With the Cannabis Act (Act) slowly winding its way through the Senate, Health Canada has been ramping up its efforts to clarify and define the regulatory framework for cannabis. To support the implementation of the Act, in November, Health Canada released a consultation paper (Paper) outlining a proposed regulatory framework and soliciting public feedback on the raft of proposals (see our November 2017 Blakes Bulletin: Health Canada Releases Proposed Regulatory Framework for Cannabis for more information).

On March 19, 2018, Health Canada released the results of the consultation, which garnered over 3,200 online responses, 450 written submissions and involved multiple in-person roundtables and webinars. The results released outline responses to the seven general areas that are to be subject to the regulations and provide some notable updates and signals from Health Canada in response to the feedback.

1. LICENSING

The Paper proposed six different categories of licences (cultivation, processing, federal-level sale, analytical tests, import/export and research) as well as a system of various permits and authorizations that are intended to allow for a range of activities among a diverse set of industry stakeholders.

Health Canada reported that respondents generally expressed support for the proposed sets of licences and permits, with a majority of respondents agreeing that the proposed categories of licences would enable both large and small players in regions across the country to compete, fostering a diverse and competitive industry.

In particular, the proposal that any shareholder who owned more than 25 per cent of a licensed organization or privately held parent company be required to hold a security clearance elicited a great deal of feedback. While respondents supported the objective of the proposal (to help prevent organized crime from infiltrating the legalized industry), they felt that it would be difficult to enforce the proposal, as it would not be particularly difficult to structure investments so as to avoid triggering the security clearance requirement. In response, Health Canada is considering alternative options, including increased financial disclosure as part of the licence application process.

With respect to the parameters that will define micro-scale producers under the regulations, which the Paper specifically sought and received substantial feedback on, Health Canada proposed the following:

  • Micro-cultivation licence: authorizes the cultivation of a plant canopy area of no more than 200 square metres.
  • Microprocessing licence: authorizes the processing of no more than 600 kilograms of dried cannabis per year or the entire output of a single micro-cultivation licence.

Of particular interest to a number of licensed producers, the Paper proposed that the regulations permit both outdoor and indoor cultivation of cannabis. A majority of those who commented on outdoor cultivation supported allowing it. Health Canada indicated it is giving consideration to further measures required to protect against theft and contamination associated with outdoor cultivation.

2. SECURITY

The Paper proposed that certain individuals associated with licences be required to hold a valid security clearance, and also proposed that the Minister of Health be able to refuse to grant clearance for certain individuals with associations to organized crime or with past convictions or associations with drug trafficking, corruption or violent offences. The Paper also put the issue forward of whether individuals convicted of non-violent or low-risk crimes would be permitted to hold a security clearance and participate in the legal cannabis industry.

A majority of respondents felt that individuals with non-violent or low-risk criminal history should be able to obtain a security clearance and participate in the legal cannabis industry. Health Canada advised that it would take this response into consideration.

3. CANNABIS TRACKING SYSTEM

The Act proposed a national Cannabis Tracking System to be maintained by the Minister of Health to enable the tracking of cannabis through the supply chain and assist in preventing the illegal diversion of cannabis. The majority of comments submitted on this item expressed support for the system, noting its potential to make product recalls easier, while the concerns focused on the potential challenges and costs of implementing such a system.

4. CANNABIS PRODUCTS

The Paper proposed a number of rules and standards for the production of cannabis products including maximum THC concentrations for cannabis oils and products intended for ingestion. It also echoed the Act in noting that the sale of edibles and other cannabis-based products would not be initially permitted, but would be permitted within one year of the Act coming into force.

Health Canada noted a significant amount of input on the proposals regarding edibles and other cannabis-based products from respondents. The responses varied. Some urged the government to allow the sale of cannabis edibles and concentrates as soon as the proposed Act comes into force, pointing towards the need for the legal cannabis industry to offer the same products currently available on the black market. Others supported the currently proposed 12-month delay, and still a smaller number argued that there should be more restrictions on what types of cannabis products will be available. Despite the responses, Health Canada reiterated the need, consistent with the draft legislation, for regulations specifically addressing edibles and other cannabis-based products to come at a later date (within one year of the Act coming into force) and stated plans to consult broadly on these regulations.

