recent report Balancing Treaty Stability and Change: Inter se modification of the UN drug control conventions to facilitate cannabis regulation, would allow a group of countries to modify certain drug control treaty provisions amongst themselves alone. A legally grounded coordinated collective response has clear benefits compared to a chaotic scenario of a growing number of different unilateral reservations and questionable re-interpretations.

See also the Report of the Standing Senate Committee on Foreign Affairs and International Trade

OPENING STATEMENT BY JOHN WALSH

before the
 
Standing Senate Committee on Foreign Affairs and International Trade
Meeting regarding Bill C-45 as it relates to Canada’s international obligations
19 April 2018 – 10:30 am

Download the statement (PDF)

Madam Chair, honorable Senators, I thank you for inviting me to participate in today’s meeting. I hope that my participation proves valuable as the Committee prepares its report. As you consider the international dimensions of Bill C-45 and the regulation of cannabis, I’ve been asked to speak about Uruguay – the only country thus far to have legalized and regulated non-medical cannabis under national law – and in particular about the possible implications for Canada in light of Uruguay’s experience.

At the outset, let me be clear about our perspective at WOLA – a leading research and advocacy organization advancing human rights in the Americas. Generally speaking, we believe the aim of drug policy should be to minimize the harms that can arise from drug use, but also to minimize the damage that is caused by drug control itself. We consider the legal regulation of cannabis to be a sensible and promising alternative to prohibition, and we have engaged extensively in recent years with governments, multilateral agencies, and civil society partners exploring how to move forward with cannabis regulation in ways that support human rights, public health, and social justice.

I have been privileged to follow closely the implementation of Uruguay’s cannabis law, from the original proposal in 2012 and its enactment in 2013, up to the present day. Last month, WOLA and our colleagues at the Brookings Institution published a report entitled “Uruguay’s cannabis law: pioneering a new paradigm,” which takes stock of the law’s advances and challenges to date. I will touch on some of the topics covered in the report – especially Uruguay’s handling of the UN drug control treaty questions as well as the problems that Uruguay faces with regard to banking. I would request that the entire report be made available to the Committee.

In view of the drug treaty questions and the banking issues, it also makes sense to take note of developments in your neighbor to the south – the United States of America – so I will address that evolving situation as well. Overall, my message to the Committee today is one of reassurance. I believe that:

•    Canada has sound reasons for moving forward now with its cannabis law reform – for the health, security, and well-being of Canadians – even though doing so will inevitably entail non-compliance with certain drug treaty obligations.

•    The drug treaty non-compliance that Canada’s shift will entail has remedies in international law. Canada has options to bring its impending new domestic legal reality into alignment with its international obligations. And Canada’s international reputation as a good global citizen need not suffer along the way; to the contrary. My colleague Martin Jelsma of the Transnational Institute will discuss the options available to Canada, in particular the procedure of inter se treaty modification.

•    Canada can avoid the kinds of banking access problems now facing Uruguay, and can even provide a model for Uruguay and others as to how to afford crucial banking services to the regulated cannabis sector, thereby contributing to the regulatory aims of transparency, accountability, and public safety.

•    Time is on Canada’s side. To be sure, Canada is at the vanguard of cannabis regulation, but it is not alone. In addition to Uruguay and to developments within the United States, other countries are contemplating similar reforms for similar reasons. To take just one example, the new Dutch government has announced that it will be permitting local experiments in regulated cannabis production to supply the country’s cannabis “coffee shops.” As Canada moves forward with cannabis regulation, it will find itself in good company.

To substantiate my overall message of reassurance, I will elaborate briefly on three points.

•    Uruguay enjoys continued good standing in the international community.
•    Canada can avoid the banking problems that have hampered Uruguay.
•    The United States itself is shifting towards regulating cannabis.

