This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 08 OTTAWA 003402 
 
SIPDIS 
 
FOR INL AND WHA/CAN 
JUSTICE FOR OIA, AFMLS, AND NDDS 
TREASURY FOR FINCEN 
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL 
 
E.O. 12958: N/A 
TAGS: SNAR PREL KSEP CA
SUBJECT: CANADA: 2004-2005 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT (INSCR) PART I 
 
REF: STATE 249035 
 
¶1.  Unclassified entire text. 
 
----------- 
¶I.  Summary 
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¶2.  The Government of Canada is committed to reducing the 
harm and availability of illicit drugs within its borders. 
Health Canada has responsibility for overall coordination of 
the nation's drug strategy although other departments, as 
well as municipal and provincial/territorial governments, are 
equally involved in addressing the domestic use of illicit 
drugs.  In addition, Canadian law enforcement officials 
coordinate closely with U.S. counterparts to stem the flow of 
narcotics into North America. 
 
¶3.  In September 2004, the government reintroduced 
legislation (now Bill C-10) to change the penalties 
associated with the possession of small amounts of marijuana 
for personal use. It is expected to pass.  Highlights of the 
Canadian Addiction Survey were made public in November and 
reported that substance abuse among Canadians has increased 
over the past decade, with alcohol and cannabis being the 
most commonly used substances. According to the Royal 
Canadian Mounted Police (RCMP), cannabis cultivation, because 
of its profitability and relatively low risk of penalty, is a 
thriving industry in Canada. In 2004, the RCMP estimated that 
annual Canadian marijuana production ranges between 960 and 
2400 metric tons.  Additionally, the RCMP estimates, the 
overall drug trade in Canada has the potential to generate 
proceeds for criminal groups in excess of USD 3 billion at 
the wholesale level and USD 13.5 billion at the street level. 
In early 2005, the Government of Canada is expected to 
designate Colombian drug traffickers and money launderers in 
Canada as law enforcement intelligence targets. 
 
---------------------- 
II.  Status of Country 
---------------------- 
 
¶4.  Canada has been and continues to be a significant 
producer and transit country for precursor chemicals and 
over-the-counter drugs that are used to produce illicit 
synthetic drugs.  For instance, Pseudoephedrine (PSE), a 
common cold remedy and the main component in the 
manufacturing of methamphetamine, is legally imported into 
Canada from China, India, and Germany. Until recently, the 
flow of large quantities of PSE from otherwise legitimate 
Canadian supply sources to methamphetamine 'Super Labs' in 
the United States highlighted law enforcement concerns 
regarding the diversion and the eventual cross-border 
trafficking of PSE for illegal purposes.  In 2003, licensed 
dealers in Canada were authorized to import 49,407 kilograms 
of PSE and to export 43,860 kilograms of PSE to the United 
States.  The implementation of new regulations in Canada in 
2003 together with increased US and Canadian law enforcement 
efforts appear to have had a substantial impact in reducing 
the trafficking of this substance. 
 
¶5.  Nevertheless, traffickers continue to attempt chemical 
diversion from legitimate importers and have sought to 
supplement or replace PSE with ephedrine.  This is reflected 
in both law enforcement intelligence and recent seizures at 
US ports of entry.  In 2004, 1,240 pounds of ephedrine were 
seized entering the US from Canada by US law enforcement 
officials. Data shows that increasing amounts of ephedrine 
have been imported into Canada mainly from China and India 
during the last several years, and authorities suspect that 
some of this is being diverted to the domestic production of 
synthetic drugs. 
 
¶6.  An increase in laboratory seizures over the last few 
years indicates increasing ecstasy (MDMA) production, 
particularly in the provinces of British Columbia, Ontario, 
and Quebec.  According to the RCMP, Canadian law enforcement 
dismantled 6 labs in 2000, 8 labs in 2001, 11 labs in 2002, 
and 12 labs in 2003. In addition to synthesis labs, 
sophisticated tableting operations are increasingly being 
discovered in Canada.  In a 2003 Canadian investigation 
involving the dismantling of major organized crime MDMA 
tableting operations, intelligence determined that the pill 
presses seized at the sites originated from legitimate 
sources in China and the United States.  Canada does not have 
regulations in place requiring the registration of pill 
presses. 
 
