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Category: News & Updates
Canada to Legalize Marijuana by 2017?

In a prepared speech to the United nations in New York City on April 20th (a date referred to by marijuana enthusiasts as 4/20), Federal Health Minister Jane Philpott announced to attending delegates that the wheels are set in motion for Canada to legalize the recreational use of marijuana.

“We will introduce legislation in spring 2017 that ensures we keep marijuana out of the hands of children and profits out of the hands of criminals.”

The special session at the General Assembly kicked off three days of meetings meant to evaluate and review the implementation of the UN’s 2009 Action Plan to combat drugs worldwide. Philpott’s announcement came as a surprise by some, who wondered whether to news was leaked pre-emptively, before the government really has an opportunity to discuss what the legislation might look like and how it will take effect come next spring.

Bill Blair, Toronto MP and former chief of police in the city, and the parliamentary secretary to the justice minister, is heading up the government’s effort to draft legislation making recreational marijuana legal. Blair was also in attendance during the UN meetings, and attempted to fill some of these gaps, commenting on the measures needed in order to ensure the forthcoming legalization legislation is executed and enforced effectively:

“It’s a great deal of work. It’s important to do it right. And so, we’re looking at regulations with respect to production, distribution, the retail and consumption of marijuana and we want to make sure that it’s based on the best advice from experts.”

Lucas Powers of CBC, raises a point echoed by many critics online. If the government is taking legitimate steps towards legalizing marijuana, shouldn’t they cease enforcing the current possession laws that are currently in place? And for those who have already been arrested, charged and imprisoned for marijuana related offences, should they be released and have their criminal records wiped clean?

The current laws are still in effect. So, individuals carrying small amounts of marijuana for recreational use can still be arrested and prosecuted. However, if a major change is imminent, it ”undercuts the whole foundation for arrests and prosecutions,” according to Alan Young, a lawyer and associate professor at Osgoode Hall, and a key proponent in the anti-prohibition movement in Canada.

The arrest and prosecution of individuals for minor drug violations like possession, has long been argued to be a waste of police resources and courts, causing a backlog of cases in the court system that slows things down significantly, potentially denying individual’s their Charter right to due process in an expedient fashion.

The solution being put forth by Tom Mulcair of the NDP party, in a statement made to the House of Commons, is that marijuana should, at the very least, be decriminalized until full legalization is enacted next year.

The Liberal Government’s Rationale for the Legalization of Marijuana

Canada’s Minister of Health, Jane Philpott, made a fairly shocking announcement about the future of marijuana legalization in Canada back on April 20th of this year. In front of a group of international delegates at a UN General Assembly, intended to review the execution of the UN’s 2009 action plan on drugs, Philpott declared that Canada, “will introduce legislation in spring 2017 that ensures we keep marijuana out of the hands of children and profits out of the hands of criminals,” as reported by CBC News

“We know it is impossible to arrest our way out of this problem,” – Philpott

At a recent event hosted by The Economist called the Canada Summit, Prime Minister Justin Trudeau made an impassioned speech discussing the rationale behind his decision to support an initiative to legalize the recreational use of marijuana by next year. Trudeau downplays the obvious economic benefits, stating that the Liberal government’s approach to legalizing marijuana “is not about creating a boutique industry or bringing in tax revenues.”

Trudeau went on to outline the two fundamental principles used to justify his Cabinet’s strategy. The first, having to do with enhanced child safety, a goal also mentioned by Philpott at the UN General Assembly.

“The first one is: young people have easier access to cannabis now, in Canada, than they do in just about any other country in the world. In 29 different countries studied by the UN, Canada was number one in terms of underage access to marijuana.”

Trudeau’s facts are derived from 2013 study by conducted by UNICEF, Child well-being in rich countries: A comparative overview. The 28% figure Trudeau quotes is 4% higher than the next highest country, Switzerland. Emphasis was also placed on the potential health risks marijuana consumption has on a young child’s developing brain.

“The other piece of it is there are billions upon billions of dollars flowing into the pockets of organized crime, street gangs and gun runners because of the illicit marijuana trade.”

