Cannabis Tracking and Licensing System reporting guide for cannabis cultivation, processing and sale for medical purposes licence holders: Frequent issues and solutions

This page provides an overview of frequent issues you may encounter when submitting your monthly reports, as well as solutions to solve them.

On this page

• Closing inventory: Storing cannabis for other licence holders
• Closing inventory: Discrepancies between opening and closing inventory
• Cannabis given or sold to employees
• Farmgate
• Language differences in reporting (English versus French)
• Product transformation from one product class to another
• Moving from unpackaged to packaged inventory
• Null data
• Reporting sales
• Drop shipping
• Samples
• Third-party manufacturing
• Kief
• Adding another form of cannabis to dried cannabis
• Pure intermediates
• Reporting the number of plants moving in and out of Unpackaged inventory
• Plant trimmings
• Topicals

Disclaimer: Please note that these are hypothetical scenarios/examples and they are not exhaustive. In practice, some solutions may differ from the below examples depending on the circumstance. If you have questions, reach out to ctls-bi-sscdl-ie@hc-sc.gc.ca.

Closing inventory: Storing cannabis for other licence holders

If a licence holder is storing cannabis that belongs to another licence holder on their site – this must be properly recorded by all parties in the Cannabis Tracking and Licensing System (CTLS).

Scenario

The licence holder that is storing the product ("Licence holder #1") on behalf of another company ("Licence holder #2") would record the initial receipt of cannabis for storage as "Additions to inventory –  Quantity received – domestic" and reflect this quantity as part of their Closing inventory.

Licence holder #2 would record the quantity they sent for storage as either "Reductions to inventory – Quantity shipped – domestic" (for a packaged product category) or "Reductions to inventory – Quantity shipped – domestic – To cultivators and processors" (for an unpackaged product category and assuming Licence holder #1 is a cultivator or processor).

Only Licence holder #1 should report the physical quantity of cannabis as part of their inventory.

Closing inventory: Discrepancies between opening and closing inventory

If retroactive changes are necessary to rectify submitted reports, these changes must be properly recorded in the CTLS.

The system will not accept if the Opening inventory values for a given month and product category differ from the previous month's Closing inventory in the same category by more than ±5%. This also applies to retroactive changes made to CTLS reports.

Scenario

If a minor discrepancy is discovered in inventory valuation that spans a period longer than two months, the licence holder can opt to conduct a single retroactive change in the current reporting period to unify internal record-keeping with CTLS reports.

This should be done by reporting the required difference as an addition or reduction in the "Other" section of the respective product category.

Cannabis given or sold to employees

Scenario 1

A licence holder is interested in compensating an employee with their cannabis. They want to know how to report this in CTLS.

Solution: Licence holders can't compensate an employee with their cannabis. The Cannabis Act and Cannabis Regulations prohibit licence holders from distributing cannabis outside of the scope of what their licence authorizes. No licence authorizes the compensation of employees with cannabis (such as, giving cannabis to employees in lieu of wages earned).

Scenario 2

A licence holder wants to sell medical cannabis to their employee. They want to know how to report this.

Solution: A licence holder can sell medical cannabis to their employees if they are a registered client. Any sale for medical purposes must comply with the specific rules for those sales, including that the consumer must be a registered client and that the cannabis must be delivered to their home address, not provided directly to them.

Scenario 3

A licence holder wants to provide a gift to an employee in the form of cannabis (not as compensation, but just as a gift). They want to know how to report this.

Solution: Licence holders can't gift their employees cannabis. Subsection 24(1)(a) of the Cannabis Act prohibits providing cannabis without monetary consideration.

Scenario 4

A licence holder wants to provide cannabis to an employee at a discounted rate. They want to know how to report this.

Solution: Licence holders can't provide cannabis to an employee at a discounted rate. A licence holder is prohibited from distributing non-medical cannabis to employees. Selling cannabis products below their market value may be considered an inducement, which is prohibited under subsection 24(1) of the Cannabis Act.

Farmgate

A licence holder is interested in operating a retail store at their site, also known as a "farmgate" store. They want to know how to report this in the CTLS.