¶7. According to the RCMP, the importation of ecstasy from 
Europe (notably, the Netherlands) to Canada continues at a 
significant level.  At the same time, the domestic 
manufacture of ecstasy and its analogue, MDA, appears to be 
on the rise.  In 2004 there were four large MDMA lab and 
storage facility seizures in the Toronto area.  In 2004, 642 
pounds of ecstasy was seized entering the US from Canada by 
US law enforcement officials. 
 
¶8. Other precursor chemicals available in Canada and used in 
the production of synthetic drugs are sassafras oil, 
piperonal, and gamma buturolactone (GBL).  These precursors 
are used in the manufacture of ecstasy 
(methulenedioxyamphetamine or MDA), and gamma hydroxybutyrate 
(GHB).  A variety of other synthetic drugs are also produced 
in Canada, including MDA and GHB, and are trafficked into the 
United States. In 2003, licensed dealers were authorized to 
import 0.67 kilograms of ephedrine hydrochloride into Canada. 
 There have been no legal exports of this substance to the 
United States. 
 
¶9.  Law enforcement reports indicate that cross-border 
smuggling of methamphetamine occurs in both directions, but 
is limited. According to the RCMP the bulk of methamphetamine 
available in the Canadian illicit market derives from 
domestic supply. The RCMP also reported that clandestine 
methamphetamine laboratories seized in Canada were 24 in 
2000, 13 in 2001, 25 in 2002, and 37 in 2003.  In 2004, 46 
pounds of methamphetamine were seized entering the US from 
Canada by US law enforcement officials. 
 
¶10.  While Canadian-produced marijuana accounts for 
approximately 2 percent of overall US marijuana seizures at 
its borders, the two governments are very concerned about an 
upward trend in seizures, which have increased 259 percent 
since 2001. Both countries recognize that, despite their best 
efforts, law enforcement authorities likely seize only a 
small portion of marijuana smuggled across the border.  The 
RCMP estimates that annual Canadian marijuana production 
ranges between 960 and 2400 metric tons.  While viewed as a 
nationwide problem, marijuana is heavily cultivated in 
British Columbia.  Significant production levels are now 
reported in Ontario and Quebec with combined seizures 
exceeding those in British Columbia.  In 2004, 40,064 pounds 
of marijuana was seized entering the US from Canada by US law 
enforcement officials. 
 
¶11. Some US experts suggest that the value of Canadian grown 
marijuana entering the United States annually approaches USD 
5 billion or more. The RCMP reports that Vietnamese 
organizations may have mastered technologically advanced 
organic grow methods and that hydroponic hothouse operations 
in Canada are now producing high THC level marijuana. 
Canadian law enforcement officials have also seized a few 
aeroponic installations, where roots are suspended in mid-air 
and sprayed regularly with a fine midst of nutrient-enriched 
water. The widespread demand for marijuana in Canada, however 
does not appear to be met by domestic production. Between 
2000 and 2003 inclusive, Canadian authorities seized a total 
of 7.8 metric tons of marijuana at Canadian ports of entry. 
Countries of origin include the US, Mexico, Colombia, the 
Caribbean, the Middle East, and to a lesser degree, Thailand 
and Morocco. In addition, the RCMP estimates that hashish 
seizures in Canada in 2003 amounted to approximately 10,903 
kilograms while liquid hashish smuggled into Canada is 
estimated at between 6 and 8 tons. 
 
¶12. Canada is also a narcotics consuming country. In November 
2004, Health Canada, the Canadian Executive Council on 
Addictions and the Canadian Center on Substance Abuse 
published highlights from the Canadian Addiction Survey, the 
first major survey on the use of substance abuse among 
Canadians since 1994.  This survey suggests that reported use 
of alcohol, cannabis and other drugs has increased in Canada 
over the past decade -- with alcohol and cannabis being the 
most commonly used drugs. This report suggests that 14 
percent of all Canadians have used cannabis in the past year, 
a rate nearly double that reported in 1989.  Reported youth 
rates showed almost 30 percent of 15 to 17 year-olds and just 
over 47 percent of 18 to 19 year olds as having used cannabis 
in the past year. In 2003, a total of 41,237 marijuana 
possession charges were reported in Canada.  Cannabis 
possession accounts for nearly half of all reported drug 
crimes.  In 2004, 22 pounds of hashish were seized entering 
the US from Canada by US law enforcement officials. 
 
