Rick Dunlop and Kevin Landry

The federal government has opened its 60-day consultation period with the release of its Proposed Approach to the Regulation of Cannabis. The paper outlines a potential regulatory framework which could be used to govern cannabis in Canada. Interested persons have until January 20, 2018 to complete an online questionnaire, or send a written submission to the Cannabis Legalization and Regulation Secretariat. This proposal is intended to shape the regulations under the Cannabis Act.

As discussed in our previous article Cannabis Act regulations – now we are really getting into the weeds! the Cannabis Act regulations will govern:

• rules for import/export;
• licensing procedures;
• the cannabis seed-to-sale tracking system;
• composition and strength of cannabis; and
• quality control procedures.

WHAT IS IN THE PROPOSED REGULATIONS?

According to the paper, the proposed regulations, which have not been made public as of yet, include the following:

Licensing

The proposed regulatory framework effectively segments the industry, introducing a variety of licenses for:

• Cultivation;
• Nurseries;
• Industrial Hemp;
• Processing;
• Sale to the public;
• Analytical testing;
• Import/export; and
• Research.

The regulatory framework allows for “micro-cultivation” and “micro-processing” licenses to be issued. These licenses would permit the same activities as a cultivation or processing license but on a smaller scale. Certain regulatory requirements for micro-cultivation would be reduced as compared with regulatory requirements for standard cultivation, reflecting differences in the level of risk related to the scale of the operation. It is proposed that licenses that authorize activities which results in large quantities of high-value cannabis products being present on a single site would face proportionately higher physical security requirements compared to other license classes.The proposal would permit both outdoor and indoor cultivation of cannabis (under all four classes of cultivation license: standard cultivation, micro-cultivation, nursery and industrial hemp).

Security Clearances

The consultation solicits feedback from interested parties on whether certain individuals with histories of non-violent, lower-risk criminal activity (for example, simple possession of cannabis, or small-scale cultivation of cannabis plants) should be permitted to participate in the legal cannabis industry or if they should remain prohibited by the current security clearance requirements.

Security Plans

There are proposed security requirements for all classes of proposed licenses. The proposed requirements are similar to those currently required for Licensed Producers under the Access to Cannabis for Medical Purposes Regulations and creation and maintenance of an organization security plan submitted to the Minister of Health that outlines:

• procedures to prevent illegal market or activity;
• detailed organizational diagram that provides a detailed description of the senior positions’ duties and responsibilities;
• all directors and officers,  and shareholders that own more than 25% of the organization (if it is a privately held organization);
• the owner of the site;
• information pertaining to specified individuals requiring security clearance; and,
• any individual in a position to bind the applicant or licence holder.

Cannabis Tracking Systems

The proposed Cannabis Tracking System (“CTS”) would enable a single reporting platform to track the movement of cannabis throughout the supply chain that could be used by various government authorities to verify compliance or prevent non-compliance with other federal, provincial, or territorial laws respecting cannabis.

It is proposed that the CTS would be a data collection tool that would show, across the supply chain, both inventory and production levels, as well as high-level movements of cannabis.

Classes of Cannabis Products

There are numerous classes of cannabis permitted under the proposed regulations in addition to the oil and dried cannabis available under the Access to Cannabis for Medical Purposes Regulations: cannabis plant seeds, cannabis plants, fresh cannabis, edibles containing cannabis, and cannabis concentrates.

The proposal also outlines different forms of products which would be permitted: pre-rolled cannabis and vaporization cartridges manufactured with dried cannabis. Product forms for cannabis oil, such as cannabis oil capsules, oral sprays, and cannabis oil intended for topical application, would continue to be permitted.

Packaging and Labelling

The maximum amount of cannabis in a single package would be 30 grams of dried cannabis, or the equivalent amount for other classes of cannabis. It is proposed that the regulations would set out the following general labelling requirements:

• Name and contact information of the processor who packaged the product;
• Product description;
• Product lot number;
• Product weight or volume, depending on the product class;
• Packaging date (and expiry date, if one has been set);
• Recommended storage conditions;
• THC/CBD content (expressed as the percentage of THC/CBD the product could yield, and by unit or dose, if applicable); and
• Inclusion of the statement: “KEEP OUT OF THE REACH OF CHILDREN”.

