Consultation Document on the Review of the Industrial Hemp Framework

November 4 - December 20, 2013

Office of Controlled Substances
Controlled Substances and Tobacco Directorate

Table of Contents

• 1. Introduction
• 2. Purpose
• 3. Components of the Consultation Document
• 4. Key Issues and Suggested Changes Being Considered to the Industrial Hemp Framework
  • 4.1 The Licence
    • Questions 1, 2, and 3
  • 4.2 THC Testing
    • Questions 4, 5, and 6
  • 4.3 Cultivation
    • Questions 7, 8, and 9
  • 4.4 Controls on the Importation of Viable Hemp Grain
    • Questions 10, 11, and 12
• 5. Other Issues
  • Questions 13 and 14
• 6. Next Steps
• Appendix A: Current Industrial Hemp Framework
• Appendix B: Summary of Suggested Changes to the Industrial Hemp Network

The personal information being collected under this process is for the purpose of obtaining your feedback on the suggested changes being considered to the Industrial Hemp Regulations and framework.  If contact information is provided, it would only be used for the purpose of arranging a potential follow-up discussion on your feedback.  This information is being collected under the authority of the Controlled Drugs and Substances Act.

The personal information you provide is protected under the provisions of the Privacy Act. That Act also includes the right of access to and correction of your personal information. This collection is described in the Standard Personal Information Bank on Outreach Activities (PSU 938). Should you require clarification about this Statement, contact our Access to Information and Privacy Coordinator.

1. Introduction

Industrial hemp is one of the oldest cultivated plants in the world. For centuries, industrial hemp has been used as a source of food and fibre^{Footnote 1}. It was banned in Canada in 1938 because it is part of the Cannabis family of plants (Cannabis sativa L.) and contains the psychoactive ingredient delta-9 tetrahydrocannabinol (THC).

Cannabis and its derivatives, which include hemp, are listed in Schedule II of the Controlled Drugs and Substances Act (CDSA). This means, possession, trafficking, importation, exportation, and production of all varieties of cannabis, regardless of the THC content, are prohibited unless authorized by regulation or via an exemption issued under section 56 of the CDSA.

In the 1980s and 1990s, there was an increased interest in the cultivation of hemp as a potential source of new jobs in the agricultural and industrial sectors. In 1994, Canada began to issue research licences to grow hemp on an experimental basis. Research conducted between 1994 and 1998 showed it could be successfully grown in Canada using low THC varieties.

The Industrial Hemp Regulations (IHR), which allow for the commercial production of industrial hemp came into force on March 12, 1998. The regulations, which ended a nearly 60 year ban on industrial hemp, create a framework for industrial hemp cultivation and production and the development of hemp products. This has resulted in the development of a thriving hemp industry in Canada.

Since the regulations were developed and implemented before the hemp industry was established, some sections of the regulations are no longer meeting the needs of the hemp industry or of the government. Thus, a number of stakeholders including the hemp industry, federal and provincial partners, and relevant agricultural associations have raised concerns regarding various aspects of the industrial hemp framework including the IHR and other related Health Canada policies and manuals^{Footnote 2}. For example, the 2009 Canadian Hemp Industry Review Project (CHIRP) report consolidated industry concerns about the IHR and other regulations/policies that govern the production and marketing of industrial hemp. The concerns highlighted in the CHIRP report mirror many of the concerns raised by individual licence holders.

In addition, in its cross-country consultations with small business, the Government of Canada's Red Tape Reduction Commission (RTRC) noted specific constraints on the hemp industry in Canada and has recommended that Health Canada review the IHR with a view to improving the licensing system for industrial hemp.

Some of the key issues raised with regard to the industrial hemp framework include:

• An annual licensing system linked to the calendar year instead of the agricultural growing season which may create the need for multiple licensing applications within a growing season and places a burden on applicants given the short validity period of licences;
• The administrative and financial burden associated with annual THC testing requirements at the plant breeding, seed production and cultivation levels, and the limited number of authorized samplers;
• The prohibition of cultivation within 1 km of school grounds or public places usually frequented by persons under 18 years of age which may prevent some farmers from cultivating industrial hemp;
• The minimum land requirement of 4 hectares for the cultivation of industrial hemp for grain or fibre which may prevent small-scale industrial hemp cultivation and may prevent farmers with terrain limitations from cultivating industrial hemp;
• Restrictions related to the importation of viable hemp grain; and,
• Other issues such as lack of clarity with the interpretation and intent of some sections of the IHR, lack of specific provisions in the IHR for the issuance of licences to conduct research on industrial hemp and restrictions on the use of the entire hemp plant.

