What industry needs to know about cannabis

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Impact of the new 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.

If you are a licensed producer of cannabis for medical purposes under the previous Access to Cannabis for Medical Purposes Regulations and have not yet transferred your licence under the Cannabis Act, please contact Health Canada.

In December, 2018, we began consulting the public on proposed changes to the Cannabis Regulations that would enable licensed processors to produce and sell three new classes of cannabis: edible cannabis, cannabis extracts and cannabis topicals.

The expert Task Force on Cannabis Legalization and Regulation recommended that we permit the legal sale of these products once regulatory controls are in place. Giving adults legal access to 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.

The proposed amendments to the regulations address the public health and safety risks posed by these classes of cannabis.

The public consultation closed on February 20, 2019. We will consider the views and comments we received during the consultation when finalizing the amendments to the Cannabis Regulations.

The legal production and sale of edible cannabis, cannabis extracts and cannabis topicals will be permitted no later than October 17, 2019.

Apply for or amend a 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 for sale or produce cannabis products commercially (large or small scale)
  • sell cannabis for medical purposes
  • conduct tests on cannabis
  • conduct research with cannabis

Effective May 8, 2019, Health Canada introduced changes to align the approach to cannabis licensing with the approach of other regulated sectors, such as pharmaceuticals.

Application requirements for Health Canada are described on the Apply for a licence under the Cannabis Act and Regulations page.

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

Cultivators, producers and packagers 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 cannabis products that have been legally produced and are available for purchase.

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

Packaging and labelling requirements under the new Act

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
  • provide consumers with information they need to make informed decisions before using cannabis

Cannabis Tracking and Licensing System

Health Canada has launched a new 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 as well as 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

It builds on the reporting system for cannabis for medical purposes that was in place for nearly 5 years. 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.

The Ministerial Order regarding the cannabis tracking system was published in the Canada Gazette, Part II, on September 5, 2018. It came into force on October 17, 2018.

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

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 are expected to:

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

Please see Health Canada's compliance and enforcement policy.

Prohibitions on promotion

Prohibitions against cannabis promotion under the Cannabis Act apply to you if you are involved with promoting:

  • cannabis
  • cannabis accessories
  • services related to cannabis

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

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 deemed inadmissible.

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

It is prohibited for any company to export or import cannabis for any purposes other than medical or scientific purposes under the Cannabis Act.

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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