The criminalization of marijuana essentially breeds organized crime, forcing criminals to come up with dangerous and occasionally creative ways to circumvent both the law and law enforcement. Legalization eliminates the need for people to obtain recreational pot through illegitimate means, eliminating the need for an underground drug trade to exist at all.

The Path to Legalization of Marijuana in Canada

The Liberal government’s proposal to introduce recreational marijuana legalization by 2017 has drawn both praise and criticism from rival political parties, but none more vocal than the New Democratic Party. NDP Leader Tom Mulcair told reporters at CBC News that he is extremely pessimistic of the policy proposal, calling it “just another broken promise,” and a pandering show of support for former Toronto Police chief and front man for the pot legalization movement in Canada, Bill Blair.

Central to Mulcair’s criticism of the proposal is his argument that current state of the law places marijuana in a confusing grey area, leaving law enforcement unsure as to how to proceed when they encounter public drug use and sale. The ambiguousness of the law also opens a door for commercial marijuana vendors to emerge en masse, a phenomenon most prevalent in the country’s big urban centers. An infrastructure for both the distribution and sale of recreational marijuana is being established in Canada, before the law has had an opportunity to adapt and formally regulate the market.

The solution that Mulcair suggests that would be in everyone’s best interest would be to “decriminalize” marijuana, a designation that is understood by many to be an intermediary step between criminalization and legalization. The words ‘legalization’ and ‘decriminalization’ are often used interchangeably, which can lead to even further confusion, because the two terms stand for two entirely different legal principles. Under a legalized model, marijuana becomes a substance that anyone over a determined legal age can possess and consume it, without the fear of being arrested. No different than how cigarettes and alcohol are treated today. However, in a decriminalized model, people can still be arrested and charged with marijuana-related offences, but possessing small amounts no longer lands the perpetrator with a criminal record or a jail sentence.

His suggestion has some sound rationale behind it, especially when one considers the issues that may arise from arresting someone for marijuana possession now, when, in a year (assuming the Liberals keep to their suggested timeline) the same activity will have no criminal penalty attached to it. Is it fair to arrest someone for a “crime,” when legislative changes are inevitable? Mulcair doesn’t think so.

The Economics of Recreational Marijuana Legalization

The money that could be made from the legalization and taxation of marijuana in Canada is staggering. Weed is a cash cow that requires absolutely no marketing effort – it practically sells itself.

But just how much money could be made if Trudeau’s plan to legalize marijuana for recreational use starting spring of 2017 becomes a reality?

Back in April of 2014, University of Western Ontario professor Mike Moffatt spoke to CBC’s The Lang & O’Leary Exchange, arguing that marijuana legalization could help Canada’s economy on both side of the ledger, generating a healthy amount of tax revenue while saving the country billions of dollar in law enforcement costs. At that time, legalized recreational marijuana in the state of Colorado (one of four states that has had legalized pot use since January, 2014) was generating $2 million in taxes per month, which works out to roughly $0.40 per resident. If we were to extrapolate this number for Canada’s 30 million residents (conservatively), that would equate to approximately $12 million in tax revenue every month, money that could be put towards funding education and other social services nationwide.

In addition, it is estimated that Canada spends approximately $2 billion every year in police resources for arresting a prosecuting minor marijuana-related offences. An additional savings that could also be better spent elsewhere.

Colorado, one of the four U.S. states that currently has legalized marijuana for recreational use for anyone over the age of 21, presents an excellent case study.

For the fiscal year starting June 30, 2014 to June of last year, the state made approximately $70 million in tax revenue during that time, nearly twice the amount tax revenue brought in from alcohol, at approximately $42 million, according to statistics published by state legislatures and published in Time Magazine. Marijuana in Colorado is currently taxed at Colorado’s data indicated that the 10% for retail sales and 15% excise tax for large wholesale, and the revenue brought in from these taxes nearly doubled initial projections. In 2014, 71.3 million visitors spent $18.6bn in Colorado on marijuana, both record highs, until figures for 2015 are released.

