Consumers are paying for government’s failure to understand cannabis

David Clement is the North American affairs manager with the Consumer Choice Center

A selection of marijuana ordered from the Ontario Cannabis Store, which has become Canadas largest online pot retailer since recreational use of the mind-altering drug was legalized in October is viewed on Nov. 18, 2018 in Canada.MICHEL COMTE/AFP/GETTY IMAGES

Cannabis is a unique and versatile product. Unfortunately, regulators at all levels fail to really understand how cannabis is used, which has led to numerous policy mishaps. Simply put, federal, provincial and municipal legislators have made many mistakes when it comes to cannabis regulations. These mistakes have hindered consumers when it comes to price, supply and access.

Consumers nationwide are faced with prices that are much higher than what is otherwise available in the black market. Prices are inflated from a variety of different sources, which include: the 10 per cent federal excise tax, the 2.3 per cent federal revenue tax, various compliance and security fees, and additional sin taxes such as Manitoba’s “social responsibility fee.” The ever growing tax burden, which is ultimately paid for by consumers, is rightly raising some eyebrows with those who are wanting to purchase cannabis legally.

When it comes to supply, retailers across the country face chronic shortages. Stores, whether online or bricks and mortar, often fail to have their full product range available at all times. These shortages come from the onerous regulations that are applied to the licensed producers (LPs) who grow cannabis. Because of old Harper-era and pharma grade regulations, LPs essentially grow cannabis inside of a bank vault, which limits their ability to scale up production and get product to market.

Lastly is access. Community opt-outs and limited storefronts have created a toxic policy mixture that has ensured the black market thrives. Quebec government stores are closing on certain days, while Alberta has stopped issuing retail licences.

Ontario, which was slated to have an uncapped amount of retailers, has announced only 25 licences will be granted before April, 2019. Not having quick access to legal cannabis understandably pushes consumers back to the black market. Access problems, along with the pricing and supply issues, have played a role in keeping the black market alive. So much so that cannabis is still purchased illegally by 35 per cent of consumers.

The issues regarding cannabis regulations are easy to see, but the reason for such a disastrous policy mix isn’t quite as obvious. All of these issues come from legislators and government officials who fail to understand the versatility of cannabis as a consumer product. Cannabis isn’t just a recreational product, it is a medical product and a wellness product.

Medically, cannabis is known to be useful for treating a variety of illnesses that range from cancer, MS, ALS and fibromyalgia. As a wellness product, cannabis can be used to aid in alleviating headaches, stress and sleep problems. Lastly, cannabis is a recreational product, one that is used for its euphoric high, to enhance experiences or to calm you down.

Inflated prices occur because regulators see cannabis as a purely recreational product, one the government can use to generate exorbitant revenues. The pricing on cannabis resembles how the government views alcohol.

The issue with this view is it completely ignores that cannabis is also a wellness product and a medical product. Because the government has failed to understand this, patients are now paying excise taxes on their prescribed medicine. This is incredibly cruel for patients, many who are either on disability or fixed income.

Supply shortages have occurred in part because the federal government treats LPs as if they are only growing a medical product as opposed to a producer of a recreational product such as alcohol, which has handcuffed the industry.

For access, consumers face community opt-outs, monopoly online retail options and capped storefronts. These regulations have the stain of prohibition all over them. They approach cannabis with the mentality that cannabis is a truly dangerous, pharmaceutical grade product that needs to be heavily regulated.

For these access issues, regulators have acted as if cannabis is a hard drug. These access questions are insanely hypocritical if we look at access consumers have for other recreational or wellness products. For example, wellness products such as over-the-counter pain medications and allergy pills are readily available at all grocery stores.

Alcohol, a recreational product, is available via government-run stores, private retailers, grocery stores and even convenience stores, depending on the province. Because legislators have this faulty mindset, that cannabis is a pharma-grade drug deserving of tight access limits, consumer choice is persistently infringed upon.

Cannabis is a versatile product, one that has a variety of uses. Legislators at all levels have horse blinders on when it comes to how this legal product should be regulated. Failing to see cannabis as a multiuse consumer product has led to a series of mistakes that should have been avoided.

