Executive Summaries Nov 16, 2018

Cannabis and cryptocurrency businesses under the gaze of the Quebec Lobbyists Commissioner

By Isabelle Landry, Lawyer

In the October 31, 2018 edition of the newsletter LobbYscope, the Quebec Lobbyists Commissioner announced that he was planning to pay special attention in the coming months to companies and organizations doing business in the cannabis or cryptocurrency industries in order to raise their awareness of the rules that govern lobbying and enforce those rules.

What is lobbying?

In Quebec, the Lobbying Transparency and Ethics Act regulates lobbying activities. That Act provides that, constitutes lobbying, any communication with a public office holder in an attempt to influence a decision concerning:

  • the development, introduction, amendment or defeat of any legislative or regulatory proposal, resolution, policy, program or action plan,
  • the issue of any permit, licence, certificate or other authorization,
  • the awarding of any contract, otherwise than by way of a call for public tenders, or of any grant or other financial benefit or the granting of any other form of benefit determined by government regulation, or
  • the appointment of any public office holder within the meaning of the Act respecting the Ministère du Conseil exécutif or the appointment of any deputy minister or other holder of a position referred to in section 55 of the Public Service Act or any holder of a position referred to in section 57 of that Act.

In the Province of Quebec, public office holders include a broad range of professionals and elected representatives, taking in ministers, members of the National Assembly, persons appointed to a government agency or a government enterprise, mayors, municipal or borough councillors, wardens, members of the council of a metropolitan community, all political staff, government employees, and government agencies and enterprises (e.g., AMF, SQI, CCQ, Régie du bâtiment, Hydro-Québec, etc.) and employees of municipalities and municipal bodies (e.g. intermunicipal boards, RCMs, etc.)

That does not mean that it is prohibited to communicate with public office holders in order to influence their decisions; on the contrary, such lobbying is clearly recognized by the Act to be a legitimate activity. However, no one may carry on a lobbying activity without being registered in the registry. Lobbyists must be registered no later than within a time that varies between 30 and 60 days after the lobbying activity commences, depending on the situation. As a precaution, it is preferable to complete any registration by 30 days after the lobbying activity.

Examples of lobbying activities in your industry

The Commissioner gives several examples of acts that could constitute lobbying in the cannabis industry:

  • lobbying municipal institutions for amendments to the zoning regulations to allow the growing or processing of cannabis;
  • lobbying the Société québécoise du cannabis for authorization to import, distribute, deliver or store cannabis;
  • lobbying the Autorité des marchés publics for the necessary authorization for cannabis producers to sell their products to the Société québécoise du cannabis;
  • lobbying Hydro-Québec to negotiate a reduction of the energy bill associated with the cost of cannabis production.

Examples relating to cryptocurrency are also listed:

  • lobbying Hydro-Québec to reserve a block of energy by special contract that is sufficient to support blockchain technology;
  • lobbying the Minister of Energy and Natural Resources to expedite the adoption or lifting of a moratorium on processing electricity consumers’ applications for cryptographic use applied to blockchains;
  • lobbying the deputy minister of Government Digital Transformation for government support (grant, loan, etc.) for implementing a high technology server farm project;
  • lobbying the government to have it adopt a favourable approach to the creation of other sites for operating cryptocurrency farms;
  • lobbying the Minister of Energy and Natural Resources to demonstrate the quality of a project in order to obtain authorization to obtain electricity.

Severe sanctions

Since there may be significant consequences for enterprises in breach of the rules, it is important to comply with the registration obligations within the times allowed. Fines may vary between $500 and $25,000 for a first offence, and may double for a repeat offence. You may also be prohibited from registering in the registry for a certain period; this amounts to a ban on acting as a lobbyist and so of obtaining changes, authorizations, assistance or otherwise that are often crucial for your enterprise.