¶13. The Statistics Canada study reveals that the increase 
hasn't been confined to cannabis, which includes marijuana, 
hashish and hash oil.  The survey also found that a higher 
proportion of Canadians were taking other illegal drugs: 
cocaine or crack, ecstasy, LSD and other hallucinogens, 
amphetamines (speed) and heroin.  Continuing, it states that 
2.4 per cent of the survey's almost 37,000 respondents, all 
aged 15 or older, reported using at least one of these other 
drugs in the previous year, up from 1.6 percent in 1994.  And 
1.3 percent, or an estimated 321,000 Canadians, had used 
cocaine or crack, making it the most commonly used of these 
illicit, harder drugs. 
 
¶14. The report also found that British Columbia has the 
highest rate of drug crimes among the provinces for the past 
20 years.  It was the only province to show an increase (by 6 
percent) in reported drug charges in 2003, including a 3 
percent hike in prosecutions of cannabis possession. The 
Correctional Service of Canada suggests that almost 70 
percent of offenders entering federal institutions have 
problems with alcohol and/or other drugs and that more than 
half of all offenders were under the influence of alcohol or 
other drugs when they committed their offense. 
 
¶15.  Outlaw motorcycle gangs and Asian, Colombian, and 
Italian-based criminal organizations cooperate with one 
another to varying degrees in the trafficking and 
distribution of illegal drugs. According to the RCMP, 
Colombian drug trafficking organizations and Italian 
organized crime groups are the most influential smugglers of 
cocaine into eastern Canada. Over the past few years, the 
importation of hundred kilogram quantities of cocaine into 
Canada is increasingly being carried out via sailing or 
fishing boats.  This trend departs from earlier trends when 
the preferred smuggling method involved the use of marine 
containers. It is estimated that approximately 15 to 24 tons 
of cocaine enter Canada annually, and it is it is believed 
that approximately 25 percent of the seized cocaine destined 
for Canadian markets either transits or is intended to 
transit the United States. Between 2000 and 2003 inclusive, 
Canadian authorities seized a total of 4.7 metric tons of 
cocaine at Canadian ports of entry.  Law enforcement 
reporting indicates that relatively little cocaine is 
smuggled from Canada into the United States (1.4 pounds were 
seized entering the US from Canada by US law enforcement 
officials). 
 
¶16.  Other illegal substances are also used by Canadians. 
Asian-based organized crime dominates the trafficking of 
heroin from Southeast Asia to Canada.  The RCMP estimates 
that one to two tons of heroin are required annually to meet 
the demand of Canada's estimated 25,000 to 50,000 heroin 
users and that this amount is smuggled into Canada yearly. 
Canadian authorities seized a total of 305 kilograms of 
heroin at Canadian ports of entry in 2003.  Also in 2003, 
Canadian authorities reported seizing 5.64 million ecstasy 
(MDMA) tablets at ports of entry, representing a 213 percent 
increase over 2002.  Members of Asian, Eastern European and 
Israeli organized crime groups, as well as OMGs, particularly 
the Hells Angels Motorcycle Club, are involved in 
cross-border MDMA trafficking.  Asian crime groups based in 
Canada are known to be extensively involved in the production 
and importation of MDMA for the North American market. 
According to the RCMP and Health Canada, the demand for MDMA 
in Canada is increasing, and the drug appears to be preferred 
among adolescents and young adults.  The results of a 
national study of Canadian university students in 1999 
concluded that 2.4 percent of the students have used MDMA in 
the past year.  The Ontario Student Drug Use Survey, 
published in 2003, revealed that adolescent MDMA use 
increased from 0.6 percent in 1993 to 6 percent in 2001. 
 
¶17.  In addition, law enforcement intelligence indicates that 
the abuse of methamphetamine has increased, particularly in 
western Canada. According to the RCMP, the domestic 
production and trafficking of methamphetamine has 
dramatically increased while its distribution and use have 
reportedly skyrocketed in some regions in Canada.  The number 
of methamphetamine labs dismantled by Canadian law 
enforcement has varied each year since 2000 with 24 labs 
seized in 2000, 13 in 2001, 25 in 2002 and 39 in 2003. 
Between 2000 and 2003, Canadian authorities seized a total of 
6,510 pills and 14.1 kilograms of methamphetamine at Canadian 
ports of entry. 
 