Originally published at https://www.theglobeandmail.com/business/commentary/article-consumers-are-paying-for-governments-failure-to-understand-cannabis/

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario. David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights. David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Experts argue allowing municipalities to opt out of cannabis shops could boost black market

THE GLOBE AND MAIL: That sentiment was echoed by David Clement, manager of North American affairs for the Consumer Choice Center.

“Community opt-outs and limited storefronts is a toxic combination which pretty much guarantees that the black market will thrive,” he said. “Capping retail outlets and having entire communities opt out makes the legal market in Ontario far less accessible.”

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario. David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights. David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Overcoming pot retail anxiety: 5 reasons for municipalities opt-in

TORONTO SUN: On that point, an interesting piece was published last August by David Clement of the Consumer Choice Center. He argued that the opt-out provision in the province’s cannabis plan would give “prohibition a new face, that being local city councillors.” His opinion included that banning retail sales “won’t mean that consumers won’t be acquiring cannabis. All it means is that consumers will either continue to purchase it illegally, as they do now, or will have to buy it from a neighbouring town.”

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Manitoba’s social responsibility fee could send pot customers to black market: consumer watchdog

VANCOUVER SUN: A consumer watchdog says the province’s incoming social responsibility fee will only place a burden on the legal cannabis industry and will counterproductive in quelling the black market.

David Clement, North American Affairs Manager for the Consumer Choice Center, says overtaxing cannabis in the province flies in the face of what the revenue from the promised 6% tax is supposed to do.

The Pallister government introduced legislation on Thursday to create the fee, with the money raised from the tax going to cover public education, safety, health and addictions programming.

Clement says it does the exact opposite.

“It appears both the federal government and various provincial governments, in this case, the Manitoba government, hasn’t realized the role that price plays from diverting people from the black market,” Clement said. “In terms of prices, we have to have a pricing system that competes with the black market. When you add a 6% social responsibility fee on top of the 10% excise tax… the 5% GST, on top of a half-billion dollars applied at different levels in production, it creates a situation that we might be passing policies that are counterproductive to the goal of taking consumers away from the black market.”

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Manitoba’s social responsibility fee could send pot customers to black market: consumer watchdog

GROWTH OP: David Clement, North American Affairs Manager for the Consumer Choice Center, says overtaxing cannabis in the province flies in the face of what the revenue from the promised 6% tax is supposed to do.

The Pallister government introduced legislation on Thursday to create the fee, with the money raised from the tax going to cover public education, safety, health and addictions programming.

Clement says it does the exact opposite.

“It appears both the federal government and various provincial governments, in this case, the Manitoba government, hasn’t realized the role that price plays from diverting people from the black market,” Clement said. “In terms of prices, we have to have a pricing system that competes with the black market. When you add a 6% social responsibility fee on top of the 10% excise tax… the 5% GST, on top of a half-billion dollars applied at different levels in production, it creates a situation that we might be passing policies that are counterproductive to the goal of taking consumers away from the black market.”

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Province unveils its first economic outlook and fiscal review

THE SAULT STAR: The move for the extended hours is welcomed by the Consumer Choice Centre.

David Clement, North American Affairs manager for Consumer Choice Centres said “There is still a lot that needs to be done to modernize Ontario’s alcohol regulations. As we know from polling data, Ontario residents want increased access and for the province to move beyond its outdated model,” he said.

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Government to extend hours to buy booze

BAY TODAY: David Clement, Toronto-based North American Affairs Manager of the Consumer Choice Center said: “Expanded retail hours for alcohol sales definitely benefits consumers. Expanding retail hours is a good first step, but there is still a lot that needs to be done to modernize Ontario’s alcohol regulations. As we know from polling data, Ontario residents want increased access and for the province to move beyond its outdated model.

“Now that hours are expanded, it is time to allow for private retail sale in Ontario convenience stores, and to end the LCBO’s monopoly on the sale of spirits,” said Clement.

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Who Pays? Regulating Cannabis in Canada Estimated to Cost $546 Million

Compliance, enforcement, inspections, public education, and program management–there are a lot of factors contributing to the costs of legalization of cannabis in Canada.

Designed to offset the estimated $546 million cost associated with regulating and enforcing the Cannabis Act, Health Canada has designed a Cost Recovery Program that aims to “ensure that those who benefit from the new legal market will pay the costs of regulating cannabis, which will reduce the cost to Canadians.”  But will it have the intended effect?