The State of Toronto’s Commercial Real Estate Industry

In stark contrast to housing, the commercial real estate industry in Canada as a whole is suffering from a lack of consumer interest. According to Tamsin McMahon of The Globe and Mail, the demand for commercial office and retail space nationwide is plummeting. A trend that McMahon believes is the result of a surplus of office space available, declining oil prices (affecting the value of the CAD), as well as “skittish” investors.

“Demand, or lack thereof, will be the biggest story in the office sector,” – Paul Morassutti, executive vice-president CBRE Ltd. (RealCapital real estate conference in Toronto

Thankfully, regional differences do exist in both demand and price for commercial real estate, particularly in Toronto and Vancouver, arguably the two hottest markets in the country. Toronto is a bit of an anomaly, in that, most analysts would agree that prices are surging and will continue to rise in the foreseeable future. However, there is some debate regarding whether or not the demand for commercial space is the GTA is healthy, or falls in line with national trends.

McMahon believes that the sustained demand for Toronto commercial properties by Asian foreign investors is what’s driving prices up. Foreign investors, having analyzed the record breaking sales figures and escalating prices both residentially and commercially, view Canadian real estate as a safe investment guaranteed to garner hefty returns.

Toronto Real Estate Board president Mark McLean, and the figures TREB published in early March pertaining to commercial sales and average lease rates, tell a different story. According to McLean:

“it is clear that there remains a degree of uncertainty in many sectors regarding the outlook for the next year. This uncertainty seems to have translated into caution when it comes to firms committing to more industrial, commercial/retail or office space,”

Members of the TREB’s Commercial Network reported leasing 392,132 square feet of combined industrial, commercial/retail and office space in February 2016, down from 796,437 square feet of space leased during the same period in 2015. Market Wired offers a great breakdown of the sales and pricing data provided by TREB, which has been summarized below.

Leased Square Feet in Toronto:

  • Feb. 2015: 107,045
  • Feb. 2016: 56,716
  • Percentage: -47.0%

Average Lease Rate

  • Feb. 2015: $17.44
  • Feb. 2016: $19.82
  • Percentage: 13.7%

Sales

  • Feb. 2015: 21
  • Feb. 2016:  22
  • Percentage:  4.8%

Average Sales Price (per square foot)

  • Feb. 2015: $352.12
  • Feb. 2016: $355.20
  • Percentage: 0.9 %

Whereas the average lease rates for properties transacted on a per square foot basis were up for the commercial sector year-over-year, the actual amount of square feet being leased has dropped by almost half! This, a demonstrated decrease in demand with an increase in price, somewhat defies traditional real estate logic. But the numbers don’t lie.

Alternative Measures to the New Mortgage Rules in Canada

The newly elected Liberal federal government made cooling down the sizzling hot real estate market a top priority. They’ve demonstrated this sense of urgency by introducing new legislation to temper escalating home prices, as one of their first orders of business. These new laws were made active a week ago, and analysts and commentators online are debating whether or not they will be effective. After the record breaking 2015 with regards to home sales and prices, Canadians unanimously agree that there is an issue of affordability, particularly in the hottest housing markets like Toronto and Vancouver.

The Canadian Mortgage and Housing Corporation now requires a 10% down payment on the portion of any mortgage it insures over $500,000. The 5% rule remains for the portion up to $500,000. What this means in practical terms, according to the Toronto Star, anyone buying a home for $700,000, for example, means the minimum down payment will rise to $45,000 from $35,000. Any home under $500,000 still requires only a down payment of 5%. Homes that cost more than $1 million still require a 20% down payment.

The problem, according to some, is that the new measures unfairly affect the buying potential of new homebuyers looking to enter the market. Higher down payments mean fewer young homebuyers will be able to afford a home, and perhaps that’s the point. Demand for homes is unlikely to change, if anything, it’s bound to increase as the population in Canada’s major cities continues to grow. The new laws are clearly intended to target supply: fewer homes being purchased translates into more homes available on the market, which should, theoretically, drive down prices.

Jillian Bell of CBC News asked several economists what alternative measures the government could implement to slow down Canada’s big-city housing markets. Each solution identifies a different root cause for the country’s housing affordability issue that the new measures don’t address.