In response, Health Canada is conducting a comprehensive review of the IHR with the key objective of modernizing the regulations and related Health Canada policies and manuals to create a more efficient framework that will benefit the hemp industry, while continuing to protect the health and safety of Canadians.

2. Purpose

The purpose of this document is to:

1. Provide an overview of the IHR review, including key issues that have been raised over the past years and to present some suggested changes being considered to the industrial hemp framework including the IHR and other related Health Canada policies and manuals; and,
2. Seek feedback on the key issues identified and suggested changes being considered as well as any additional issues associated with the industrial hemp framework.

Federal and provincial partners, the hemp industry, relevant agricultural associations and other parties who may have an interest in industrial hemp, are invited to provide comments on this document either online, by email, by mail or in-person. This consultation begins on November 4, 2013 and the deadline for providing comments is December 20, 2013.

3. Components of the Consultation Document

This document provides an overview of the key issues and suggested changes being considered to the industrial hemp framework. They are broken down into four main areas: 1) the licence; 2) THC testing; 3) cultivation; and, 4) controls on the importation of viable hemp grain. Each area includes a brief synopsis of the key issues that have been identified to date, some of the suggested changes that are being considered to address those issues, and the anticipated impacts of those changes on the hemp industry. A series of questions follow each area. Section 5 focuses on other issues which may not have been addressed in previous sections and the document concludes with the next steps in the review process. Appendix A outlines the current industrial hemp framework, and Appendix B provides a summary of the key issues and suggested changes in a chart which can be used for easy reference.

Please note that the suggested changes under consideration and associated questions are not meant to be exhaustive but are intended to stimulate input and build on the issues already identified and other suggested approaches to addressing these issues. Health Canada looks forward to hearing from you on these issues and any other comments you may have.

4. Key Issues and Suggested Changes Being Considered to the Industrial Hemp Framework

In response to the key issues that have been identified by the RTRC and internal and external stakeholders since the enactment of the IHR, Health Canada has developed several suggested changes to the industrial hemp framework. These issues may be addressed through amendments to the IHR, the Industrial Hemp Technical Manual (Technical Manual), the Policy on the Exemption of Industrial Hemp Varieties from THC Testing (THC Exemption Policy) and the Policy for the Inclusion of Cannabis Varieties on the List of Approved Cultivars.

4.1 The Licence

4.1.1 Key Issues Identified

Short duration and validity of hemp licences:

Under the current IHR, licences and authorizations are valid for up to one year, based on the calendar year for which they are issued, i.e. all licences expire on December 31. However, the majority of licence applications for cultivation are not submitted until sometime between mid-March and June because the information required to complete a licence application is often not available until that time; therefore, the licence is only valid for 6 or 7 months.

Many hemp farmers use the winter months to plan out their growing season including determining the number of hectares to be cultivated, the location of the sites to be cultivated and the hemp variety being sown. Since a licence application must include the above determinants as well as licence legal land descriptions and Global Positioning System coordinates for each site to be cultivated, many licence applications cannot be completed until early spring.

Further, the List of Approved Cultivars(LOAC)^{Footnote 3} which contains the specific hemp varieties that are approved to be grown in Canada as well as varieties that are exempt from THC testing for that calendar year is often not released until late February or early March (please refer to section 4.2.1 for further details). This may impact on the application process for a licence as applicants must indicate which approved cultivar they will be planting in their licence application.

Licensing based on calendar year instead of growing season can create a need for multiple licence applications:

Industrial hemp is normally planted between April and June, harvesting takes place during August and September and drying, cleaning, conditioning and preparing industrial hemp for the market is done in the fall. Although farmers begin to sell their crop in late fall, many do not sell their full crop by year's end. In order to comply with the regulations, these farmers must apply (before December 31st) for an authorization for possession of hemp for the purpose of storage or apply for a new licence to cover the possession and sale of industrial hemp.^{Footnote 4}

Farmers who have remaining grain from the previous year and are also planning to cultivate in the new year, will need to apply for a licence covering the possession and sale of industrial hemp in December and then apply for a cultivation licence in the spring.^{Footnote 5} This can impose a burden on some licensees, who in order to adhere to the regulations, need to apply to Health Canada twice annually.

4.1.2 Suggested Changes Being Considered to the Industrial Hemp Framework

1. Increase the validity period of licences from one year to a maximum of four years based on the issuance date of the licence. Licensees would need to contact Health Canada to request an amendment to their licence regarding any changes such as those to field locations at the beginning of the growing season.