A Barrier to Would-Be Producers

The cost recovery program imposes a number of fees on licensed producers for application screening ($3,277), security clearance ($1,654), import/export permits ($610), and an annual regulatory fee of 2.3% or revenues, or $23,000 for producers with less than $1,000,000 in revenues.

Added to the capital costs required to produce cannabis at a commercial level, the fees represent a ballooning burden for LPs which might not serve the interests of consumers.

The cost recovery program could stifle competition by acting as a barrier to entry for new players looking to enter the cannabis space. If this is the case, market consolidation is likely and could ultimately limit consumer choice.

Competition, particularly early on in legalization, is important to encourage a market that is geared towards meeting the needs of consumers. More competition means more product selection and availability, and better service and quality.

Passing the Buck

When the fee structure for the Cost Recovery Program was announced by Health Canada in early October, the agency justified the fees, and their regulatory system, because it is all designed to shift profits away from the criminals and organized crime networks that sell cannabis illegally.

Fees, although technically charged to licensed producers, will ultimately be passed on to consumers who are already finding themselves subject to a 10% excise tax, provincial taxes, and delivery fees (especially in areas where online retail dominates in the absence of physical retail stores).

High prices have already generated some irritation for would-be consumers. In New Brunswick, one of the first customers into a Cannabis NB store actually left without making a purchase, citing that prices were out of his price range.

These inflated costs could ultimately prove counterproductive to the government’s mandate to stamp out the black market. And yet, Health Canada’s cost recovery program will not benefit provincial or municipal governments who will have to shoulder costs of regulation themselves. More concerning still, the scheme, priced at over half a billion dollar, doesn’t include any law enforcement costs.

While it is understandable that the government would want to recover the costs associated with regulating the industry, the Federal Government’s approach has created a bloated system that further burdens consumers through inflated prices, limited competition, and ultimately, encourages the black market to persist.

Originally published at https://www.leafly.com/news/politics/cost-recovery-canada

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

Opinion: Marijuana promises economic benefit, poses financial questions

Michiganians voted Tuesday to introduce a new industry to the state that is expected to bring in $765 million in revenue over the next year and thousands of new jobs.

What we’re talking about is legal cannabis.

Look no further than the state of Colorado to see the incredible effects of legal cannabis on the economy, whether it’s the new influx of tax revenue, massive job growth, or discovering the plant’s health advantages.

By August, Colorado already hit $1 billion in legal cannabis sales for the year, bringing in over $200 million in taxes. Last year’s sales hit $1.5 billion. With a higher population and a GDP close to $100 million greater than Colorado, Michigan will have a lot to look forward to once it goes green.

However, federal law has continued to provide financial obstacles to states that have legalized medicinal or recreational marijuana.

If you’ve ever purchased cannabis legally with a medical card or in a state with recreational sales, you likely bought the product with cash. The lack of payment options is due to banks operating under federal law, which still prohibits the consumption and selling of marijuana after being (included with bath salts and heroin) listed under Schedule 1 of The Controlled Substances Act.

A history of injustice

Marijuana was added to this list in 1971 when the act was initially introduced during the Nixon administration, which notoriously began the national War on Drugs. Since then, the federal government has spent over $1 trillion in futile, anti-drug efforts. This is apparent when observing the fact that there were “8.2 million marijuana arrests between 2001 and 2010, 88 percent … for simply having marijuana.”

Here’s what characterizes a Schedule 1 drug:

To begin, the drug or other substance must have a high potential for abuse. Second, the drug or other substance has no currently accepted medical treatment use in the United States. Last, the drug has a lack of accepted safety for use under medical supervision.

As we now know, marijuana has shown to be an effective agent against a multitude of illnesses and disorders, ranging from treating chronic pain to providing relief for cancer patients. .

The strongest argument prohibitionists explore is the fact that marijuana, like many drugs available today (such as caffeine, alcohol, or tobacco), could be heavily abused. This view isn’t wrong. Someone could become dependent on marijuana to the point they can no longer be as productive as they otherwise would be.

Despite that, there are zero recorded marijuana-induced deaths in the United States.