¶18.  Overall, the RCMP estimates, the drug trade in Canada 
has the potential to generate proceeds for criminal groups in 
excess of USD 3 billion at the wholesale level, and USD 13.5 
billion at the street level. 
 
------------------------------------- 
Country Actions Against Drugs in 2004 
------------------------------------- 
 
¶19.  POLICY INITIATIVES:  The Government of Canada recognized 
that Canada needed to adopt a regulatory and administrative 
framework to better control precursor chemicals.  As a 
result, in early 2003 Canada enacted new regulations to its 
Controlled Drugs and Substances Act, which strengthened 
Canada's ability to monitor and control precursors and other 
substances used in the clandestine manufacture of synthetic 
drugs.  Companies must now be properly licensed in order to 
import, export, produce, or distribute precursor chemicals. 
The Government of Canada has granted licenses to almost 300 
companies and issued over 400 export and 800 import permits 
for class A precursors.  The new legislation encourages 
legitimate companies to work with Canadian authorities to 
identify suspicious trafficking activity; however, to date 
reporting of such activity is voluntary rather than 
compulsory.  In addition, the legislation does not require 
companies to undergo mandatory on-site visits prior to being 
registered and fails to grant law enforcement officials 
access to all records of regulated transactions. 
Nevertheless, the implementation of these new regulations 
together with US and Canadian law enforcement efforts appears 
to have had a substantial positive impact in reducing the 
trafficking of these substances. 
 
¶20.  On November 1, the GoC re-introduced legislation that 
proposes changing the penalties associated with the 
possession of small amounts of marijuana for personal use. 
Should it pass in its current form, an adult caught with 15 
grams or less of marijuana could receive a fine of USD 115. 
A youth caught with 15 grams or less of marijuana could 
receive a fine of USD 75.  The bill also proposes new 
graduated sentencing criteria for the cultivation of 
cannabis, based on the number of plants seized, as follows: a 
fine for cultivating 1-3 plants; a maximum five years 
imprisonment for cultivating 4-25 plants; a maximum ten years 
for cultivating 26-50 plants; and a maximum of 14 years for 
cultivating 51 or more plants.   This bill is complemented 
with another, also introduced on November 1, which if passed, 
would give Canadian police authorities the powers to arrest 
and charge individuals found driving under the influence of 
drugs. It could also make resources available to law 
enforcement officers for training in the detection of 
automobile drivers operating their vehicles while under the 
influence of narcotic substances and marijuana.  Canadian law 
currently provides for the legal use of marijuana for medical 
purposes and Health Canada makes marijuana available to some 
700 Canadians with medical authorization. 
 
¶21.  To address the organized crime element behind the 
proliferation of marijuana grow operations in Canada, the 
RCMP is establishing teams across the country to identify and 
dismantle these threats.  A National Coordinator oversees the 
activities conducted by these special investigative teams, 
which are currently active in British Columbia, Alberta, and 
Quebec. 
 
¶22.  In September 2003, the first supervised drug injection 
site in North America opened in Vancouver.  This site costs 
approximately USD 1.5 million a year to operate, is located 
in the downtown Eastside of Vancouver, and services an 
estimated 4,000 injection drug users.  The government of 
British Columbia is financing the project; however, Health 
Canada commits about USD 1.15 million for research as to the 
site's viability and public good. 
 
¶23.  ACCOMPLISHMENTS:  In May 2003, the GoC announced the 
renewal of its comprehensive drug strategy.  Health Canada 
committed USD 186 million over five years to reducing both 
the demand for, and the supply of illegal drugs in Canada. 
The renewed strategy will attempt to accomplish its goals 
through education, prevention, and health promotion 
initiatives, as well as stronger enforcement efforts.  The 
strategy also provided new funding for statistical research 
on Canadian drug trends to enable more informed 
decision-making.  Under the renewed Comprehensive Drug 
Strategy, the RCMP in January 2004 established dedicated 
investigative teams to target and dismantle marijuana grow 
operations and clandestine laboratories that produce 
synthetic drugs such as methamphetamine in Canada.  These 
teams are placed throughout the country where organized crime 
operations are most prevalent.  Also in 2004, a National 
Coordinator was selected to oversee their efforts. In 
November, health-care workers, police and social service 
providers from western Canada met in Vancouver to discuss the 
prevalence of methanphetamine and develop approaches to 
counter its use and availability.  In early 2005, the 
Government of Canada is expected to designate Colombian drug 
traffickers and money launderers in Canada as law enforcement 
intelligence targets. 
 
