Canada is showing the world the way forward on marijuana legalization. In Ontario, superior and appellate courts have ruled that Canada’s cannabis laws are null and void. Challenges to change federal law towards decriminalization, on the other hand, have failed. There’s a lesson to be learnt for blockchain regulators here.
Nevertheless, Health Canada does regulate cannabis for medicinal purposes in a system industrial nations are looking towards as an example. As well, hemp plant cultivation is legal in Canada for seed, grain and fiber production. Public opinion finds more-and-more Canadians believe each year since 1997, “Smoking marijuana should not be a criminal offence.”
Indeed, Canada has positioned itself as one of the most pro-marijuana governments in the world. Prime Minister Justin Trudeau said he wanted to “legalize, regulate, and restrict” marijuana for recreational use.
When I spoke with Alan Brochstein – the 420 Investor – he told me: “I spend my time focused on Canada. It has a federally legal medical marijuana program that is almost two years old, and while off to slow start initially, it has gained a lot of traction and there is a lot of excitement. Because of a government change there, very likely in next two years, we will have legal cannabis on a federal basis in Canada. That’s an exciting part of the cannabis investment space.” Brochstein believes Canada could be a global leader in marijuana.
“The US could be in that position, but already other countries are looking to the Canadian model, which is tightly regulated production at federal level,” he added. “We don’t have that in the US.”
Trudeau has vocalized his intention to take marijuana consumption and small possession out of the Criminal Code. New laws will enact stricter punishment for those who supply cannabis to minors or while driving stoned, for example.
Canada could capitalize on its sensible regulations and reap the benefits. This same approach could be applied by the nation towards emerging blockchain technologies. Already, Canada has a sensible approach to technology regulation. For instance, there are no laws in Canada that mention MySQL.
“Most laws in Canada are technology-neutral and don’t call for a specific technology or system to be used,” Addison-Cameron-Huff told me.
Many vocal proponents of innovation have expressed their desire to see Canada take a sensible, perhaps even laissez faire, approach to blockchain technology in order to allow the technology to evolve.
For instance, at a recent roundtable hosted by CIGI in Toronto, the topic “Regulating Blockchain & Distributed Ledger Technologies: Challenges and Opportunities for Canadian Innovation” was discussed.
Addison Cameron-Huff, a technology lawyer, believes Canada has the opportunity to be a world leader. In order to be such, the country has difficult questions to answer.
“Can regulatory ‘gaps’ be filled with common law and economic behavior rather than government-prescribed rules?” He asked. “Are there any gaps that cannot be filled by private actors or court-created law?”
Bitcoin is regulated in Canada under common anti-money laundering and know-your -customer laws. Like most countries, Canada had no specific law or regulation for bitcoins. An official of Canada’s Department of Finance told The Wall Street Journal in January 2014 that Canada did not consider bitcoins to be legal tender.
According to WSJ, the official stated “[o]nly Canadian bank notes and coins are recognized as legal tender in Canada. Bitcoin digital ‘currency’ is not legal tender in Canada.” However, the official also stated that the government of Canada would continue to “monitor developments involving virtual currencies.”
A spokesman for the Bank of Canada, Canada’s central bank, told WSJ: “[s]maller, stand-alone payment systems for which there are many substitutes – like bitcoin – should generally require much less intensive oversight and regulation because they pose much less risk to the Canadian financial system as a whole. . . . Nevertheless, these payment systems should be designed and operated to meet the needs of Canadians which would include convenience and ease of use, price, reliability, safety, and effective redress mechanisms.”
Canada’s Revenue Agency informed bitcoin users in April 2013 they would have to pay tax on transactions in the digital currency. The Canadian Finance Minister, in the Federal Budget for 2014, mentioned briefly Canadian government intentions to draft anti-money laundering and anti-terrorist financing regulations for virtual currencies.
As in cannabis, Canada could become a world leader in blockchain technology. In order to do this, the nation will have to approach the technology sensibly, and work together with Canada’s leaders in finance and technology to ensure its approach harbors innovation while staying within the framework of global anti-money laundering and know your customer precedents.
For now, businesspeople and government regulators are still trying to wrap their head around Bitcoin. Over the coming years, a discussion about blockchain regulations will develop. A measured weighing of risks and benefits can ensure that software developers are free to innovate.
Featured image from Shutterstock.
Last modified: May 21, 2020 10:30 AM UTC