There are different reporting requirements for farmgate operations in each province or territory as retail sale is under their authority.

Scenario 1

Farmgate operations in a province may involve a cannabis transfer from a licence holder to a retail store. This may not involve the physical movement of cannabis but rather a paper transaction.

Scenario 2

In another province, farmgate operations may involve a transfer of cannabis to the provincial or territorial distributor and subsequently to the retail store. Again, this may not involve the physical movement of cannabis but rather a paper transaction.

The provincial or territorial reporting authority would then report the following in CTLS:

• Purchase of cannabis product from the licence holder
• Sale of the cannabis product to the retail store 

The licence holder would not report the sale to the retailer because this would be double-counting the sale since the provincial or territorial reporting authority has already reported the sale.

Language differences in reporting (English versus French)

Scenario

A licence holder from Quebec is submitting reports to a provincial or territorial reporting authority in French and consequently, they use a comma rather than a period as a decimal point.

Programs like Excel default to semicolons rather than commas as delimiters in .csv files when configured to be in French.

Solution: Depending on your language preference, you will need to ensure the correct punctuation is applied in the .csv templates before it is uploaded in the CTLS.

For the French version of the CTLS, you can only use commas in the .csv template. For example: 0,084. If you use 0.084, the file will be rejected.

For the English version of the CTLS, you may use commas or periods in the .csv template and the system will accept it. For example: 0.084 and 0,084 are considered equivalent in the English version of the CTLS.

Product transformations from one product class to another

Unpackaged inventories are designed to capture not only the quantities of cannabis entering and exiting a site, but also the transformation of cannabis from one class to another.

Scenario: Fresh cannabis

A month begins with 1,000 kg of fresh cannabis (in the Reports tool, this can be found in cell F6 of the Unpackaged tab).

During the month, the following reduction occur:

• 100 kg was dried and moved to the unpackaged dried cannabis classification (Unpackaged tab: cell F17)
• 500 kg of moisture weight was lost during the drying process (Unpackaged tab: cell F31)
• 200 kg was destroyed (Unpackaged tab: cell F32)

By the end of the month, 100 kg of dried cannabis production must be recorded as an addition to inventory. Then 200 kg of fresh cannabis should remain in inventory and be recorded in cell F38 in the Unpackaged tab.

Calculation: 1,000 (opening inventory) - 100 (dried) - 500 (lost) - 200 (destroyed) = 200 (inventory)

In the following cases, the quantity of the cannabis processed of one class will not equal the quantity of the other class produced:

• cannabis seeds processed into vegetative cannabis plants (kilograms versus individual units)
• whole cannabis plants processed into fresh cannabis (individual units versus kilograms)
• pure intermediates processed into a derivative cannabis product (derivative cannabis products include the weight of the non-cannabis additives)

Moving from unpackaged to packaged inventory

When unpackaged cannabis is packaged and labelled for sale, it should be recorded both as a reduction to unpackaged inventory and an addition to packaged inventory.

Scenario: Processing dried cannabis into pre-rolls or gram containers

Company A packages 11.5 kg of dried cannabis into:

• 1,000 of 1 gram pre-rolls (1 kg of dried cannabis)
• 1,000 of 3.5 gram containers (3.5 kg of dried cannabis)
• 1,000 of 7 gram containers (7 kg of dried cannabis)

In the Reports tool, this would be recorded as a 11.5 kg reduction to the unpackaged dried cannabis inventory (Quantity packaged in the "Unpackaged" tab; cell G24) and a 3,000 unit addition to the packaged dried cannabis inventory (Quantity packaged in the "Packaged" tab; cell F9).

Null data

Scenario 1

A new licence holder is planning to submit their 1st monthly report. They do not have any sales or inventory.

Scenario 2

An existing licence holder is planning to close their operations and will need to submit their last monthly report. They do not have any sales or inventory.

Solution for Scenario 1 and 2: In both scenarios, both licence holders are required to submit a monthly report. For Scenario 1, licence holders are required to submit a report for the first month in which they were licensed.

