The ruling Liberals are sparring with the upper Senate chamber, where a draft law is currently under review. Critics in the Senate — which must approve the law — complain the Liberals are moving too quickly.

The Liberals initially planned for pot to be legalized in July but Health Minister Ginette Petitpas Taylor said the Senate vote on the draft legislation would be on or around June 7, later than expected.

If senators recommend amendments, the bill will be sent back to the House of Commons for review, and would then have to go back to the Senate.

Asked by reporters when legalization was likely to happen, Petitpas Taylor said: “If you do the math, you can certainly see that it certainly won’t be July 2018.”

She did not give further details. The House of Commons is due to break for the summer on June 22 and will not come back until Sept. 17.

Last week, Petitpas Taylor said recreational marijuana would only go on sale a few months after it was legalized because the new retail system needs time to start working properly.

Canada would be the first Group of Seven country to legalize recreational cannabis nationally.

Some of the country’s 10 provinces — which have responsibility for setting up a system to handle sales — and police forces have argued that the timeline initially set out by the Liberals was too tight.

Medical marijuana is already allowed in Canada. The Liberals, which made legalizing recreational use part of their successful 2015 election campaign, say the new law would keep marijuana out of the hands of underage users and reduce related crime.

— Leah Schnurr is an economics correspondent for Reuters in Ottawa.

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Trudeau told Bloomberg Television that the U.S. in fact ran a dairy surplus with Canada. Trump took aim at Canada’s dairy industry this week and said on Thursday “what they’ve done to our dairy farm workers is a disgrace.”

Canada’s dairy sector is protected by high tariffs on imported products and controls on domestic production as a means of supporting prices that farmers receive.

Trudeau said the system “works very well” in Canada.

“Let’s not pretend we’re in a global free market when it comes to agriculture,” he said. “Every country protects, for good reason, its agricultural industries.”

Trump’s comments were the second time this week he has attacked Canada’s dairy industry and on Thursday he included the lumber, timber and energy sectors in a list of what he said were problematic areas of trade.

Canadian Foreign Minister Chrystia Freeland, asked for a reaction, rejected the suggestion of wrongdoing.

“Canada strongly believes in a rules-based system of trade, and therefore always abides by and upholds the rules that govern trade,” she said in an e-mailed statement.

Trump said the U.S. will report in the next two weeks what it intends to do with the North American Free Trade Agreement (NAFTA), which he has promised to renegotiate.

The threat to get rid of or alter NAFTA is a potential problem for Canada, whose biggest trade partner is the U.S.

Trudeau said he would not “overreact” and planned to move the trade conversation forward “in a way that both protects our consumers and our agricultural producers.” He also said he saw an opportunity to engage with the U.S. president.

“He has shown if he says one thing and actually hears good counter arguments or good reasons why he should shift his position, he will take a different position if it’s a better one, if the arguments win him over,” Trudeau said.

The two nations are embroiled in a long-standing dispute over exports of Canadian softwood lumber, which U.S. producers complain are unfairly subsidized.

“Our producers and workers have never been found in the wrong .. the United States needs Canadian lumber. A protracted dispute will only drive up the cost of wood and homes for U.S. consumers,” Freeland said.

— Reporting for Reuters by Leah Schnurr and David Ljunggren in Ottawa; additional reporting for Reuters by Jeff Mason in Washington.

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Canada is set to become the first G7 country to legalize recreational marijuana nationally when it introduces legislation next spring. Medical marijuana is already legal.

If the government incorporates an expert panel’s recommendations, outlined on Tuesday, it could strictly limit advertising and require plain packaging on products.

That means companies will need to be creative to set themselves apart from the competition, with the advantage going to those who have already established a name, said Aaron Salz, founder of Stoic Advisory Inc., a cannabis advisory firm.

“If you’ve been able to build a brand presence ahead of potentially more restrictive rules on advertising, you’re going to have a leg up.”

Alternatives could include sponsoring events or companies putting their name on products other than cannabis, he said.

Medical marijuana producer Peace Naturals has a line of food products, such as hemp hearts, sold in health food stores. It is a strategy that owner Cronos Group, which is changing its name from PharmaCan Capital Corp., might consider for its other brands, said CEO Michael Gorenstein.

Gorenstein plans to use British Columbia-based In The Zone, which is licensed for medical marijuana cultivation, to appeal to the outdoor crowd when recreational use is legalized, with a focus on hiring like-minded employees to connect with customers.

“If you build a culture and recruit a group of people that really represent what your brand is, you don’t need to advertise,” said Gorenstein. “The brand recognition will follow.”