The way forward

In Michigan, the ballot initiative on cannabis brought to voters this week was brought forward by the Coalition to Regulate Marijuana Like Alcohol. A seller must obtain the required licenses, you must be 21 years of age to purchase, sell, or consume, and it’s still illegal to drive under the influence. This is very similar to buying your favorite six-pack.

But, there’s always a catch.

Even though Michigan voters decided to legalize recreational marijuana, it won’t be exactly like alcohol. It’s still illegal at the federal level, meaning you will likely be limited to purchasing cannabis with only cash.

At this point, only a small number of banks and credit unions will accept cannabis-related capital. In June of this year, Forbes noted, “411 banks and credit unions in the U.S. were ‘actively’ operating accounts for marijuana businesses, according to a report from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).”

While this number continues to rise, it’s not on pace to keep up with an exponentially growing number of new dispensaries and growers from all over the country. Putting that in jeopardy has been former Attorney General Jeff Sessions, who back in January gave the green light to federal prosecutors to enforce federal law on banks that work directly with cannabis-related ventures. Risk-averse banks are unlikely to forfeit eligibility of Federal Deposit Insurance for marijuana businesses.

Despite the risk, there have a been a few notable proposals in California that have looked to curb this issue. Republican Congressman Dana Rohrabacher recently came out claiming he’s working directly with President Donald Trump to push marijuana reform, specifically legalizing medical marijuana at the federal level. That in turn, would likely lead to the rescheduling of marijuana. With minimal details about the possible legislation available, the following solution provided would be contingent on cannabis staying on as a Schedule 1 drug. That means this predicament could no longer be an issue by next year.

The most viable and practical solution introduced to California’s state legislature is SB-930. As explained in our article in MG Magazine, the bill “would allow the formation of private cannabis limited-charter banks and credit unions. These banks would be allowed to deal only with cannabis firms, allowing them to legally pay vendors, take out loans, and pay their tax bills at the end of the year.” By receiving banking licenses from the state level, cannabis firms would be able to bank their profits, and tax payments, legally.

Lessons from Canada

At our northern border, Canada took the step of becoming the largest industrialized country to legalize cannabis on Oct. 17. Unlike the many pockets of legalization and prohibition here in the U.S., Canada’s new policy establishes an entirely new, legal market. As long as citizens follow the rules governed by the provinces, cannabis firms can take out loans and lines of credit, open bank accounts, and pay their employees with direct deposit. And citizens can purchase using a number of payment methods, not just cash.

The difference between how the cannabis markets operate, however, is still not uniform across the country. Each province has created rules and restrictions on who may sell the product. In Ontario and Quebec, the state liquor stores have a monopoly on cannabis sales. In Saskatchewan and Manitoba, private retailers are allowed to operate. Some provinces, like Quebec, ban home growing, even though federal allows citizens to grow up to six plants.

Regardless of the jurisdictional and regulatory differences, the fact remains that Canadians are freely able to buy cannabis in a commercial setting, taxes are collected, and banks and auxiliary services can benefit. Achieving the same in Michigan will require changes in federal law, but we can at least move forward one aspect of this battle come Election Day.

What’s clear is that a private solution is favored over a public one if our goal is maximum innovation and efficiency. A public bank operated by government bureaucrats would lead to a burden on Michigan taxpayers and hinder economic growth. But there are other ways to innovate and be creative to find solutions.

In Michigan, we like to embrace our craft beer industry with a sense of pride. We understand and love the art and innovation that come with brewing a solid beer. If we want to join the 21st century, it’s time we do the same with marijuana, just like voters said on Tuesday.

Garett Roush is the North American leadership manager with Students For Liberty and a fellow with the Consumer Choice Center.

Yaël Ossowski is deputy director of the Consumer Choice Center.

Originally published at https://eu.detroitnews.com/story/opinion/2018/11/07/marijuana-promises-economic-benefit-poses-financial-questions/1904480002/

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

Opinion: advertising rules for cannabis in Canada are too strict

Cannabis legalization passing on October 17th means that the Federal Cannabis Act is in full force and that the industry will have to follow extremely strict restrictions when it comes to marketing, branding, and advertising practices.