In other words, a licence holder is expected to submit a monthly report regardless of whether they have sales or inventory because the reporting requirement is part of an active licence.

If you are submitting a report by manual entry in CTLS, it is possible to submit "0" values in the reporting fields related to sales and inventory to reflect no sales or no inventory.

In the portal, it is not recommended that fields be left blank (such as null data), as this can lead to poor data quality.

If you prefer to submit a file via .csv file upload and you are using the Reports tool and have no sales or no inventory, you can leave the fields blank and the .csv tab will auto-populate with "0" values and you can upload this .csv file.

The "Business statistics" section of each monthly report is mandatory and must have values.

Reporting sales

While packaged and unpackaged inventory reporting is designed to capture the physical flow of cannabis, sales are intended to capture financial flow and this requires a different reporting process.

Scenario

A licence holder sells and ships 1,000 units of dried cannabis products to a provincial or territorial distributor or retailer.

Solution:

• Packaged inventory reporting: They will first need to report a reduction to their "Dried cannabis (packaged)" inventory. Specifically, the field that they will report 1,000 units of dried cannabis products reduced is: "Reductions to inventory – Quantity shipped – domestic". In the Reports tool, this field can be found in cell G16 of the "Packaged" tab.
• Sales inventory reporting: They will also need to report the sale of 1,000 units to the distributor or retailer in the respective province or territory, along with the corresponding Canadian dollar value net of sales tax. Specifically, the field that they will report 1,000 units sold is: "Sales of dried cannabis for non-medical purposes – To distributor". In the Reports tool, this field can be found in the "Sales" tab. Starting in cell G64 and going to G76 is where the number of packaged units can be reported by the specific province or territory. Starting in cell H64 and going to H76 is where the corresponding Canadian dollar value net of sales tax can be reported, again depending on the specific province or territory. Cells G77 and H77 indicate the total for each column. The same concept applies to other cannabis products, as shown by the other tables in the "Sales" tab.

Drop shipping

In some cases, customers can order cannabis for non-medical purposes through a provincial or territorial distributor's online platform. The provincial or territorial distributor then requests that the licence holder ship the product directly to the customer (commonly referred to as "drop shipping").

Scenario

A customer purchases 20 g of edible cannabis for non-medical purposes in a solid form (for example gummies) through a provincial or territorial distributor's online platform. The provincial or territorial distributor requests that the licence holder ship the product directly to the customer.

Solution:

• Packaged inventory reporting: There is a reduction to the "Packaged edibles (Solids)" inventory. Specifically, the field that they will report this in is: "Reductions to inventory – Quantity shipped – domestic". In the Reports tool, this field can be found in cell G16 of the "Packaged" tab.
• Sales inventory reporting: The licence holder needs to report the sale to the distributor by indicating the quantity sold and the wholesale value. Specifically, the field that they will report the sale in is: "Sale of edibles (solids) for non-medical purposes – To distributor (wholesale)". In the Reports tool, this field can be found in the "Sales" tab. Starting in cell G83 and going to G95 is where the number of packaged units can be reported by the specific province or territory. Starting in cell H83 and going to H95 is where the wholesale value can be reported, depending on the specific province or territory. Cells G96 and H96 indicate the total for each column. The same concept applies to other cannabis products, as shown by the other tables in the "Sales" tab.

Samples

Scenario 1

A licence holder wants to distribute samples to provincially licensed retailers and distributors as part of a promotional effort. They find that the monthly cannabis tracking report does not accept an associated dollar value of $0.

Solution: The reporting requirements for cannabis product samples will vary by province or territory when the samples are provided by licence holders to provincially and territorially authorized distributors and retailers.

Regulated parties should be familiar with all relevant legislation and consult with provinces and territories as applicable.

Although licence holders can provide samples to a person authorized to sell cannabis (such as a provincially or territorially authorized retailer), the retailers may not provide samples to consumers.

Please note that samples must comply with all applicable packaging and labelling rules and Good Production Practices – similar to any cannabis products sold.