¶24.  LAW ENFORCEMENT EFFORTS: 
 
--In January 2004, Canadian law enforcement uncovered a large 
indoor grow operation inside a former brewery in Barrie, 
Ontario and seized 20,100 marijuana plants. 
 
--In March 2004, as a result of Operation Candy Box / Project 
Okapi / Project Codi, Canadian and US law enforcement jointly 
dismantled a large criminal network producing MDMA and 
marijuana in Canada and distributing it throughout the United 
States.  Over 130 individuals in 19 cities were arrested, and 
more than 877,000 MDMA pills, 120 kilograms of MDMA powder, 
over USD 6 million in currency, and more than 1,000 marijuana 
plants were seized by US and Canadian law enforcement. 
 
-- Also in March 2004, Toronto police seized over 800 
marijuana plants being grown on the 18th floor of a high rise 
apartment building. Several apartments reportedly contained 
some USD 40,000 in specialized growing equipment. 
 
-- In June, DEA announced the arrest of 50 drug traffickers 
in Colombia, Panama, Jamaica, the Bahamas, the US and Canada 
believed responsible for the US distribution of three metric 
tons of cocaine every month. 
 
-- Also in June, Canadian police made a series of arrests in 
the Toronto and Windsor area resulting in 157 charges with 49 
counts under the Controlled Drugs and Substances Act and the 
Criminal Code of Canada against 24 individuals. 
 
-- In July, the York Regional Police seized two MDMA labs in 
Markham, Ontario with approximately 100 kilograms of ecstasy, 
2 pill presses, and Canadian currency. 
 
-- In August, US Coast Guard officials seized a Canadian flag 
vessel in the Caribbean and interdicted 350 kilos of cocaine. 
 
-- In September, RCMP and DEA enforcement officials conducted 
Operation Brain Drain and executed 53 search warrants in 
western Canada and the US and the RCMP obtained arrest 
warrants for 25 individuals in Canada.  Resulting illegal 
substance seizures in Canada included approximately 1.5 
million tablets of ephedrine, 600 kilos of bulk ephedrine and 
between USD 1.5 and 2.5 million in currency.  Additionally, a 
third MDMA facility was seized in Markham, Ontario with over 
200 kilograms of MDMA and precursor chemicals that could have 
produced an additional 300 kilograms. 
 
--  From October 15 through November 7 a Canadian police task 
force seized 15,000 marijuana plants, with a street value of 
some USD 15 million, in Southern Alberta.  During this 
operations 42 search warrants were issued, all but one were 
for residential houses.  One warehouse was also raided. 
Canadian law enforcement speculated that most of the seized 
drugs were heading to the US where they would be exchanged 
for cocaine. 
 
-- In November local police authorities seized 116 pounds of 
MDMA from three Toronto residences. 
 
¶25.  CORRUPTION:  Canada holds its officials and law 
enforcement personnel to a very high standard of conduct and 
has strong anti-corruption controls in place.  Government 
personnel found to be engaged in malfeasance of any kind are 
removed from office and are subject to prosecution. 
Investigations into accusations of wrongdoing and corruption 
by government officials are thorough and credible.  As a 
matter of government policy, Canada neither encourages nor 
facilitates illicit production or distribution of narcotic or 
psychotropic drugs or other controlled substances, or the 
laundering of proceeds from illegal drug transactions. 
 