5. PACKAGING AND LABELLING

Perhaps the most notable among Health Canada’s responses were the specific details provided regarding the packaging and labelling requirements. As noted in our prior Bulletin, the Paper proposed a set of packaging and labelling regulations similar to that of tobacco to achieve the desired public health and safety objectives, including the protection of young persons from access to cannabis and inducements to use cannabis. These proposals included tamper-evident and child-resistant packaging and clear, stark health warning labels.

Health Canada noted that a majority of respondents who provided views on these regulations expressed support for the packaging and labelling proposals. Some respondents suggested the additional requirement to include further information on the label, such as growing conditions or the name of the cultivator. However, among those who expressed support, there were mixed responses regarding the need for “plain packaging” and restrictions on the use of colours and branding. Some felt that companies should be allowed to brand their products in order to differentiate from both legal and illegal competitors, and industry stakeholders were nearly unanimous in stating that they needed certainty as soon as possible on what regulations would be required in order to prepare products that would be compliant with the packaging and labelling rules.

In response, Health Canada clarified what the requirements would look like, with the resulting labelling and branding requirements being closer to the strict, plain tobacco packaging than the more relaxed rules governing beer and wine packaging:

  • Labelling: standardized cannabis symbols on every label; mandatory health warning messages (including specifics regarding size, placement and appearance); and requirements regarding the content of THC and CBD (or cannabidiol, a cannabis compound lacking the psychoactive effects of THC).
  • Branding, logos and colours: among other requirements, beside the brand name, only one other brand element can be displayed; no other image or graphic can be displayed; backgrounds need to be a single, uniform colour; use of fluorescent or metallic colours is prohibited; labels and packaging cannot have any coating or embossing; and no inserts can be included.
  • Package-specific: cannabis products (other than plants or seeds) must be packaged in a container that is tamper evident and child resistant in order to prevent contamination. In addition, Health Canada intends to propose that the immediate container is opaque or translucent.

Health Canada maintained that labelling requirements would be the same for cannabis products sold for medical or recreational purposes. However, it proposes a six-month transition period following the coming into force of the Act, under which cannabis products sold for medical purposes could continue to be packaged under the current rules. Health Canada does not intend to provide any transition period for cannabis products sold for recreational products, and these products will be required to meet the new packaging and labelling requirements immediately upon the coming into force of the Act.

Industry will also need to ensure packaging complies with any excise stamping requirements (see our November 2017 Blakes Bulletin: Federal Governments Proposes Excise Duties for Cannabis Producers for more information).

6. MEDICAL CANNABIS

The Paper’s proposed regulatory framework for medical cannabis was substantially the same as it currently exists, with limited changes that aim to improve consistency with recreational use, improve patient access and reduce the risk of abuse.

In general, respondents supported this proposed regulatory approach. One notable recommendation was to treat medical cannabis like other health products to enable coverage eligibility under private health plans. Health Canada responded by emphasizing its commitment to monitor and evaluate patient access, and to evaluate the medical access framework within five years of the Act coming into force.

7. HEALTH PRODUCTS AND COSMETICS CONTAINING CANNABIS

The Paper recommended a significant expansion of the current health product regulatory framework to permit the use of cannabis in a wider range of products. Health Canada also proposed a scientific, evidence-based approach to the approval and oversight of health products containing cannabis, including applying relevant THC limits, and reiterated that cosmetics containing cannabis would not be exempt from the Act and its regulations.

A majority of the respondents expressed support for the proposed regulations. Similarly to the packaging and labelling requirements, respondents sought out further details about the approval process of natural health products and non-prescription drugs containing cannabis.

Health Canada partially responded to these requests for more detail, clarifying that all existing authorizations established by the Food and Drugs Act and its regulations for health products containing cannabis would be maintained. It noted that additional consideration is being given to promotional controls for prescription drugs, and proposed that packaging and labelling of prescription drugs with cannabis would only be subject to the Food and Drugs Act and its regulations.

Health Canada proposed further consultations to address the approach for any potential new non-prescription drugs and natural health products containing cannabis. Until these consultations occur, new applications for health products with cannabis will be limited to prescription drugs, medical devices, or natural health products and veterinary health products with permitted cannabis parts and no more than 10 parts per million THC.