4.1.3 Anticipated Impacts

It is anticipated that the above suggested changes under consideration would:

• align more closely with the natural hemp growing season and reduce the need to apply for an additional licence or authorization to store or sell industrial hemp past the calendar year;
• reduce paperwork burden as hemp farmers would most likely receive a multi-year licence; and,
• enable hemp farmers to develop a multi-year business plan.

Questions:

1. Based on your experience, please provide us with your feedback/comments on the suggested changes being considered with respect to the industrial hemp licence.

2. If there is another alternative that better addresses the challenges that you have experienced with respect to the licence, please provide further details.

3. Are there other issues/challenges that you have experienced with respect to the licence that have not been included above? If so, please provide specific examples of these challenges.

4.2 THC Testing

4.2.1 Key Issues Identified

Multiple Levels of Testing:

THC testing is currently required at three stages in the hemp growing life cycle (plant breeding, seed production, and grain production levels). In addition, the requirement to use pedigreed seed obliges farmers to buy their seed from an authorized seed distributor or grower (whose seeds have undergone THC testing), who themselves bought their seeds from a licensed hemp plant breeder (whose parent seeds also underwent THC testing). Thus, this creates duplication as a crop produced by a hemp farmer has been triple tested to ensure a THC level of 0.3% or less.

Limited number of authorized samplers:

The Technical Manual sets out the criteria for who can be an authorized sampler and conduct field sampling of industrial hemp. Currently, there are a limited number of authorized samplers to meet the needs of licensed growers. In addition, sampling procedures in the Technical Manual include specific timing when hemp fields must be sampled (when the first seeds of 50% of the plants are resistant to compression)^{Footnote 6} which means that some hemp farmers may have difficulty locating a sampler to sample their field within the specified growth period. These issues thereby make it difficult for some licensees to meet licensing requirements.

Delays in THC testing from competent laboratories:

In order to conform to the IHR, industrial hemp samples must be tested by a competent laboratory licensed under section 9 of the Narcotic Control Regulations. Currently, there are only three competent laboratories in Canada and given that THC testing is only one of many services provided by these laboratories, they can take several months to complete testing. Sampling is most often done at time of harvesting, which typically occurs in August or September. With testing delays of 3 to 5 months only half of the THC results are usually completed and submitted to Health Canada by December 31st. The late access to test results creates delays in the development of the LOAC as THC test results are used as the basis for accepting or rejecting hemp varieties for inclusion on the LOAC. This in turn delays licence application and approval because licensees' must indicate which approved cultivar they will be planting when they apply for a new licence (please refer to section 4.1.1 for further details).

Cost of sampling and testing:

Under the IHR, it is the licensee's responsibility to pay to have samples of their industrial hemp crop collected by an authorized sampler. This includes a fee for professional services to have each of their fields sampled. In addition, a limited amount of authorized samplers has meant that farmers who do not have access to a sampler in their region may need to hire an authorized sampler from another region or province and cover additional costs such as transportation, accommodation and meals.

Licensees also have to cover the costs associated with THC testing by a competent laboratory. Testing costs are routinely between $140 - $180 per field, and thus sampling and testing fees can add up for licensees with numerous fields.

Exemption Criteria:

Health Canada's THC Exemption Policy outlines the criteria under which an exemption from THC testing is allowed. The criteria include the requirement for three consecutive years of THC data which limits the amount of exempt varieties. If there is insufficient cultivation of a particular variety for one year, then there would not be any THC data for that variety and the three year testing cycle will have to start again. The requirement that average test results must be no higher than 0.15% also disqualifies some varieties for exemption status whose average is well below 0.3% but higher than 0.15%. Stakeholders have noted that this criterion creates barriers to varieties being exempted

4.2.2 Suggested Changes Being Considered to the Industrial Hemp Framework

Suggested changes to the IHR:

• a. Eliminate the requirement for THC testing at the grain production level, while continuing to require THC testing at the plant breeding and seed production levels. Pedigreed seed standards would remain in place to ensure the use of seed that produce plants with THC levels of 0.3% or less; and,

Suggested approach to the THC Exemption Policy:

• b. Conduct a thorough review of the criteria outlined in the THC Exemption Policy. Consideration would be given to raising the allowed average THC test results and shortening or removing the requirement for "consecutive" years of test data.

4.2.3 Anticipated Impacts

The suggested changes are expected to:

• Eliminate THC sampling and testing costs for hemp farmers;
• Greatly reduce the THC testing delay caused by a backlog of THC tests;
• Reduce duplication caused by THC testing at all three stages of the growing cycle;
• Support a more timely release of the LOAC; and,
• Support the development of a more flexible exemption policy.