Wholesaler Supreme Pharmaceuticals Inc. is putting its focus on the quality of marijuana it grows. The end product is sold under other companies’ names, but Supreme gets a producer’s mark and is betting on customers recognizing where their marijuana came from and coming back for more.

“A good analogy would be Intel chips,” said CEO John Fowler. “Whether you’re buying an Apple or a Dell, you’re looking for Intel inside as a mark of quality.”

Canopy Growth Corp., which operates Bedrocan and Tweed, plans to use the potential plain packaging to educate customers about the strength and strain of marijuana they are buying, said CEO Bruce Linton.

“We were not going to be using swirly, psychedelic colors,” Linton said. “We’re going to be using the chance to put the name ‘Tweed’ on the package.”

Executives said education through events or customer service will be key. It is a strategy Olivia Mannix, CEO e of Colorado-based cannabis marketing agency Cannabrand, recommends.

“Be professional, that’s really the best advice,” said Mannix. “Have education and information behind your brand.”

— Leah Schnurr reports on the Canadian economy for Reuters from Ottawa.

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How cannabis is sold should be left up to the provinces and should include both retail storefronts and a mail order system, the report recommended. Authorities have been battling a surge in illegal dispensaries over the past year, particularly in Ontario and British Columbia.

With medical marijuana already legal in Canada, Prime Minister Justin Trudeau’s Liberal government made legalizing it for recreational use a part of its successful election campaign last year and will introduce legislation in the spring of 2017.

Deloitte has estimated that annual sales could be as high as $8.7 billion.

Canada is following in the footsteps of some U.S. states that have already legalized recreational use, including Colorado and Washington. While Tuesday’s recommendations are not binding, the government said it will take them under consideration.

The recommendations were generally positive for the 36 companies that currently produce and sell medical marijuana, analysts said, with a lower-than-expected age limit of 18 for recreational users and the allowance of some forms of edibles, which have been popular in places such as Colorado.

Still, the panel recommended that plain packaging be required, while restrictions to advertising should be put in place similar to those currently on tobacco products.

“That’s where the downside is for some of these licensed producers that had been hoping to advertise and really develop brands,” said Jason Zandberg, an analyst at PI Financial.

Canopy Growth, which has a $1.2 billion market capitalization on the main TSX exchange, was up 6.6 per cent at $10.66, while producer and seller Aphria Inc. was up 5.3 per cent at $5.34.

The panel recommended Canada maintain a separate system for medical marijuana.

The government should use licensing and production controls to foster a competitive recreational market that includes small producers, the panel recommended, suggesting the door was open for new producers to get into the burgeoning sector.

Nonetheless, analysts did not expect the firms that want to transition to recreational will find themselves shut out.

“We’re talking about a massive market,” said Noel Atkinson, analyst at Clarus Securities. “There’s lots of room for everyone to play.”

— Reporting for Reuters by Leah Schnurr and David Ljunggren in Ottawa; additional reporting for Reuters by Alastair Sharp in Toronto.

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Republican Donald Trump calls NAFTA the worst trade deal signed by the U.S. and Democrat Hillary Clinton has signaled a change of position on the 1994 pact she supported when it became law under her husband, former president Bill Clinton.

The agreement between the U.S., Canada and Mexico is often used for political grist in U.S. election campaigns but altering it is a major concern for export-oriented Canada.

In 2008, Barack Obama campaigned on renegotiating the treaty with tougher labour and environmental standards, a pledge that fell to the wayside when he became president in 2009.

But the idea has taken hold more strongly in 2016 and Mexico has said it is ready to update the treaty. Canada has said NAFTA is in the best interest of all three countries.

If Canada were forced to renegotiate, one issue it could target is the pact’s investor-state dispute settlement provision.

The U.S. wanted it included in the original deal to protect U.S. investments in Mexico. It has since been used by U.S. companies to sue Canadian federal and provincial governments. TransCanada Corp. is using the provision to seek billions from the U.S. government for rejecting the Keystone XL pipeline.

That would probably be an area of mutual concern for Canada and the U.S. given those unintended consequences, said Derek Burney, Canada’s former U.S. ambassador, who was involved in the original negotiations.

Labour mobility, a concern for Canadian technology companies, could be improved by updating the list of professions that allows workers to relocate between countries.

“We fell short in terms of what we wanted to achieve on labour mobility in the NAFTA,” said John Weekes, Canada’s chief negotiator, who added Canada should also push for improved access to the U.S. government procurement market.

Reopening NAFTA could give the Canadian government cover to phase out a domestic supply management system for the politically powerful dairy industry that has come under international criticism, negotiators said.