Mandatory health messages, similar to those placed on tobacco products have been proposed as well. These messages include:

• Prevention of accidental ingestion;
• Risks associated with different methods of use;
• Risks associated with cannabis use during pregnancy;
• Dangers of impaired driving;
• Risks of combining cannabis with other substances, such as alcohol; and
• Impacts of cannabis use on mental health.

Similarly, the proposal suggests limiting use of colour on packages, using standard font types and size, and restrictions on brand elements pertaining to size, colour, and placement on the package.

Medical Cannabis

It is proposed that the way in which individuals access cannabis for medical purposes would remain largely unchanged. In order to purchase or cultivate cannabis for medical purposes, individuals would need to have the support of an authorized health care practitioner, who would provide the patient with a medical document supporting access.

Health Products and Cosmetics

The government proposes that Health Canada maintain a scientific, evidence-based approach for health products with cannabis. These products will be subject to the requirements of the Food and Drug Act and applicable regulations, including requirements for safety, efficacy and quality.

To address the uncertainties around the health benefits and potential risks of cannabis related to non-medical use, addiction potential or neurological harm (for example, risks to the developing brain), any manufacturer of health products with cannabis would be required to demonstrate robust safety and efficacy evidence prior to being authorized for sale in Canada.

Consultation Questions

The government posed twelve specific questions to interested parties and will accept written submissions until January 20, 2018:

1. What do you think about the different types of proposed licences (i.e., cultivation, processing, etc.)? Will they achieve the objective of enabling a diverse, competitive legal industry that is comprised of both large and small players in regions across the country?
2. What do you think would be an appropriate threshold to distinguish between a micro-cultivator and a standard cultivator, taking into account the reduced physical security requirements for a micro-cultivator? Should the threshold be based on the number of plants, size of growing area, total production, gross revenue, or some other criteria? What should the threshold be?
3. What do you think would be an appropriate threshold to distinguish between a micro-processor and a standard processor, taking into account the reduced physical security requirements for a micro-processor? Should the threshold be based on total production, on-site inventory, gross revenue, or some other criteria? What should the threshold be?
4. What do you think of the proposed rules and requirements (i.e., physical security, good production practices, etc.) for the different categories of authorized activity? Do you think that the requirements are proportional to the public health and safety risks posed by each category of activity?
5. What do you think about the proposed requirements for certain individuals associated with a licensed organization to hold a security clearance issued by the Minister of Health? Do you think the proposal appropriately addresses positions of greatest risk?
6. What do you think of the proposed criteria for determining whether or not an individual is eligible to hold a security clearance? Do you think that the proposed approach should permit individuals with a history of non-violent, lower-risk activity (such as simple possession or small-scale cultivation of cannabis plants) to obtain a security clearance and participate in the legal cannabis industry?
7. What do you think about the proposal not to restrict the types of product forms that industry will be able to manufacture and sell (for example, pre-rolled dried cannabis, or cannabis oil capsules and oral sprays)? Are there any specific product forms that you think should be prohibited?
8. What do you think about the proposed THC limits based how a product is represented to be consumed (i.e., by inhalation or by ingestion)? What do you think about the proposed limits on a unit or serving basis?
9. What do you think about the proposed rules for the packaging and labelling of cannabis products? Do you think additional information should be provided on the label?
10. What do you think about the proposed approach to providing cannabis for medical purposes? Do you think there should be any specific additional changes?
11. What do you think about the proposed restrictions on the sale of health products containing cannabis authorized by Health Canada? Do they strike an appropriate balance between facilitating access to safe, effective and high quality health products, and deterring illegal activities and youth access?
12. What do you think about the overall regulatory proposal? Is there any additional feedback that you would like to share on the proposed approach to the regulation of cannabis?