Uruguay enjoys continued good standing in the international community

More than four years after having enacted its cannabis regulation law, Uruguay is not an international outcast, and has not suffered sanctions or otherwise been punished for moving ahead with its reform. First, Uruguay foresaw the criticism that its unprecedented move would likely trigger, and fashioned an argument based on human rights obligations that was at once consistent with the country’s international reputation and coherent with the rationale for its reform. Uruguay maintains that its policy is fully in line with the original objectives that the UN drug control treaties emphasized but have subsequently failed to achieve: namely, protecting the health and welfare of humankind.

There is no doubt that Uruguay is contravening its obligations under the 1961 Single Convention to limit cannabis exclusively to medical and scientific purposes. But Uruguay has side stepped the non-compliance question, arguing that its new law adheres to the country’s foundational obligations under international law. In the event of a conflict between human rights obligations and drug control requirements, Uruguay argues that it is bound to give priority to its human rights obligations.

Second, the UN drug control treaty bodies, such as the International Narcotics Control Board (or INCB), do not have the enforcement authority or political power to block Uruguay from moving ahead with its new law. Historically, countries such as the United States have wielded their considerable power to encourage full implementation of the drug treaties, and to discourage innovations that break from the orthodoxy of prohibition and criminalization. However, with Uruguay’s cannabis law entering its fifth year, there has not been a concerted U.S. effort to punish Uruguay, either bilaterally or in the wider international arena.

In this respect, Uruguay has enjoyed felicitous timing, with its law’s passage having come in the midst of a major shift toward cannabis regulation within the United States itself. After the November 2012 ballot initiatives to legalize non-medical cannabis in the states of Colorado and Washington, President Obama adopted a policy of conditional accommodation of state-level legalization, spelled out in a 2013 Justice Department enforcement guidance known as the “Cole Memo.” This accommodation by the U.S. federal government provided Uruguay a political cushion internationally, just as the Uruguayan parliament was preparing to approve the country’s cannabis reform.

Uruguay’s human rights rationale for adopting a regulatory approach to cannabis provides a powerful case for moving ahead, even though regulation entails breaching certain drug treaty obligations. However, the human rights arguments for regulation do not automatically resolve the legal conflict with the current treaties or somehow erase the issue of non-compliance.

Uruguay was understandably reluctant to take the step of openly acknowledging treaty non-compliance entirely on its own, potentially isolated and without obvious allies. Rather, Uruguay judged that it would be better to reckon with that challenge in the international arena once other countries found themselves confronting the same problem – as Canada is today and as other countries will likely be in the not-too-distant future. So while human rights-based arguments and appeals to the fundamental health and welfare goals of the drug treaties do not resolve the issue of treaty non-compliance, such arguments do provide a strong justification for a country to enter into a temporary period of drug treaty non-compliance, with the intention of formally altering its relationship to the international obligations that it has decided it can no longer meet.

As Martin Jelsma will describe, such a period of transitionary “respectful non-compliance” could set the stage for two or more States to avail themselves of the inter se option for treaty modification, concluding agreements among themselves that permit the production, trade, and consumption of cannabis for non-medical and non-scientific purposes.

Canada can avoid the banking problems that have hampered Uruguay

Just as Uruguay had successfully launched commercial sales of regulated cannabis last July, a significant obstacle arose. Pharmacies making cannabis sales were told by their banks to either stop selling cannabis or see their bank accounts closed. Some pharmacy owners opted to continue selling cannabis on a cash basis, others withdrew, and still others who might have been considering entering the market put those plans on ice.

For Uruguay, the problem arose from the reluctance of large U.S.-based banks that have relationships with Uruguayan counterparts to risk running afoul of the USA PATRIOT Act, which precludes banks from serving accounts that involve cannabis. To date, these large U.S. banks, such as Bank of America, have shied away from servicing even U.S. domestic markets for medical or non-medical cannabis.

But where Uruguay was highly vulnerable given its relatively small economy and significant reliance on U.S.-based banks, Canada has attributes that should help avoid the obstacles that Uruguay is still struggling to overcome. First, Canada already has experience with the medical cannabis sector, something Uruguay is only now developing. Second, Canada’s overall population (10 x), economy (30 x), and cannabis markets are orders of magnitude larger than Uruguay’s, and the incentives for the country’s banks to participate in the legal cannabis sector are commensurately larger.