The goal of these restrictions is to avoid cannabis being exposed to young people. Although that goal is noble on its face, the restrictions that will be in place far exceed what could be considered sensible regulation. This is especially true when you consider how other age prohibited goods, like alcohol, are advertised and promoted nationwide.

Here are some of the most problematic restrictions on the advertising and promotions listed in the Cannabis Act:

Prices

Among the most glaring issues listed in the Cannabis Act is the prohibition against advertising with information about a product’s price, as well as any promotion based on inducement. The price provision essentially means it will be illegal for producers and retailers to advertise the prices for the products they sell.

Prohibiting price advertising will leave consumers unaware of potential sales until after they have actually entered a cannabis retail space, whether that be in person, or online. This significantly limits consumer knowledge and discourages competition which is essential to ensure that consumer demand is appropriately met.

For inducements, it will be illegal for cannabis producers and retailers to have any marketing efforts that offer additional products, accessories, or services with purchase. That means product giveaways, the inclusion of free promotional items, and various other forms of product marketing will be against the law.

This is stricter than how alcohol is treated. Across Canada, consumers can regularly see ads that reveal prices for various products. These advertisements happen whether alcohol is sold by government or private retailers. In addition to that, producers of alcohol are permitted to advertise product giveaways or promotional items that might be included with their products at the point of purchase. For example, many popular beer companies include promotional items like t-shirts, miniature Stanley Cups, and various other “swag” items in their cases of beer. It’s clear that there’s a double standard at play.

Event Sponsorships

The disparity between how the alcohol industry is treated and how the legal cannabis industry will be treated is also evident with the prohibition on event sponsorship. Cannabis companies will not be able to use their branding to promote events or offer event sponsorship for venues or festivals.

The hypocrisy here is that alcohol companies are allowed to provide such sponsorships, while cannabis companies won’t be. All of this begs the question; why can producers of alcohol sponsor events and venues, like Toronto’s Budweiser Stage, while the legal cannabis industry can’t?

Testimonials and Endorsements

The other major issue with the Act is the prohibition on advertising with testimonials or endorsements. In the absence of packaging that promotes therapeutic uses and efficacy–also prohibited–testimonials and endorsements are important tools for consumers because those testimonials put assurance behind a brand and its impact on the user. This is even more important given that many consumers of cannabis will be new to the product, and ultimately uninformed, or ill-informed. Cannabis producers and retailers should be able to convey a product’s desired impact, via testimonial or endorsement, so that consumer knowledge can be enhanced, which ensures consumers make appropriate purchases based on their preferences.

One example of why this is misguided is how we treat advertising for non-prescription medicine. Numerous popular pain medication, allergy, and cold medicine brands regularly advertise their products to the general public and make use of testimonials explaining the drug’s impact and designed use. Again, we have a clear double standard that puts unnecessary and inconsistent restrictions on the legal cannabis industry.

Lifestyle Marketing

The last, and most obnoxious, marketing and branding restriction is the complete prohibition on depicting persons or animals, whether fictional or not. This means that all cannabis marketing or promotion can not have any instances where they depict a person. The goal of this is to prevent lifestyle marketing.

Preventing lifestyle marketing is obviously inconsistent when we look at alcohol marketing in Canada. That said, the ridiculousness of this can be seen in the example of New Brunswick. New Brunswick’s online retail outlet, run by the province, initially depicted a woman doing yoga, and people socializing. Health Canada has now warned the province that they are violating the marketing rules set out by the federal government. Heaven forbid adult cannabis consumers see a picture of an adult doing yoga.

Limiting cannabis exposure to minors is important, however; these restrictions are heavy handed and ultimately hypocritical once the advertising practices of other industries are taken into account. Instead of these inconsistent restrictions, the Federal Government would be better to spend their efforts cracking down on any advertising considered to be false, misleading, or deceptive. For legal products, like cannabis, that is the proper role of government when it comes to consumer protection.

The Federal Government, although legalizing cannabis, appears to be desperately holding on to the remnants of prohibition through these overly restrictive advertising rules. That’s bad for consumers and bad for Canada.

David Clement is the north american affairs manager for the Consumer Choice Center. He has written for outlets such as the Globe and Mail, Toronto Star, and Hamilton Spectator. He is regularly featured as a commentator on CTV, Global News, and the CBC.

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario.

David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights.

David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.