Section 121 and Canada’s Marijuana Monopolies

28 11 2017

I was quoted in a recent Toronto Star story on marijuana and the constitutionality of interprovincial trade barriers.  The reporter asked me whether a victory for  the advocates of interprovincial free trade in the Comeau case (see here) would destabilize the plans for provincial government monopolies on the sale of marijuana.  I answered that whether Canada ends up with a single national market for marijuana or a system whereby each province creates its own walled-garden system could indeed be influenced by the Supreme Court’s decision in the case of R v Comeau. If the Supreme Court agrees with the view that interprovincial trade barriers that impedes the trade in alcohol and other legitimate products are unconstitutional, then the existing restrictions on bringing beer, dairy products, etc between provinces would become unenforceable. In that scenario, clever lawyers for companies that want to be able to sell marijuana across interprovincial borders might then be able to use this precedent to argue that a provincial law banning mail-order sales from another province are also unconstitutional.


However, I also told the reporter don’t that I didn’t think that such arguments would be persuasive or that the courts would greenlight a free-for-all in marijuana, as opposed to commodities that have been legal for a long time (e.g., beer).  I arrived at this conclusion based on comparative constitutional history. Many federal unions have a provision in their constitution that mandates that there should be free trade between the members unit. For instance, the Australian constitution has a section (Section 92) very similar to the Canadian constitution’s section 121 that mandates that there should be free trade between the Australian states. The founding documents of the European Union enshrine a similar sort of principle called the single market, which means that EU courts have declared that citizens in one EU country can drive to another, fill their car with alcohol or any other legitimate product, and then return home. The key court case that helped to create the single market was the famous 1979 Cassis de Dijon ruling. Without this ruling, the EU Single Market as we know it would not have come into existence. One of the many consequences of the creation of the EU Single Market is that you routinely see heavily-laden cars stuffed with wine bottles returning to the UK from Calais, a French town that has a suspiciously large number of liquor stores.  In 2007, the European Court of Justice, which is effectively the EU’s Supreme Court, issued a ruling in a case that has many parallels with the Comeau case. In Sweden, alcohol sales are a state monopoly—you must buy your alcohol from Systembolaget. In Denmark, the sales regime is more liberal. Thanks to the famous bridge between the two countries, it is quite easy for people in western Sweden to circumvent the Swedish state monopoly. In 2007, the  European Court of Justice, ruled that some of the Swedish laws that support Systembolaget,  in particular the provisions prohibiting the importation of alcoholic beverages by private individuals, violate the principle of free trade within the EU.


As I explained to the reporter, the courts in federations that mandate interal free trade generally frown on internal trade barriers,  they seem to draw the line at things like recreational drugs or prostitution. For instance, people in EU countries cannot drive to Amsterdam or some other Dutch city where marijuana is openly sold in cafes, and then drive back to say, Germany, with the marijuana. The principle of the single market doesn’t extend to such controversial products. If it did, EU member nations would no longer be able to have drug laws that deviate from those of the most liberal EU member state.  In a 2010 test case brought by the owner of the Easy Going cafe, a Dutch marijuana establishment in the town of Maastricht, the European Court of Justice, ruled that the principle of free trade between EU countries just didn’t apply here. [Maastricht, it should be noted, is located conveniently close to the border and a German autobahn.]

Similarly, the Australian courts have been quite vigorous in using Section 92 of Australia’s constitution to strike down barriers to inter-stateat  trade in the goods and services in that country, particularly since the precedent-setting ruling in the 1988 case of Cole v. Whitfield. However, the principle of inter-state free trade is not taken so far as to  mean that brothel companies that operate in the Australian state where prostitution is legal (e.g., New South Wales) can open up branches in states that have banned brothels!

I suggested to the reporter that in interpreting section 121, the Canadian Supreme Court would likely adopt a similar approach to that taken by courts in other industrial democracies (the EU and Australia). Since the Gold Seal Case, Canadian judges have interpreted section 121 it very narrowly to mean that only restrictions on interprovincial trade that take the form of actual tariffs are prohibited. I suppose the Canadian courts could go to the other extreme and declare that anything that restricts interprovincial trade, such as federally-imposed fines for people who send marijuana through Canada Post, are unconstitutional under the  Section 121. After looking at how courts in other democratic federations have interpreted the constitutional protections for internal free trade in marijuana cases, I would predict that the Canadian courts would likely adopt a middle ground position is that some non-tariff restrictions on interprovincial trade are acceptable, particularly in the case of substances that have only just become legal and which are still illegal in most other democratic countries.  Such an interpretation of Section 121 would be analogous to the one that the European Court of Justice adopted in its 2010 ruling on marijuana.