To be sure, Canada may also experience bumps along the road in terms of financial services. But indications are already clear that at least some of Canada’s large institutions intend to engage, and they are presumably conducting the due-diligence necessary to do so, in particular as it relates to their relationships with U.S.-based banks.
 
The United States itself is shifting towards regulating cannabis

It may not be obvious, given the hostile views on cannabis held by the current U.S. Attorney General, Jeff Sessions. But the United States is also headed in the direction of cannabis legalization, or more specifically, federal law allowing for and setting guidelines around state-level legal regulation. An agreement was reported last week between President Trump and Senator Gardner of Colorado to develop legislation to protect states that legalize medical or non-medical cannabis from federal intervention. The debate at the federal level is still far from settled, and there is still quite a ways to go before any such law is enacted.

But even if Trump should change his mind and hand the reins of cannabis policy back to Attorney General Sessions – who in January 2018 rescinded the aforementioned Cole memo – the states that have already legalized should not be expected to reverse course, and more states are likely to join them in the months and years to come. The path toward eventual congressional passage of legislation that codifies the states’ ability to regulate cannabis will not be a straight line. But already 1 in 5 Americans lives in a state that has voted to legalize, more ballot initiatives are on the way, and public opinion is increasingly in favor of legalization—which has appeal across the political and ideological spectrum.

The Canada-U.S. relationship is obviously enormously important for both countries. On cannabis regulation, the Canadian government is certainly ahead of the U.S. federal government. But without putting a timeline on it, the United States is heading in a similar direction, and in the future Canada should anticipate that the United States is more likely to be a partner in addressing shared concerns on cannabis policy, rather than an antagonist.

OPENING STATEMENT BY MARTIN JELSMA

before the

Standing Senate Committee on Foreign Affairs and International Trade
Meeting regarding Bill C-45 as it relates to Canada’s international obligations
19 April 2018 – 10.30 am

Download the statement (PDF)

Madam Chair, honourable senators, thanks so much for inviting me to appear before this committee today. The international dimensions of Bill C-45 are of utmost importance not only for Canada itself but for many countries around the world that are moving in the direction of legally regulating the cannabis market. The position Canada will take vis-à-vis the UN drug control conventions could well be a crucial moment in the long and troubled history of international drug control. I sincerely hope that my participation today will be useful for your deliberations and for the recommendations in your final report.

Let me make clear from the outset that I support the policy change proposed by Bill C-45, and that the Transnational Institute has been actively involved in similar drug law reform initiatives around cannabis in other countries, providing expert advice and facilitating meetings to exchange experiences and to discuss the dilemmas countries are confronted with in that process. The international drug control system was built with the aim to protect the health and welfare of humankind, and the current crisis around opioid overdose deaths here in Canada and in the US is a stark reminder of the importance to safeguard its key principles and to improve the functioning of that system.

In that sense, I fully agree with the statements made last month before this committee by Mr. Gwozdecky of Global Affairs that “Canada’s approach is fully compliant with the overarching goals of these conventions”, but also with his acknowledgement that it “will result in Canada being in contravention of certain obligations related to cannabis under the UN drug conventions”. There’s simply no way around that: denying that reality would be dishonest and disrespectful of international law. And for TNI, and fortunately still for many countries including Canada, respect for international law is crucial for a basic degree of global order and governance. And pacta sunt servanda, so Canada runs into a legal problem, just as Uruguay and the US already have, that requires due attention and needs to resolved at some point in the future.

From that perspective, we started four years ago to explore with a group of international lawyers, UN officials, government representatives and civil society experts, the best options for dealing with those undeniable treaty tensions, and how to move forward with legal regulation of cannabis while respecting basic principles of international law. The outcomes of those consultations are laid down in a recent report “Balancing Treaty Stability and Change: Inter se modification of the UN drug control conventions to facilitate cannabis regulation” that we presented in March at the UN Commission on Narcotic Drugs in Vienna. Though the report is only available right now in English, I would like to request that the entire report be made available to the Committee for its consideration (I’ve also brought printed copies for those who want).