Questions:

4. Based on your experience, please provide us with your feedback/comments on the suggested changes being considered with respect to THC testing.

5. If there is another alternative that better addresses the challenges that you have experienced with respect to THC testing, please provide further details.

6. Are there other issues/challenges that you have experienced with respect to THC testing that have not been included above? If so, please provide specific examples of these challenges.

4.3 Cultivation

4.3.1. Key Issues Identified

Minimum land requirement:

Stakeholders have highlighted that due to terrain limitations, such as mountains, rivers and rocky terrain, some farmers are unable to meet the minimum land requirement of 4 hectares within a "single area" for the cultivation of viable hemp grain or fibre. This minimum requirement also prevents small scale industrial hemp cultivation and creates barriers for the use of industrial hemp for research and development, varietal trials and for first-time producers wanting to try out hemp cultivation before committing to full-scale cultivation.

In other cases, farmers' fields may have small divisions due to hills, ravines and swamps or manmade barriers such as drainage ditches, pathways and fences which might prevent them from being considered a "single area." Thus, farmers who must break up their fields into separate areas because of these barriers may also have difficulty meeting the 4 hectare minimum requirement for each new "single area".

Limitations on cultivation locations:

The prohibition within 1 km of schools and public places usually frequented by minors under the age of 18 (which can apply to shopping centres, restaurants, grocery stores, movie theatres, parks, sports facilities, etc) has been perceived by some as an unnecessary barrier to cultivation near these types of facilities.

4.3.2 Suggested Changes Being Considered to the Industrial Hemp Framework

• a. Reduction in the minimum acreage requirement from 4 hectares to 2 hectares;
• b. Inclusion of clear criteria of what would be considered a single area for the cultivation of industrial hemp. The suggested criteria would clearly delineate what is considered a continuous field based on systematic criteria and would allow for small divisions within a single field; and,
• c1. Retain the prohibition on cultivation within 1 km from school grounds. Reduce the prohibition on cultivation in other areas to 500 metres of the following specific areas: community centres, recreation centres, community arenas, sports fields, public playgrounds, public pools, public parks or public libraries; OR,
• c2. Remove the prohibition on cultivation locations entirely.

4.3.3 Anticipated Impacts

The suggested changes are expected to:

• Allow a number of farmers with smaller fields to cultivate industrial hemp;
• Remove some barriers to the development of small-scale production of industrial hemp and the use of industrial hemp for research and development, varietal trials and first time hemp producers who want to produce on a smaller scale in their first year; and,

Additional impacts for c1:

• Allow farmers flexibility to cultivate in closer proximity to a defined set of public places; OR,

Additional impacts for c2:

• Allow farmers flexibility to cultivate near schools and/or public places without restriction.

Questions:

7. Based on your experience, please provide us with your feedback/comments on the suggested changes being considered with respect to cultivation.

8. If there is another alternative that better addresses the challenges that you have experienced with respect to cultivation, please provide further details.

9. Are there other issues/challenges that you have experienced with respect to cultivation that have not been included above? If so, please provide specific examples of these challenges.

4.4 Controls on the Importation of Viable Hemp Grain

4.4.1 Key Issues Identified

Barriers to the importation of viable hemp grain:

The IHR requires importers to have a document attached to their shipment that has been issued by the competent authority of a country set out in the List of Countries Approved for the Importation of Viable Grain (LCAIVG), published by Health Canada. Since the coming into force of the IHR in 1998, there have not been any countries designated on the LCAIVG. This causes a barrier to importation.

Short validity period of import and export permits:

The hemp industry has expressed concerns that the maximum validity period of three months for import and export permits is too short for contracts and shipping matters to be completed prior to the expiration of a permit.

4.4.2 Suggested Changes Being Considered to the Industrial Hemp Framework

1. Remove the reference to an importation list in the IHR and require hemp importers to provide Health Canada with documentation demonstrating that the country from which they wish to import has similar standards for the varieties that are approved in Canada. Imported shipments would also need to be accompanied by THC testing results from an accredited international laboratory demonstrating that the grain to be imported contains THC levels of 0.3% or less; and,
2. Increase the validity period of import and export permits from a maximum of three months, to a maximum of 180 days (approximately 6 months).

4.4.3 Anticipated Impacts

The suggested changes are expected to:

• Allow the hemp industry the opportunity to import viable hemp grain from a variety of countries (should they have similar standards for the varieties that are approved in Canada); and,
• Allow hemp importers additional time to effect shipment and finalize related paperwork prior to the expiry of their import and export permits.

