In the wake of Canada’s initial legalization of cannabis for adult recreational use, a number of impactful global regulatory changes and discussions have followed. A paradigm shift has begun as other countries have started to loosen their existing cannabis regulations, or at least to consider such actions. Unsurprisingly, both the public and private markets continue to flood with budding cannabis companies (where legally allowed) hoping to carve out a niche for themselves. To gain an edge, many of these companies have focused their efforts on producing, processing and selling CBD (Cannabidiol)—a chemical compound derived from cannabis that has blurred certain regulatory lines.
As with many rapidly evolving industries, there is often a gap between a business’ legal knowledge and the reality of the regulatory environment in which it operates. This article seeks to shed light on Canada’s current regulatory regime governing the production, processing, and sale of CBD and CBD products.
CBD Versus THC – Why the Regulatory Confusion?
‘Cannabis’ is the general designation of the plants Cannabis sativa, Cannabis indica and Cannabis ruderalis.[1] THC (Delta-9-tetrahydrocannabinol) and CBD are two well known cannabinoids (i.e. chemical constituents of cannabis) although new cannabinoids are discovered frequently. While THC has certain psychoactive properties—CBD is considered ‘non-psychoactive’ and understood to have potential therapeutic benefits.[2]
Both THC and CBD are naturally found in all cannabis plants but their concentrations may vary greatly depending on the specific plant in question. For example, Cannabis sativa is typically thought to have a high ratio of THC to CBD, even though hemp[3], a variety of Cannabis sativa, typically has a low THC to CBD ratio. Due to its non-psychoactive nature and the fact that CBD is omitted altogether from Canada’s definition of industrial hemp[4], it is perhaps unsurprising that some businesses (inappropriately) distinguish CBD and THC from a regulatory perspective[5], or believe (equally inappropriately) that CBD is regulated differently depending on its source.
How Is CBD Regulated in Canada?
In Canada, CBD is regulated in the same manner as THC under the Cannabis Act[6] and the Cannabis Regulations[7]. CBD is not regulated under the Industrial Hemp Regulations, regardless of its source (being industrial hemp or otherwise). As of today’s date, a business requires a license under the Cannabis Act and the Cannabis Regulations (not under the Industrial Hemp Regulations) if it wishes to produce, process, and/or sell any permitted CBD products, including dried cannabis and fresh cannabis, CBD oil, cannabis plants, and cannabis seeds. Edibles, beverages, extracts, concentrates and topicals containing CBD are currently prohibited but are expected to be permitted on or around October 17, 2019 based on available guidance from Health Canada.[8]
What Is in Store for the Future?
Despite becoming the second country in the world to establish a legal national marketplace, some argue that Canada’s stance on CBD regulation is too conservative. Unlike in Canada, the United States federal government regulates CBD derived from hemp differently from CBD derived from other sources—an interesting reversal considering the U.S. federal government continues to categorize cannabis as an illicit narcotic.[9] Further, the Expert Committee on Drug Dependence (ECDD) of the World Health Organization (WHO)—an organization that has historically categorized cannabis as a dangerous drug—published a letter on January 24, 2019 recommending to the United Nations Commission on Narcotic Drugs (CND) that cannabis should generally be re-classified within international law.[10] The ECDD also recommended that “preparations containing pure CBD should not be scheduled under the international drug conventions” because CBD has not demonstrated potential for abuse or to produce dependence.[11]
A number of the CND’s member states have requested more time to evaluate the ECDD’s recommendations; therefore, the CND postponed its vote originally scheduled for March 7, 2019. Despite uncertainty from the CND, the WHO’s position regarding the safety of CBD and the U.S. federal government’s relaxation of its views towards hemp-derived CBD may influence Canada’s position towards its own CBD regulations.