According to John Andrew, director of the Queen’s Real Estate Roundtable, foreign investment in high-end properties is what’s causing prices to skyrocket, especially in Vancouver. The solution, in a nutshell, is to tax foreign property owners more heavily, which is harder than it sounds, because the government would “first have to do its due diligence when it comes to identifying foreign buyers who hide behind a Canadian friend or relative.”

Andrey Pavlov, a real estate finance professor at Simon Fraser University, agrees that foreign owners should pay more taxes, arguing that, as the law currently stands, most foreign home investors pay practically no taxes in Canada. The reason for this is that the current law only requires foreign investors to pay tax on their Canadian income, as opposed to their worldwide income. The solution is for the government to change the definition of residency “so that someone who owns a $4-million home in Vancouver pays taxes on their worldwide income, not just on their Canadian income, which is typically zero.”

Toronto’s Record Breaking Year

Toronto is one of two main outliers in the Canadian real estate scene, with Vancouver being the other hot market. Most other markets demonstrated more modest price increases, or in some cases, price decreases, in 2015. The Canadian Real Estate Association released data in December that showed the average resale home price was up 10.2% year over year. But when you remove Toronto and Vancouver from the equation, the average increase was just 3.4%.

The calendar year 2015 was one of the best years on record for home sales in the GTA, with multiple monthly and annual records being broken. Amazingly enough, as good as 2015 was, it could have been better, with a skyrocketing demand for residential homes not being met by the current supply. Amy Grief of BlogTO reports that 101,299 homes were sold by Toronto Real Estate Board (TREB) members, up 9.2% from 2014. And it wasn’t a crawl to the finish line, with sales finishing up strong at the end of the year; the Toronto-area had 4,945 residential sales in December of 2015, the second-highest on record for a December.

TREB president Mark McLean stated in a press release:

“If the market had benefited from more listings, the 2015 sales total would have been greater…As it stands, we begin 2016 with a substantial amount of pent-up demand.”

TREB also had a few other revealing stats to share. The average price for all Toronto-area homes, including condos and semi-detached and detached houses, is $622,217, a 9.8% increase since 2014. For detached houses, the average selling price in the city hit $1,039,658 in December, up 11.8% in a year. An alternative price measurement shows a similar price increase. The MLS home price index for the Greater Toronto Area, which measures the rate at which prices change over time by tracking price changes in “typical” homes, was up 10 per cent from 2014, to $573,500.

The Huffington Post also looked at the TREB figures, noting that the Greater Toronto Area and other parts of southern Ontario experienced stronger demand than most Canadian markets — outdone only by parts of British Columbia in the Greater Vancouver and Lower Mainland areas.

The Toronto Real Estate Board believes that sales could have been much higher, shattering previous records, had their been more properties available to satisfy the pent-up demand. But that demand should carry over into the new year, which should boost early 2016 home sales.

Jason Mercer, TREB’s director of market analysis, made this statement:

“TREB will release its official 2016 outlook later in January, but suffice to say that the demand for ownership housing is expected to remain very strong in 2016.”

According to a Canadian Press report, TREB will release its outlook for 2016 on January 18. Many are expecting to see no slowdown in sales for this year, even with the introduction of new mortgage rules by the recently elected Liberal federal government.

CMHC Implements New Mortgage Rules

The newly elected Liberal federal government is wasting any time attempting to remedy what many fear is a nationwide housing market bubble. It’s been a noteworthy week and a half in the ongoing story that is the Canadian real estate market in 2015. As Adam Chambers of The Globe and Mail notes, first, the Bank of Canada announced that it would consider moving to negative interest rates should the economic conditions warrant the need to do so. And second, the Department of Finance, the Canada Mortgage and Housing Corp. (CMHC) and the Office of the Superintendent of Financial Institutions (OSFI) came to a consensus regarding measures geared at slowing down the market. The resulting measure will increase the minimum down payment for new insured mortgages over $500,000 to 10% from 5%, as well as future changes to be made to the amount of capital that banks must hold against residential mortgages.