I’ve been closely following your Committee’s deliberations of Bill C-45 until now, and I don’t want to repeat things that have been discussed in earlier sessions in some detail already, so allow me to highlight some key points from our report that haven’t received much attention thus far:

1    Especially the inclusion of cannabis and coca leaf in the strictest control schedules, has been an historical mistake which has weakened and delegitimized the whole system, and the moment is long overdue to repair those mistakes, refocus priorities and to make the system more evidence-based and ‘fit for purpose’. An important step in that direction is the pre-review process of cannabis currently undertaken by the World Health Organization. The WHO Expert Committee on Drug Dependence is mandated by the treaties to recommend on the scheduling of substances under the 1961 and 1971 Conventions but has never in its history reviewed the current classification of cannabis which was basically copy-pasted from the pre-War treaties into the Single Convention. In June the Expert Committee will meet to discuss the outcomes of the pre-reviews of cannabis, hashish, extracts, THC and dronabinol, and surely proceed to undertake a critical review and provide recommendations for rescheduling. Most likely the WHO will also suggest improvements in the confusing definitions of the various cannabis-related substances in the 1961 Convention and the inconsistency related to the inclusion of the cannabinoids under the 1971 Convention.

2    An increasing number of countries are discussing or moving towards legal regulation of the cannabis market. The trend is most visible in the Americas (US States, Canada, Uruguay and several Caribbean countries – Jamaica, St Vincent and the Grenadines, Antigua, Belize), getting closer to a breakthrough in some European countries (The Netherlands, Switzerland, Spain, Germany) as well as in New Zealand and Australia, but also followed with interest in a few African (Morocco, South Africa) and even Asian (Thailand, Myanmar, India) countries. Reaching a new global consensus to revise or amend the UN drug control conventions to accommodate cannabis regulation, however, does not appear to be a viable political option in the foreseeable future. As the 2016 UNGASS and also the latest CND session have clearly shown, the global consensus on drug policy is fractured beyond repair.

3    The nature of the drug control regime limits the formal avenues for consensus-based treaty evolution and modernisation and forces states – like Canada – that want to move forward with reforms they consider to be in the best interest of their citizens but are in contravention of certain treaty obligations, to adopt temporarily a stance of respectful non-compliance, or to take extraordinary measures, such as the choice made by Bolivia to withdraw and re-adhere with a new reservation with regard to coca leaf.

4    The option of inter se modification, based on article 41 of the Vienna Convention on the Law of Treaties, was specifically designed to find a balance between the stability of treaty regimes and the necessity of change in absence of consensus, and appears to provide a useful safety valve for the state of paralysis of the global drug control regime today. A quote from the Commentary on the Vienna Convention: “Due to the conflicting interests prevailing at an international level, amendments of multilateral treaties, especially amendments of treaties with a large number of parties, prove to be an extremely difficult and cumbersome process; sometimes, an amendment seems even impossible. It may thus happen that some of the States Parties wish to modify the treaty as between themselves alone.”

5    An inter se agreement on cannabis regulation would allow a group of countries to modify certain treaty provisions amongst themselves alone, while maintaining a clear commitment to the original treaty aim to promote the health and welfare of humankind and to the original treaty obligations vis-à-vis countries that are not party to the inter se agreement.

6    A legally grounded coordinated collective response has clear benefits compared to a chaotic scenario of a growing number of different unilateral reservations and questionable re-interpretations. An inter se modification agreement would provide opportunities to experiment and learn from different models of legal regulation, open the possibility of international trade between states with regulated cannabis markets, also enabling for example small cannabis farmers in traditional Southern producing countries to supply the opening regulated licit spaces in the global market.

7    Inter se modification would facilitate more diversity in parallel control regimes fine-tuned to specific substances and local circumstances, operating on the basis of established rules around the peaceful co-existence of legal differences in national jurisdictions within the boundaries of international law.