¶26.  CULTIVATION/PRODUCTION:  Cannabis cultivation, because 
of its profitability and relatively low risk, is a thriving 
industry in Canada.  In 2004, the RCMP estimated that annual 
Canadian marijuana production ranges between 960 and 2400 
metric tons.  While viewed as a nationwide problem, marijuana 
is heavily cultivated in British Columbia, although 
significant production levels are now reported in Ontario and 
Quebec.  According to RCMP seizure data, 1,102,198 marijuana 
plants were seized in 2000, 1,367,321 in 2001, 1,275,738 in 
2002, and 1,400,026 in 2003. In January 2004, Canadian law 
enforcement uncovered the largest indoor grow operation to 
date inside a former brewery in Barrie, Ontario, seizing a 
total of 20,100 marijuana plants. Though outdoor cultivation 
continues, use of indoor grow operations is increasing 
because it allows production to continue year-round; they are 
also becoming larger and more sophisticated. 
 
¶27.  DOMESTIC PROGRAMS (DEMAND REDUCTION):   Health Canada is 
the focal point for the nation's drug control policy and 
emphasized demand reduction as an integral component of its 
drug control strategy.  In an effort to decrease demand, 
Health Canada has financed a number of public education 
campaigns, many with a specific focus on youth.  The GoC, 
along with NGOs, also offers extensive drug abuse prevention 
programs  Drug treatment courts in Vancouver and Toronto 
offer alternatives to jail for convicted drug abusers facing 
incarceration for non-violent drug possession offenses. 
 
¶28.  AGREEMENTS AND TREATIES:  Canada is party to the 1988 UN 
Drug Convention, the 1971 UN Convention on Psychotropic 
Substances, and the 1961 UN Single Convention on Narcotic 
Drugs as amended by the 1972 Protocol.  Canada is a party to 
the Inter-American Convention on Mutual Legal Assistance in 
Criminal Matters and the Inter-American Convention Against 
the Illicit Manufacturing of and Trafficking in Firearms, 
Ammunition, Explosives and Other Related Materials.  Canada 
has also signed the Inter-American Convention Against 
Corruption.  Canada has ratified the UN Convention against 
Transitional Organized Crime.  Canada has ratified all 12 
United Nations Security Council Resolutions pertaining to 
terrorist financing. 
 
¶29.  Canada actively participates in international activities 
aimed at eliminating illicit drugs.  From November 2003 until 
November 2004 Canada held the Chairmanship of the 
Organization of American States' Inter-American Drug Abuse 
Control Commission (CICAD).  In 2004, Canada provided 
technical assistance and USD 115,000 to CICDA for specific 
counter-narcotics related projects, including developing 
partnerships between health and law enforcement officials on 
drug issues. The GoC participates actively in the Dublin 
Group and the Commission on Narcotic Drug (CND) of the United 
Nations Office on Drugs and Crime (UNODC). 
 
------------------------------------ 
U.S. POLICY INITIATIVES AND PROGRAMS 
------------------------------------ 
 
¶30.  BILATERAL COOPERATION:   Canada and the United States 
have an extensive cooperative law enforcement relationship. 
The two countries collaborate closely at both the federal and 
state/local levels, and this also extends into the 
multilateral arena. An important bilateral cooperative forum 
is the annual Cross-Border Crime Forum, which engages 
policy-makers in a joint effort to guide the relationship and 
to enhance coordination.  The Forum's technical working 
groups continue to identify areas and priorities, such as 
intelligence sharing, where the two countries can better 
advance a common agenda.  For instance, at the October 2004 
Forum, the US Department of Justice and the Canadian 
Department of Public Safety and Emergency Preparedness Canada 
(PSEPC) released a joint threat assessment on the common 
threat posed by the cross-border illegal drug trade.  In 
addition, Project North Star is an ongoing mechanism for law 
enforcement operational coordination.  The two governments 
also have a broad array of agreements in place to facilitate 
cooperation in legal matters, such as the extradition and 
mutual legal assistance treaties, an information-sharing 
agreement, and an asset sharing agreement. 
 
¶31.  Canada is one of the USG's principal extradition 
partners. 
 