The logic behind the rule change is sound, in theory. The rules are structured so minimum down payments begin to rise gradually as the selling price moves above that point. But, as is the case when putting any codified policy into practice, the only way to know whether or not its working is to give it time, followed by an evaluation of its effects.

Don Pittis of CBC breaks down what the possible consequences the increase to down payments might have, breaking it down into two scenarios:

“Is it too much? Enough to pop the bubble that so many people have identified? Or, at the other end of the spectrum, will it be too little to have any serious impact on a mortgage market that is constantly finding fresh ways to entice new buyers?”

Pittis goes on to make an interesting observation, noting that the new rules instituted by Bill Morneau, atleast at first glance, appears to target the richer segment of the market, seeing as how homes that are under $500,000 will remain unaffected by the change. The effects of the new rules are likely to be restricted to the margins. Since the rules apply across Canada, cities such as Calgary, with traditionally lower minimum down payments, will have to bare the brunt of the changes.

But, when one factors the record breaking increase in housing prices in Canada’s two largest markets, Toronto, and Vancouver, you quickly realize that $500,000 doesn’t exactly constitute “rich” anymore. The majority of first time homebuyers in Toronto, if they opt not to purchase a condo, are looking at a home priced anywhere between $500,000 and $1M. Craig Alexander, an economist for the C.D. Howe Institute, a Canadian economic think-tank, commented on the state of first time homebuyers, arguing that many have to overextend their budgets and income in order to purchase a home, which forces them into a precarious financial situation that can become disastrous very quickly.

“The share of households that have no financial buffer has been going up. There’s more financial vulnerability now than there was before.”

The Ashley Madison Data Breach

Data breaches of major networks and corporate computer networks has become such a common phenomenon nowadays, that some incidents don’t even make it on the news. But the theft of over 31 million account profiles from the adultery website Ashley Madison, is not one of these easily ignored or forgotten cases. The data that was stolen was sensitive, including names, addresses, credit cards, sexual preferences. Not to mention, membership to the website itself implies a desire to want to cheat on a partner or spouse, which, in itself could potentially ruin many relationships.

If anything positive can be taken from the hack, it’s the fact that the collection of data serves as a great source of information about human sexuality online and offline, and what we look for in relationships, illicit or otherwise. This incredibly large data set provides interested parties an opportunity to analyze and draw insights from the data that would otherwise be incredibly difficult to collect.

The group taking credit for the act is an anonymous collective of hackers going by the moniker “Impact Team.” As Robert Hackett of Fortune reports, Avid Life Media, the parent company of the website, has placed a bounty on the hackers’ heads, offering up $500,000 (CAD) for any information that would lead to the arrest of the guilty party. The company first began receiving threats from back in July of last year, immediately appointing a team to investigate who the culprit might be, initially suspecting that the culprit was someone who may have worked for them on a contractual basis.

Toronto Police Services Superintendent Bryce Evans made the initial announcement:

“Today I can confirm that Avid Life Media is offering a $500,000 reward to anyone providing information that leads to the identification, arrest, and prosecution of the person or persons responsible for the leak of the Ashley Madison database.”

So what have some analysts found while analyzing the data?

Alex Krasodomski-Jones, a researcher for the Centre for the Analysis of Social Media (CASM), wrote a piece for Wired that outlined some of his findings. Krasodomski-Jones chose to focus on cultural differences among the user base:

  • Italian users were most likely to be looking for a short term relationship
  • German and Austrian users preferred a long term arrangement.
  • Brtis are three times more likely to be looking for a short term arrangement. Just one in twenty users were looking for a long-term relationship, compared with one in four in Germany.
  • Chinese users most frequently opted to keep things online, expressing a preference for a “cyber-affair”, something of no interest to Japanese and South Korean users.
  • Sixteen million people used the site in the US. Utah, Mississippi and South Carolina — which feature in the top five churchgoing American states – are Ashley Madison’s three best represented states per capita.