Questions:

10. Based on your experience, please provide us with your feedback/comments on the suggested changes being considered with respect to the importation of viable hemp grain.

11. If there is another alternative that better addresses the challenges that you have experienced with respect to the importation of viable hemp grain, please provide further details.

12. Are there other issues/challenges that you have experienced with respect to the importation of viable hemp grain that have not been included above? If so, please provide specific examples of these challenges.

5. Other Issues

In addition to the key issues and suggested changes to the industrial hemp framework that have been presented in this document, some of the other issues that may need to be addressed include:

• Lack of clarity with the interpretation and intent of some sections of the IHR;
• Inability to use the entire industrial hemp plant, sprouts or the leaves, flowers or bracts of the industrial hemp plant;
• Concerns regarding the methods and criteria used to develop the LOAC;
• Update needed to the verification methods for testing in the Technical Manual;
• Lack of specific provisions in the IHR for the issuance of licences to conduct research on industrial hemp;
• Concerns regarding labelling requirements at the wholesale level;
• Need for additional methods to render seeds non-viable; and,
• Criminal record check requirements for any officers, directors or partners of corporations, cooperatives or partnerships are seen by stakeholders as burdensome.

Questions:

13. Have you experienced any of the above issues/challenges? If so, please describe how have you been impacted by these challenges.

14. Have you experienced other issues with the regulations or associated Health Canada policies or manuals that have not yet been captured above? If so, please provide specific examples of these issues and the challenges associated with them.

Please note that the issues highlighted in this document are not meant to be exhaustive and input regarding any other issues with the IHR is encouraged. Health Canada is committed to reviewing any issues/concerns with the IHR and other related policies and manuals in order to help assure that the IHR and associated Health Canada policies are as responsive to the needs of the hemp industry, as possible, while protecting the health and safety of Canadians.

15. Please provide any further comments you may have with respect to the review of the IHR.

From the following list, please indicate which type of stakeholder group you belong to.

• Industrial hemp farmer
• Industrial hemp processor
• Academia/education or research
• Municipal, provincial, territorial or federal government
• Other (specify)

If you choose to provide your contact information, it would only be used to contact you for further information regarding the responses you provided. Please refer to the full privacy statement for further details.

May we contact you?

• Yes
• No

If yes:
Please provide your name and email or telephone number below.

Name:

E-mail: or Telephone number:

Clicking "Submit" will submit all the responses and personal information you have entered on this web page to the Regulatory Policy Division of the Office of Controlled Substances.

6. Next Steps

Input on the issues and suggested changes being considered in this document will help inform Health Canada's review of the industrial hemp framework. Following the completion of the stakeholder consultation process, Health Canada plans to propose amendments to the IHR, in accordance with the government policy on regulations, as well as update other related Health Canada policies and manuals. There will be another opportunity to provide input on the proposed amendments to the IHR during the 75 day comment period following the pre-publication of the regulatory proposal in the Canada Gazette, Part I.

Appendix A: Current Industrial Hemp Framework

Current Framework

The Industrial Hemp Regulations (IHR) set out controls related to the importation, exportation, possession, production, sale, provision, transport, sending or delivering of industrial hemp.

To be eligible for a licence to cultivate hemp for industrial purposes, the following key requirements must be met:

• proposed cultivation areas must meet the minimum acreage required by the IHR, i.e., 4 hectares (for the cultivation of viable grain or for fibre) and 0.4 hectares (for cultivation of seed, unless the applicant is a plant breeder);
• growers may only cultivate pedigreed seed of a variety listed on the Health Canada List of Approved Cultivars (LOAC) (published annually);
• growers must provide Global Positioning System coordinates for the cultivation area;
• applicants must not have a criminal record indicating a designated drug offence in the previous 10 years; and
• applicants must have adequate security and record-keeping mechanisms in place.

Licences issued under the IHR are valid for up to one calendar year, and expire on December 31. They must be renewed annually.

All parties licensed to cultivate industrial hemp are required to:

• have samples taken and tested on an annual basis to determine that their plants do not contain more than 0.3% THC; and,
• ensure sampling is carried out by authorized samplers as designated by Health Canada.

Under the IHR:

• industrial hemp seeds must be of a variety listed in the LOAC;
• plants and plant parts of the genera Cannabis, the leaves and flowering heads of which do not contain more than 0.3% THC when sampled and tested in the approved manner; and,
• products made or derived from hemp must not contain more than 10 micrograms of THC per gram.

Appendix B: Summary of Suggested Changes to the Industrial Hemp Framework