Scenario 2

A licence holder receives samples from another licence holder.

Solution: The receiving licence holder should report the samples under the appropriate "Unpackaged" product category under "Additions to inventory – Other". Intra-industry sales applies here with a value of $0.01.

Please note that packaged inventory should reflect what is packaged for sale to consumers at the retail level. However, if a product is packaged but will not be sold to the consumer at the retail level, please report it as "Unpackaged".

Third-party manufacturing (for example packaging and labelling, medical sales)

Scenario 1

A licence holder sends bulk oil for encapsulation to a third-party manufacturer and expects the capsules to be sent back to them.

Solution: Although this is not a sale, there is an inventory reduction of unpackaged cannabis ("Pure intermediates" or "Extracts-ingested", depending on the situation) which is shipped domestically to processors. Record this under "Reductions to inventory – Quantity shipped – domestic – To cultivators and processors".

Once the capsules are received back from the processor, there is an addition to inventory. Record this under "Additions to inventory – Quantity received – domestic" as either a packaged or unpackaged product. If it is a bulk order and not individual containers or packages, then this should be under "Extracts-ingested" (Unpackaged).

Scenario 2

A cultivator sells bulk cannabis product to another licence holder.

Solution: Bulk product is cannabis that is not in individual containers yet and not ready for excise stamping.

To report the sale of bulk product, this should be an inventory reduction in the appropriate unpackaged cannabis product category. Specifically, it should be under "Reductions to inventory – Quantity shipped – domestic – To cultivators and processors".

In addition, this involves an intra-industry sale for unpackaged cannabis. As such, record the weight of cannabis (in kilograms) which was sold and the dollar valuation for the appropriate cannabis product category and province or territory. Specifically, this information should be under "Intra-industry trade – Unpackaged product".

Scenario 3

Licence holder #1 ships bulk unpackaged cannabis product to Licence holder #2 for packaging and application of excise stamps. However, Licence holder #1 retains ownership of the cannabis product and provides the excise stamps. Licence holder #2 sells the packaged cannabis product to a provincial distributor.

Solution: Licence holder #1 needs to report the shipment as "Reductions to inventory – Quantity shipped – domestic – To cultivators and processors" for the appropriate unpackaged cannabis product category.

Licence holder #2 should report the following:

• Additions to inventory – Quantity received – domestic (Unpackaged)
• Reductions to inventory – Quantity packaged and labeled (Unpackaged)
• Additions to inventory – Quantity packaged (Packaged)
• Reductions to inventory – Quantity shipped – domestic (Packaged)

Finally, Licence holder #1 should report the sales since they are receiving the revenues.

Scenario 4

The participants of a third-party manufacturing agreement want to know how to report when there is a licence holder with a medical sales licence that does not allow possession.

Solution: The licence holder (with a medical sales licence without possession) does not report the sale. The processor who is fulfilling the order on their behalf reports the sale and corresponding reductions to their inventory. The holder of the licence for medical sales without possession reports the information related to their registered clients in their monthly report, as well as information related to health care practitioners.

Scenario 5

Opposite to the previous scenario, the participants of a third-party manufacturing agreement want to know how to report when there is a licence holder with a medical sales licence that allows possession.

Solution: The licence holder (with a medical sales licence that allows possession) reports the sale and, if applicable, reductions to inventory. If they do not have inventory, then any processor fulfilling the order through an agreement will report reductions to inventory.

Kief

How to report: Kief used to produce other cannabis products vs. kief sold on its own

Solution:

• Kief which is used to produce other cannabis products should be reported as "Pure intermediate" (Unpackaged)
• Kief sold on its own should be reported under "Extracts - Inhaled"

For example, dried cannabis can undergo an extraction process that results in kief. The kief can be used to manufacture hash products. In this case, the kief is used to produce other cannabis products so it should be reported as "Pure intermediates" (Unpackaged).

Adding other forms of cannabis to dried cannabis products (for example infused pre-rolls)

How to report: Addition of THC to dried or fresh cannabis (for example kief or hash).