Robert Hansen, VP of WhiteHat Labs for WhiteHat Security, spoke to Tony Bradley of Forbes (http://www.forbes.com/sites/tonybradley/2015/08/19/ashley-madison-hack-data-reveals-interesting-statistics/) regarding some of the insights his company was able to uncover while combing through the Ashley Madison data. Hansen’s focus was on the type of email people used when signing up for an account, which sheds light on where people work, and how far some people will go to remain anonymous.

  • The vast majority of Ashley Madison clients use a webmail address presumably to hide their true identity and/or prevent their spouse from intercepting any Ashley Madison communications.
  • Well over 13,000 email addresses were from .MIL and .GOV domains and a handful of congressmen among the hacked data.
  • A substantial number of addresses from various Fortune 500 companies like Microsoft MSFT +0.00%, Cisco, Apple, and Bank of America.
  • Three accounts using Vatican.com email addresses.
The James Deen Saga – Part 2

Coming to His Own Defense

Hilary Hanson of The Huffington Post recently referred to Deen as the “Bill Cosby of Porn,” making reference to the fact that a seemingly endless string of women with allegations began to emerge not long after Stoya made her initial claims. His only public statement since Stoya’s initial allegation was a series of tweets and an Instagram post in which he called the accusations “egregious” and said, “I want to assure my friends, fans and colleagues that these allegations are both false and defamatory.”

Deen finally broke his silence regarding the rape allegations, coming to his own defense in an interview conducted by fellow porn actress Aurora Snow, published in The Daily Beast. Here are some of the highlights of the interview. Snow did not shy away from asking Deen some tough, hard-hitting, and in my opinion, extremely well thought out questions. Snow asks him directly about some of the allegations coming from the nine women who stepped forward., as well as Deen’s opinions on consent, rape humor and rape culture in the porn industry.

Snow began her interview by asking Deen why Stoya would make her initial allegations on Twitter. His is quick to blame the bitterness left behind after what he describes as a “messy” breakup with Stoya as a key motivator behind her actions.

I do not know at all. I am completely baffled. I also can’t speak to her motivations…What I do know is that Stoya and I did not have a clean break up. It was pretty messy, full of a lot of emotions and both Stoya and I are to blame for that…The reason Stoya made this claim could be as simple as her finding out that my current girlfriend and I are moving in together.”

Snow goes on to question Deen about the Tori Lux allegations, asking him to clarify what really happened on set that day. Deen immediately denies the description of events in question provided by Lux, arguing that the rough nature of the scene filmed was all part of the context of the film, which criticizers are seemingly missing.

“I can safely say that did not happen. All of the accusations are from either ex-girlfriends or events that happened on set. I always try to take responsibility for my actions and apologize when needed. As far as these other claims, at a certain point I feel like people have to step back and analyze this stuff in context. Most of these are descriptions of things on BDSM or rough sex sets. When I am on set I am under instruction of the company who is paying me. I will just say this: my job as a performer for rough sex companies is to engage in certain acts. If at any point I pushed boundaries past the point of comfort, I am sorry. I have always tried to respect peoples’ limits and safe words and operated within that space.”

Stoya asked Deen a very interesting question part way through the interview, asking for his perspective on the differences in consent between the real world and porn industry.

“On every set I have been on the thing that stops everything is: “I don’t feel comfortable.” There are third parties and supervision. There is a disconnect because the person who is having the sex is oftentimes doing it under instruction from a director.”

Styoa followed up by asking: Where do you draw the line between an aggressive violent sex performance and reality? Does that line ever become difficult to define? Does your environment change how you behave towards women? For example, what’s it like to work at the Armory for Kink.com, which is treated like one big porn set?

“Kink.com is a very unique and specific example. They are the only company that I have worked for who puts all the models in one building on one floor unsupervised with access to alcohol and various sex toys, as well as a communal bathroom. It creates a very non-stop sexual environment which is very conducive to producing great content. On most sets there is a natural safety net because you know that there is a walk-on location that changes depending on the day, and there is no blurry line as to when the day starts and ends. I don’t think you can blame an environment for someone’s actions. I can say that the type of content desired by the person who is paying me changes the types of performances I create, and the type of performance desired would be enhanced by the environment, so a smart producer/director would ensure to create the right environment to dictate the type of performance they want.”