Because the licensed production of medical marihuana is in its infancy, much corporate and media attention has been focussed on the establishment of medical marihuana production facilities in Canada without noting that the Marihuana for Medical Purposes Regulations ("MMPR"), which authorizes this production, also contains rules allowing licensed producers to apply for permits to export or import medical marihuana. This can either be in the form of seeds, plants or dried marihuana. This bulletin will examine the applicable rules to obtain these permits and their strategic value for companies participating in the medical marihuana market.
Currently, there is a limited international trade market for medical marihuana, but this is likely to expand: Holland permits the import and export of medical marihuana; Germany, Italy and the Czech Republic reportedly are importers of medical marihuana; Uruguay recently legalized the production, sale and use of marihuana, and Uruguayan officials reportedly are considering the importation of medical marihuana from Canada; Israel is reported to become an importer of medical marihuana in the next three years.
The MMPR authorizes the federal Minister of Health ("Minister") to issue permits to licensed producers to import and export medical marihuana. The application for a permit, the supply chain due diligence obligations and the subsequent reporting requirements are set out in detail in the MMPR, some of which are discussed in this bulletin.
Import Permits: Detailed Requirements
To obtain an import permit, the Minister requires the medical marihuana licensed producer to provide several pieces of information including:
- whether seeds, plants or dried marihuana are sought to be imported;
- the quantity sought to be imported and the brand name, if any;
- the intended use of the medical marihuana;
- the name of the exporter, the country of export and any third countries through which the medical marihuana may transit;
- the port where the imported shipment will enter Canada including the address of the customs warehouse to which the medical marihuana will first be delivered.
If the application is successful, a permit is granted only for the calendar year in which it is issued and for not more than six months. Permits are valid only for the importation for which it is issued.
Once issued, the import permit holder must ensure that the medical marihuana is transported directly to its licensed production site. The permit holder also must provide the Minister with a detailed report within 15 days of each shipment, which includes the date of the shipment, the type of medical marihuana imported and its intended use.
Export Permits: Differences in Required Information
Much of the information a licensed producer must supply to obtain an import permit must be provided to obtain an export permit (e.g., type of marihuana, quantity, and intended use). Each export shipment must be followed by a report to the Minister within 15 days of shipment, setting out much of the same detailed information required for an import shipment.
However, there are differences:
- any application must be accompanied by a copy of the official import permit in the country of final destination;
- the application must list the port of exit from Canada, the name of the importer and any country of transit to the final destination.
The exporter must also attest that to their best knowledge, the export shipment does not violate the laws of the country of final destination or any country of transit.
An export permit is granted only for the calendar year in which it is issued and for not more than four months. It is valid only for the export shipment for which it is issued.
Failure to Comply May Mean Revocation of Import or Export Permit
The MMPR authorizes the Minister to suspend or revoke such permit for several reasons, including where the Minister has reason to believe that:
- the import or export permit was issued on false or misleading information;
- any importation is for the purpose of re-exporting;
- revocation is necessary to prevent the medical marihuana from being diverted to an illicit market;
- the importation of medical marihuana to or the exportation from a country would contravene the laws of the country.
For importations, this means that though not specified in the application for an import permit, the importer must ensure that the country from which it sources medical marihuana permits the exportation.
Canadian licensed producers may want to consider as part of an overall business plan the use of import or export permits, for example to manage the supply of medical marihuana in Canada or foreign markets that permit the importation of medical marihuana. Companies making use of the import and export rules of the MMPR must exercise due diligence in managing their supply chain and be meticulously accurate in all applications and reports.
Although the international trade in medical marihuana is in its early stages, first mover entry into foreign markets or with trusted foreign suppliers may play an important role in revenue generation. In consequence, licensed producers may want to consider whether there are strategic advantages to applying for an import or export permit.