What industry needs to know about cannabis

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Impact of the law and regulations on industry

The Cannabis Act and its supporting regulations came into force on October 17, 2018. Health Canada is now accepting applications from those who want to become a cannabis licence holder under the Act.

The amended Cannabis Regulations came into force on October 17, 2019, establishing a regulatory framework for these new products:

  • edible cannabis
  • cannabis extracts
  • cannabis topicals

The expert Task Force on Cannabis Legalization and Regulation recommended that the Government permit the legal sale of these additional products once regulatory controls were in place. Giving adults legal access to a broader range of cannabis products will help to achieve the Government's objective of displacing the illegal market and keeping profits out of the hands of criminals and organized crime.

Apply for or amend a federal licence

Cannabis licence holders may need 2 licences: 1 from Health Canada and, possibly, 1 from the Canada Revenue Agency (CRA).

Health Canada

You must have a licence from Health Canada to:

  • grow cannabis commercially (large or small scale)
  • process cannabis into finished products (including packaging and labelling)
  • sell cannabis for medical purposes
  • conduct tests on cannabis
  • conduct research with cannabis

We describe application requirements for Health Canada on the Apply for a licence under the Cannabis Act and Regulations page. This page also includes information on managing a licence, including renewing or amending a licence.

Note: Holders of a cannabis processing licence who are interested in producing the new products (edible cannabis, cannabis topicals and cannabis extracts) will require amendments to their licences. Health Canada has contacted processing licence holders with information on the timelines and process to apply for these amendments.

Apply for a licence from the Canada Revenue Agency to sell cannabis

Cultivators and processors of cannabis products are required to obtain a cannabis licence from the CRA.

Once licensed, they are also required to:

  1. buy and apply cannabis excise stamps to their products (if they package cannabis products)
  2. calculate the duty on their sales
  3. file their return and send the excise duty to the CRA

An excise stamp must be present on all legally produced cannabis products available for purchase, except for products with less than 0.3% THC or no THC).

You may buy cannabis excise stamps only if you have obtained a cannabis licence from the CRA.

If you want to sell cannabis for non-medical purposes you must refer to the relevant provincial or territorial licensing authority.

Cost Recovery

As of October 17, 2018, fees apply to these classes of licences:

  • cultivation (standard, micro, nursery)
  • processing (standard, micro)
  • sales for medical purposes

These fees are for:

  • screening licence applications
  • conducting security screening of key persons
  • reviewing applications to import or export cannabis for scientific or medical purposes
  • covering other regulatory costs, including:
    • detailed review of licence applications
    • the issuance of licences
    • inspections
    • compliance and enforcement activities

Packaging and labelling requirements

Industry must follow plain packaging and labelling requirements for cannabis products.

These requirements are designed to:

  • protect against accidental consumption
  • ensure products are not appealing to children and youth
  • give consumers the information they need to make informed decisions before choosing to use cannabis

Prohibitions on promotion

The Cannabis Act prohibits any unauthorized promotion of:

  • cannabis
  • cannabis accessories
  • services related to cannabis

Cannabis Tracking and Licensing System

Health Canada has an online Cannabis Tracking and Licensing System. This system allows industry to submit and view the progress of applications online. It also allows industry to submit amendments to licences and inventory reports.

The Health Canada cannabis tracking system:

  • enables the tracking of cannabis
  • prevents legal cannabis from being diverted to the illegal market
  • prevents illegal cannabis from being introduced into the legal market

The system tracks the movement of cannabis from cultivation, to processing, to sale.

The system does not include information on individual consumers. It protects confidential business information.

A Ministerial Order setting reporting requirements for the cannabis tracking system came into force on October 17, 2018.

A new Ministerial Order came into force on October 17, 2019. It adds reporting requirements for:

  • edible cannabis
  • cannabis extracts
  • cannabis topicals

All those with a federal licence to cultivate and process cannabis, and provinces and territories, are required to submit monthly tracking reports through the cannabis tracking system.

Information on reporting requirements and procedures is available online.

Compliance and enforcement under the Cannabis Act

Industry (licensed or not) must comply with the Cannabis Act and its regulations and is expected to:

  • understand the law and its obligations
  • understand and cooperate with inspectors
  • comply with orders from Health Canada

Please review Health Canada's compliance and enforcement policy.

Leaving Canada if you are involved in the cannabis industry in Canada

The legalization and regulation of cannabis in Canada has not changed Canada's border rules. It is illegal to take cannabis across Canada's international borders.

If you try to travel internationally with any amount of cannabis in your possession you could be subject to serious criminal penalties both at home and abroad. You could also be denied entry at your destination country if you have previously used cannabis or any substance prohibited by local laws.

Canadians travelling to the U.S. for reasons related to the cannabis industry may be denied entry.

Canadian companies engaging in the cannabis industry in the U.S. may face risks of prosecution or penalties under U.S. law and regulations, including those that criminalize the management, financing and possession of equipment and materials associated with cannabis.

Exports and imports of cannabis

The Cannabis Act prohibits any company from exporting or importing cannabis for any purposes other than medical or scientific purposes.

There are risks for companies doing business in the cannabis industry in international markets. Make sure you seek advice from legal counsel in the prospective export market before engaging in any kind of commercial activity related to cannabis abroad.

Any foreign company interested in investing in Canada's cannabis industry should fully understand relevant Canadian federal and provincial laws and regulations.

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