Backgrounder: Highlights of the Proposed Regulatory Framework for Cannabis

November 2017

The Government of Canada intends to bring the proposed Cannabis Act into force no later than July 2018, subject to the approval of Parliament. To meet this commitment, the final regulations will need to be published as soon as possible following Royal Assent. As such, it is important that stakeholders provide input on the proposed regulatory approach during this 60‑day consultation period as draft regulations will not be pre-published.

This backgrounder provides an overview of key regulatory proposals to support the implementation of the proposed Cannabis Act. The full details are outlined in a consultation paper. Stakeholders and Canadians who are interested in participating in the consultation are encouraged to review the full consultation paper and share their views by January 20, 2018. This new consultation builds on the extensive consultations conducted by the Task Force on Cannabis Legalization and Regulation. Comments received from this consultation will be carefully reviewed, and the feedback will inform the development of the regulations. To meet the Government’s commitment to bringing the proposed Cannabis Act into force no later than July 2018, subject to Parliamentary approval, the final regulations will be published in Canada Gazette, Part II before July 2018.

Under the proposed Cannabis Act, the federal government would be responsible for regulating cannabis production. The provinces and territories would be responsible for regulating its distribution and sale, subject to minimum federal conditions. The federal government continues to engage and share information with the provinces and territories in a number of key areas, including public education and awareness, drug-impaired driving, taxation, and aspects of implementation, including supply of legal cannabis and the cannabis tracking system.

Licences, Permits and Authorizations

The intent of the proposed system of licences, permits and authorizations is to allow for a range of activities with cannabis (e.g., cultivation, processing and research). It is also intended to enable a diverse, competitive legal industry made up of both large and small companies in regions across the country to produce quality-controlled cannabis. It would ensure that legal cannabis products meet high quality standards while reducing the risk that organized crime could infiltrate the legal industry.

The proposed regulations would:

• Establish different types of authorizations based on the activity being undertaken (e.g., cultivation or processing), and in some cases, the scale of the activity (e.g., standard versus micro-cultivation).
• Set out rules and requirements for authorized activities that are proportional to the public health and safety risks associated with each type of activity.

Security Clearances

Security clearances would be required for employees who hold key positions with access to sensitive security or business information, as well as directors and officers of the organization and any parent company and major shareholders.  Regulatory proposals pertaining to personnel security have been developed to mitigate the risks that individuals associated with organized crime could infiltrate licensed organizations and use their position to conduct illegal activities with cannabis to the benefit of criminal organizations.

The regulations would enable the Minister to refuse to grant security clearances to individuals with associations to organized crime and with past convictions of, or an association with, drug trafficking, corruption or violent offences. In making decisions, the Minister would take into account information provided by an applicant, a criminal record check and a law enforcement record check. Each application would be assessed on a case-by-case basis and on its own merits. This is the approach that is in place today under the existing regulations governing the federally licensed production of cannabis for medical purposes.

Health Canada acknowledges that there are individuals with a history of non-violent, lower-risk activities (e.g., simple possession or small-scale cultivation of cannabis). Some of these individuals may seek to obtain a security clearance to participate in the legal cannabis industry. Part of the purpose of this consultation is to seek feedback regarding the degree to which these individuals should be permitted to participate in the legal cannabis industry. The Minister of Health would have final authority over the granting of security clearances.

Cannabis Tracking System

The proposed Cannabis Act would authorize the Minister of Health to establish and maintain a national Cannabis Tracking System, to track cannabis throughout the supply chain. This would help prevent diversion of cannabis into, and out of, the legal market. It is proposed that any person authorized to conduct activities with cannabis, whether federally or at the provincial or territorial level, would be required to report into the system. Exceptions would be provided for industrial hemp and certain lower-risk research and development activities. The tracking system would be a data collection tool that would show inventory, production levels, as well as bulk movements across the supply chain. The tracking system would not require the reporting of any personal information about consumers who purchase cannabis at the retail level.

Cannabis Products

The initial regulations would permit the production and sale of dried cannabis, cannabis oil, fresh cannabis, cannabis plants and cannabis seeds to people who are 18 years of age and over. The production and sale of edibles and concentrates to people who are 18 years of age and over would be enabled within one year following the coming into force of the proposed Act.

It is proposed that the regulations would establish rules and standards for the production of cannabis products, and would seek to:

• Provide adults with access to quality-controlled cannabis products of known potency.
• Enable the sale of a range of products to help the legal industry displace the illegal market.
• Reduce the appeal of cannabis products to youth.
• Reduce the risk of accidental consumption of cannabis by young persons.

Packaging and Labelling

It is proposed that the regulations would set out requirements for the packaging and labelling of cannabis products. The proposed packaging and labelling requirements would promote informed consumer choice and allow for the safe handling and transportation of cannabis. All cannabis products would need to be packaged in a manner that is tamper-evident and child-resistant.

Health Canada is proposing strict limits on the use of colours, graphics and other special characteristics of packaging to curtail the appeal of these products to youth. To ensure that consumers make informed decisions and to avoid misuse, products would be required to be labelled with specific information about the product (such as the THC and CBD content of the product, and the product weight or volume), be labelled with the statement “Keep out of the reach of children,” contain mandatory health warnings similar to those on tobacco products, and be marked with a clearly recognizable standardized THC symbol.

Cannabis for Medical Purposes

The proposed regulations would maintain a distinct system to provide patients with access to cannabis for medical purposes. With the support of a health care practitioner, patients would continue to be able to purchase from a federally licensed seller of cannabis for medical purposes, produce their own cannabis or designate someone to grow cannabis on their behalf.

The proposed medical access regulatory framework would remain substantively the same as it currently exists, with proposed adjustments to improve patient access, reduce the risk of abuse of the system, and create consistency with the rules for non-medical use.

Health Products and Cosmetics Containing Cannabis

In keeping with the objectives of the proposed Cannabis Act to legalize and strictly regulate cannabis, and the health and safety mandate of the Food and Drugs Act, a coordinated regulatory approach is proposed for human and veterinary health products containing cannabis that are authorized by Health Canada to be safe, effective and of high quality. 

Manufacturers are currently allowed, and would continue to be allowed, to file new drug submissions for prescription drugs containing cannabis. They can also seek authorization for medical devices intended for use in consuming cannabis for medical purposes. It is proposed that the use of cannabis in non-prescription drugs and natural health products would be permitted. For natural health products, a strict limit of no more than 10 ppm THC is proposed. 

Health Canada would also work with the provinces and territories on options to control the sale and display of health products with cannabis to youth.

The use of cannabis-derived products in cosmetics is currently prohibited with the exception of hemp seed derivatives containing no more than 10 ppm THC, which are permitted. Under the proposed Cannabis Act, cosmetics containing currently prohibited cannabis-derived ingredients would be subject to provisions of the proposed Act.