“I’d be secretly delighted if they came hard at us on supply management,” said Burney. “Given the dairy industry and its weight in the United States, it’s not easy to dismiss.”

The system controls dairy prices and production, which critics say drives up consumers prices. The industry says it allows farmers to get stable prices, and noted Canada has preserved the system while negotiating several trade agreements.

Still, former negotiators warned Canada would not be working from a position of strength as it sought concessions.

“Ignoring everything else, yes, there could be an opportunity there,” said Michael Hart, who advised on the original negotiations. “But in the real world, I’d be very cautious.”

While Clinton has said she would rework the trade pact, Trump’s threat to withdraw is a bigger concern in Canada.

“If we’re in a situation where people are threatening they’re going to walk out of trade agreements unless they can be renegotiated, then I think we’re in a situation where it would be very difficult,” said Weekes.

— Leah Schnurr is a Reuters reporter based in Ottawa. Additional reporting for Reuters by David Ljunggren.

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The salmon was approved in the U.S. to be farmed for human consumption last year but has since been a source of controversy. Environmentalists sued U.S. health regulators this year to try to overturn the decision.

Canadian activist groups expressed their concerns following the approval, saying the government should establish mandatory labeling of all genetically modified foods. Some are concerned they may pose risks to the environment or to health.

Health Canada and the Canadian Food Inspection Agency said that the AquAdvantage salmon developed by Massachusetts-based AquaBounty Technologies had been found to be as safe and nutritious as conventional salmon for food and livestock feed.

These were the final scientific assessments by the government required to allow the salmon to be sold in Canada, the agencies said.

Nonetheless, the salmon is still more than 18 months away from coming to market, Health Minister Jane Philpott said.

“While this is the first product of this nature to be reviewed, it will not likely be the last,” Philpott told reporters.

Health Canada said there are no special labeling requirements for the salmon, given that there are no health and safety concerns.

The salmon is developed by introducing a growth hormone gene from a Pacific salmon to an Atlantic salmon, which then grows faster than conventional farmed salmon.

The company, which has a facility in Prince Edward Island, welcomed the news.

“We are pleased to receive the approvals of the various authorities of Canada which means we can produce, sell and eat our AquAdvantage Salmon in Canada,” CEO Ronald Stotish said in a statement.

— Leah Schnurr is a Reuters reporter based in Ottawa.

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It will mark Canada’s first surplus in eight years, accomplished with the help of the sale of assets including General Motors shares. The government also cut some of the cushion set aside for economic shocks.

The budget is “written in black ink,” Finance Minister Joe Oliver told Parliament.

The Conservatives, seeking a fourth straight election win in October, have portrayed themselves as strong economic managers.

Polls show them lacking enough support to win another majority, needed if they want to be sure not to be brought down by the two main parties to their left, Justin Trudeau’s Liberals and Thomas Mulcair’s New Democrats.

The budget, which includes tax cuts, could bind opposition parties’ hands by leaving small surpluses, ranging from $1.4 billion for the fiscal year that started on April 1 to $2.6 billion for 2018-19. It estimates a $2 billion deficit for 2014-15.

In order to fund major election promises, their opponents may have to look at increasing taxes, reallocating spending or returning to deficit, leaving them open to attack from the Conservatives on these issues in the upcoming campaign.

To combat the 2008 financial crisis, the Conservatives ran massive deficits, ending a string of surpluses started by the Liberals. The Conservatives have gradually reduced those deficits.

But to help balance the books, Tuesday’s budget reduced a traditional $3 billion annual contingency for unexpected problems to $1 billion.

“From a financial market perspective, ideally you want a higher cushion than that, but I like the fact that they used it,” said Laurentian Bank Securities assistant chief economist Sebastien Lavoie.

A $2.2 billion boost from asset sales also helped push this year’s budget into surplus.

The budget entrenched major family tax cuts announced last year and included a new reduction in the small business tax rate to nine per cent in 2019 from 11 per cent.

It also reduced the amount of money seniors have to withdraw annually from their registered retirement income funds, lowering the tax they will have to pay.

Other measures likely to prove popular with seniors and investors include higher contribution limits for tax-free savings accounts.

Oliver pledged more money for the military and security agencies, including the Royal Canadian Mounted Police to help combat threats following the killing of two soldiers last year on Canadian soil. But much of the planned spending will be deferred to future years.

“When there’s a limit imposed by a spectacular fall in the price of oil, you can’t do everything. That’s the reality. You have to make choices,” Oliver said.

— Randall Palmer and Leah Schnurr are a bureau chief and reporter, respectively, for Reuters in Ottawa.

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