EDITOR: | February 24th, 2016 | 9 Comments

Marijuana Update: Allard Decision and the MMAR’s

| February 24, 2016 | 9 Comments
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Allard_MMARThe Federal Court of Canada today released its long-awaited Allard decision. Making a complicated story simple, the question was, will the 45,000 medical marijuana users who had been licenced to grow and consume their own strains of marijuana be allowed to continue, or will they be forced into the new MMPR system to buy from third parties. (More detailed background articles here and here.)

The short answer is, keep growing your own.

The decision from Justice Phelan is here.

He found in a 100-plus page decision that the new MMPR regulations infringed upon the old MMAR holders’ section 7 rights under the Charter of Rights, and could not be saved by s.1 of the Charter. As a result, the MMPR regulations are invalid.

Found under the Heading “Legal Rights”, section 7 of the Charter reads, “Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.”

What’s fascinating is the remedy imposed by the court. From paragraphs 296 and 297 of the decision:

The appropriate resolution … is to suspend the operation of the declaration of invalidity [of the new MMPR system] to permit Canada to enact a new or parallel medical marihuana regime. … The declaration [of invalidity] will be suspended for six (6) months to allow the government to respond to the declaration of invalidity.

That means the federal government has 6 months to figure out a better system. This is very similar to what the Supreme Court of Canada did with the issue of prostitution. It also creates a great deal of confusion.

As a practical matter, this means the existing MMPR’s lost a substantial portion of their target markets, which will have a downward impact on their values. It also means there is a great deal more risk associated with the MMPR’s, since we have no idea what the Trudeau government will do about this in the next six months. The system can be overhauled or the government can tinker with it. Will the MMPR’s keep their licences? In what form? What kind of licence will the MMAR’s get?

At one point on the day Allard was released, Canopy (TSXV:CGC), the largest MMPR and bell-weather for the group, was off about 9%. It closed down 6% on the day on over 5 million shares being traded.

Health Canada must be thrilled. Regardless of what the Federal Court would have decided, while this case was pending Health Canada was blocked from fulfilling its simple mandate of, “helping Canadians maintain and improve their health”. With this guidance from the court, the government can get going in some direction, any direction…

This decision is in keeping with the philosophies expressed by the Supreme Court of Canada in Smith. While it is a delicate balancing act, the rights of the patient take priority over the interests of the government.


Peter Clausi

Editor:

Mr. Clausi is an experienced investment banker, executive and director. A graduate of Osgoode Hall Law School called to Ontario's bar in 1990, Mr. Clausi ... <Read more about Peter Clausi>


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Comments

  • Luc C Duchesne

    This is creating a legislative vacuum that will force the government to put forward its plan to legalize marijuana sooner than later–within 6 months.

    February 24, 2016 - 1:02 PM

  • Tracy Weslosky

    Note that we have had a lot of comments on this column, but they have been full of advertisements….for marijuana sites: and have had to all be deleted. An intelligent debate on what this will really mean to the public markets is what InvestorIntel was built for. I for one, believe members like Abattis will be unaffected as their focus is pain relief — and are directed more to pills, vitamins and creams. There is a large market here for this. As for growing in your home, I grew up in Tennessee where MMJ grows like a weed…and really, how do you police one plant in a home in the sunroom? I just shake my head at all the people jailed in my lifetime for what is now legal. Am I allowed to say: what a mess?

    February 25, 2016 - 9:32 AM

  • Peter Clausi

    Allard has caused a great deal of confusion with respect to the status of the existing licences. Where you find confusion, you find increased risk. The value of the MMPR’s and the applicants has taken a hit.

    February 25, 2016 - 10:29 AM

  • Jeff

    The statement “Making a complicated story simple, the question was, will the 45,000 medical marijuana users who had been licenced to grow and consume their own strains of marijuana be allowed to continue, or will they be forced into the new MMPR” is incorrect 28,000 have a license to grow under the injunction. The remaining have to wait 6 months to see what the Feds come up with.

    February 25, 2016 - 2:07 PM

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  • Michael Shada

    I read the store, I may have been more interesting to me if I knew what MMPR and MMAR described because by guessing what they mean didn’t work for me.

    March 30, 2016 - 11:07 AM

  • Peter Clausi

    Michael, you are right. I made assumptions concerning MMPR and MMAR, but then included hotlinks to prior articles that provided more detail. You can look at the article here http://investorintel.wpengine.com/agbusiness-mmj-intel/marijuana-investing-update-comes-judge for better background info. Thanks for your comments – keep em coming.

    March 30, 2016 - 11:16 AM

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