Solution: In accordance with Section 99 of the Regulations, products that are classified as dried or fresh cannabis cannot contain added THC.

Products that are classified as "Dried cannabis" cannot be augmented with THC through the addition of kief, hash, or anything else.

Only cannabis products that are extracts, edibles or topicals can be made with cannabis that has been extracted.

Example: A pack of pre-rolls, made with primarily dried flower but with kief or hash added, is classified as "Extracts – Inhaled".

Pure intermediates

Related topics:

• Non-cannabis material mixed with cannabis material
• Infused pre-rolls
• Intra-industry trade

In general, unpackaged pure intermediates are products that are used to create another cannabis product.

Scenario 1

A licence holder wants to know how to report the weight of a cannabis product that has non-cannabis material infused with cannabis material. Specifically, they used 200 mg of THC distillate and infused it with 1 kg of non-cannabis ingredients to create edibles-solids.

Solution: In this example, 200 mg of THC distillate is considered a "Pure intermediate" (Unpackaged). The weight of the infused product is recorded under "Edibles – Solids" (Unpackaged).

Scenario 2

A licence holder wants to report the stages of creating infused pre-rolls. Specifically, the infused pre-rolls are created by mixing 1 kg of dried cannabis with 0.5 kg of hash.

Solution: The 1.5 kg mixed infusion of dried cannabis and hash would be tracked as a "Pure intermediate". Once it is used to create pre-rolls, the 1.5 kg would be tracked as a finished extract under "Extracts – Inhaled".

Scenario 3

A licence holder wants to sell pure intermediates to another licence holder (via intra-industry trade).

Solution: The "Sales" section does not include "pure intermediates". As such, record the sale of pure intermediates under "Sales > Other > Province/territory of sale > Intra-industry trade > Unpackaged product > Dollar value and weight in kg".

The corresponding entry in the "Unpackaged" section can be found under "Unpackaged > Pure intermediates > Reductions to inventory – Quantity shipped – domestic – To cultivators and processors".

Reporting the number of plants moving in and out of Unpackaged inventory

Scenario

A licence holder wants to know how to classify different types of plants.

Solution: Licence holders should classify plants according to whether they are in a vegetative state or whether they are a whole cannabis plant.

A vegetative cannabis plant is a cannabis plant that is not budding or flowering while a whole cannabis plant is one that is budding or flowering.

When moving from vegetative to whole plants, report the reductions to inventory for vegetative plants and then report the additions to inventory for whole plants.

• Vegetative cannabis plants: "Reductions to inventory – Quantity processed" (cell D17 of the Reports tool)
• Whole cannabis plants: "Additions to inventory – Quantity produced" (cell E9 of the Reports tool)

Plant trimmings

Scenario

A licence holder has plant trimmings and processing loss for Vegetative plants (Unpackaged) and Whole plants (Unpackaged).

They see that there is a "Reductions to inventory – Quantity destroyed" field for both plants.

Solution:

Plant trimmings and processing loss is captured in the "Reductions to inventory – Adjustment for drying/processing loss" field for Vegetative plants (Unpackaged) and Whole plants (Unpackaged).

The "Reductions to inventory – Quantity destroyed" field that exists for Packaged and Unpackaged cannabis product categories will capture destruction of "usable" cannabis (for example destruction of dried cannabis, fresh cannabis) or destruction of unwanted/withering plants. It is not referring to drying loss but rather taking the whole bud or plant and tossing it out.

Topicals

Scenario

A licence holder created a 10 g topical using cannabis oil and non-cannabis oil. In the reporting fields, they see that there is a reduction field for "Extracts – Ingested" (Unpackaged) called "Reductions to inventory – Quantity processed" and an addition field for "Topicals" (Unpackaged) called "Additions to inventory - Quantity produced".

Solution: The licence holder would need to report the 10 g produced as a reduction in the "Reductions to inventory – Quantity processed" field for "Extracts – Ingested" (Unpackaged) and then carry it over to the "Additions to inventory – Quantity produced" field for "Topicals" (Unpackaged) as well.