¶32.  The RCMP and US law enforcement agencies provide 
reciprocal direct access to each other's criminal databases, 
including the Canadian Police Information Center (CPIC), a 
firearms identification database, and a unique automotive 
paint chip database.  Canadian law enforcement benefits from 
access to the El Paso Intelligence Center (EPIC) and the 
USG's tactical National Drug Intelligence Center (NDIC). 
However, some aspects of Canada's criminal justice system, 
such as Canada's strict privacy laws, limit timely 
information exchange in some areas. 
¶33.  THE ROAD AHEAD:  The US is confident that law 
enforcement cooperation and coordination with Canada will 
continue to expand in the future.  Specifically, the USG 
remains particularly interested that Canada continues its 
efforts to strengthen its chemical control regulations so 
that these regulations can become even more effective 
instruments in the effort to stem the diversion of precursor 
chemicals into the United States or other countries. 
Additionally, given the already significant amount of 
Canadian-produced marijuana entering the US, the USG is 
concerned that Canada's proposed cannabis reform package now 
in Parliament would have negative consequences for our 
bilateral efforts to keep our shared border open to 
legitimate goods, services, and travelers while keeping 
illicit substances from being trafficked into the United 
States. 
 
¶34.  To further improve cooperation with Canada, the USG is 
committed to: 
 
-- supporting  Canadian efforts to further strengthen 
chemical control legislation and regulatory practices, 
consistent with international standards and practices; 
 
-- maintaining and expanding two-way intelligence sharing to 
include the timeliness and relevance of the information 
provided; 
 
-- expanding professional exchanges and cooperative training 
activities between our law enforcement agencies; 
 
-- working with the GoC to increase the risks and penalties 
for criminals engaged in drug trafficking and other organized 
crimes; 
 
-- maintaining joint cross-border investigations and 
operations, and expanding these to include joint operations 
on the Great lakes and Saint Lawrence Seaway; and 
 
-- actively promoting drug abuse awareness and prevention, 
particularly among our young people. 
 
---------------- 
Chemical Control 
---------------- 
 
¶35.  Canada is a transit and producer country for precursor 
chemicals and over-the-counter drugs used to produce 
synthetic drugs, particularly methamphetamine.  The chemical 
most widely used for this purpose is pseudoephedrine, a 
regulated chemical on Table 1 of the 1988 UN Drug Convention. 
 Other precursor chemicals available in Canada that are used 
in synthetic drugs manufacture include sassafras oil, 
piperponal and gamma butyrolactone.  Canada is party to the 
1988 UN Drug Convention. 
 
¶36.  Until 2003, Canada did not effectively control imports 
of pseudoephedrine, with the result that legal imports 
increased, primarily from China, India and Germany. 
Significant amounts of these imports were smuggled into the 
United States, either in bulk, or in tablet form as an 
antihistamine, for use in U.S. methamphetamine labs.  Canada 
tightened its Controlled Drug and Substances regulations in 
early 2003.  The new regulations provided for control of the 
23 chemicals listed in the 1988 UN Drug Convention, and for 
the proper licensing of companies in order to import, export, 
produce, or distribute controlled substances.  The agency 
with primary responsibility for implementing the new 
regulations is Health Canada, but the lead law enforcement 
responsibility lies with the Royal Canadian Mounted Police. 
Cooperation on regulatory matters between DEA and Health 
Canada is very good and ongoing. 
 
¶37.  Law enforcement cooperation is excellent and includes 
information sharing.   In March 2004, as a result of 
Operation Candy Box / Project Okapi / Project Codi, Canadian 
and US law enforcement jointly dismantled a large criminal 
network producing MDMA and marijuana in Canada and 
distributing it throughout the United States.  Over 130 
individuals in 19 cities were arrested, and more than 877,000 
MDMA pills, 120 kilograms of MDMA powder, over USD 6 million 
in currency, and more than 1,000 marijuana plants were seized 
by US and Canadian law enforcement.  In July, the York 
Regional Police seized two MDMA labs in Markham, Ontario with 
approximately 100 kilograms of ecstasy, 2 pill presses, and 
Canadian currency.  And, in September, RCMP and DEA 
enforcement officials conducted Operation Brain Drain and 
executed 53 search warrants in western Canada and the US and 
the RCMP obtained arrest warrants for 25 individuals in 
Canada.  Resulting illegal substance seizures in Canada 
included approximately 1.5 million tablets of ephedrine, 600 
kilos of bulk ephedrine and between USD 1.5 and 2.5 million 
in currency.  Additionally, a third MDMA facility was seized 
in Markham, Ontario with over 200 kilograms of MDMA and 
precursor chemicals that could have produced an additional 
300 kilogram 
 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
CELLUCCI