When the inter se option came up briefly in earlier sessions of this committee, the opinion was expressed that the mechanism was only intended for countries that wanted to agree among themselves on stricter rules than what the treaties require, not to reduce treaty obligations. But as we explain in detail in our report, there is no doubt that inter se modification can also be applied by a group of countries to derogate from certain treaty provisions. The UN International Law Commission discussed the matter in great detail and concluded that in that case basically the same rules apply for an inter se agreement as for a reservation, namely − as Article 41 specifies – that it should not affect the rights of other treaty parties and that it “does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole”.

I’d be happy to go into more legal details in answer to questions, but let me mention briefly two important points around the question whether an inter se agreement to derogate from cannabis-specific treaty provisions would be permissible under those Article 41 conditions. Firstly, it depends on the nature of the treaty. The prohibition of torture under international law, for example, is an absolute principle from which derogation by means of reservation or inter se modification obviously would not be permissible. Similarly, an inter se agreement modifying the provisions of a disarmament treaty would be unlawful since it necessarily affects the rights of other parties. But there is more flexibility for treaties where the impact of a specific change between two or more parties inter se can be confined to those parties and has no immediate effect on the rights of others or on the object and purpose of the treaty as a whole. The pre-War origins of the international control system basically aimed to prevent the uncontrolled export of certain drugs to states that had prohibited those substances, respecting differences between the domestic laws of the treaty parties. The morally charged 1961 Single Convention perhaps attempted to elevate the policy of drug prohibition to an absolute principle, but that argument is not sustainable, since there are many psychoactive substances-including alcohol- to which the principle is not applied.

That brings me to the second point I wanted to make about the permissibility of an inter se cannabis agreement. A majority of countries at least for the short-term foreseeable future will maintain a strict prohibition regime for cannabis, so to what extent are their rights immediately compromised if a group of countries decides otherwise? Of course, similar to the pre-War principles, the regulating countries would promise in their inter se agreement to fully cooperate to prevent leakage to countries where cannabis prohibition remains in place. In fact there are quite a few examples in practice that demonstrate the possibility of peaceful co-existence of fundamentally different control regimes for the same substance. The Bolivian derogation from certain treaty obligations regarding the coca leaf does not appear to have affected the rights of other parties in any serious way. Other psychoactive plants like khat, kratom and ephedra, with stimulant properties comparable to coca, are not controlled under the conventions at all and subjected to widely varying degrees of national controls and prohibitions.

But also in the case of cannabis by now there are many years of experience with the legal medical cannabis market, allowed under the treaties, but in practice still strictly prohibited in most parts of the world. The rapid boom of the medical cannabis market has taken place apparently without a major impact on those countries that maintained its prohibition. Why would that be different now with the emergence of a legal non-medical market in various countries, as long as it is strictly regulated as Bill C-45 plans to do? Plainly, the international drug control system is currently ineffective in preventing the international illegal traffic of cannabis in spite of the near universal prohibition. A strictly controlled legal regulated market is likely to prove more effective in preventing the illicit export of cannabis from regulated jurisdictions in comparison to the current situation. Thus, though it may seem counter intuitive to some, a legally regulated market in a group of countries under an inter se agreement may well benefit non-parties to the agreement instead of harming them.

Of course, there will be opposition and the legality of the mechanism will be questioned by some states, as happened with the Bolivian coca reservation. At the time 18 countries registered objections, including Canada, something I hope this government will correct by withdrawing Canada’s formal objection against Bolivia, not only to open the path for a future similar exemption for cannabis that Canada will need to obtain one way or another but also out of respect for indigenous rights.

In conclusion, from our consultations with international treaty lawyers, inter se modification appears as a legitimate safety valve, and perhaps under current circumstances the most elegant way out for a group of countries to collectively derogate from certain cannabis provisions. Therefore, I hope your committee carefully considers the legitimacy of this option for Canada to resolve the approaching conflict with its international obligations and recommends in your report that the government seriously explores this possibility with the growing number of like-minded countries struggling with the same dilemma.