Canada Gazette, Part I, Volume 152, Number 51: Regulations Amending the Cannabis Regulations (New Classes of Cannabis)

December 22, 2018

Statutory authority

Cannabis Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations or the Order.)

Executive summary

Issues: The Cannabis Act will authorize the legal sale of “edibles containing cannabis” and “cannabis concentrates” one year following the coming into force of the Act. Amendments to the Cannabis Regulations are required to address the public health and public safety risks of these new classes of cannabis, and must be brought into force by no later than October 17, 2019. Description: It is proposed to amend Schedule 4 to the Cannabis Act to add three new classes of cannabis that could be legally sold by federal licence holders and provincially and territorially authorized distributors and retailers. Those three new classes would be “edible cannabis,” “cannabis extracts,” and “cannabis topicals.” Consistent with the comprehensive public health approach to the regulation of all cannabis products established by the Cannabis Regulations, it is also proposed to amend the Cannabis Regulations to establish new regulatory controls to address the public health and public safety risks associated with these new classes of cannabis, including their appeal to youth and the risks of accidental consumption, overconsumption, and foodborne illness, among other risks. These controls would include restrictions on product composition and ingredients, tetrahydrocannabinol (THC) limits, and new requirements pertaining to packaging and labelling, good production practices and record keeping. At the same time, it is proposed to amend the Cannabis Regulations to allow for a broader variety of product forms within these new classes of cannabis, consistent with the Government’s objective of displacing the illegal market. Rationale: The proposed amendments to the Cannabis Regulations are estimated to generate a net cost to federal licence holders of $40.5 million net present value over a 10-year period (or $5.8 million annually). In contrast, the public health and public safety benefits resulting from the current proposal are considerable, even if they cannot be quantified. It is expected that these benefits would outweigh the costs. As required by the “One-for-One” Rule, the incremental increase in administrative burden for industry resulting from the proposed amendments has been estimated at $352,876 net present value over the 10-year period (or $50,242 annually). This increase in administrative burden is mostly related to the proposed new record-keeping requirements. The current proposal is subject to a public comment period ending 60 days following its publication in the Canada Gazette, Part I. All input received through the public consultation will inform development of the final regulations. Given the provincial and territorial responsibility for distribution and retail sale of cannabis, Health Canada will hold bilateral meetings with representatives of all provincial and territorial governments to help ensure their perspectives and feedback are considered in the development of final regulations. Engagement with Indigenous peoples has been ongoing throughout the development of the Cannabis Act and its regulations. Health Canada welcomes the views of Indigenous peoples with respect to the new classes of cannabis and the current proposal, and will continue to engage and work closely with Indigenous governments, organizations and communities across the country to help ensure the specific interests of Indigenous peoples are carefully considered.

Issues

The Cannabis Act (the Act) will authorize the legal sale of “edibles containing cannabis” and “cannabis concentrates” one year following the coming into force of the Act (i.e. on October 17, 2019), unless section 193.1 of the Act is brought into force sooner, by Order. Amendments to the Cannabis Regulations (the Regulations) are required to address the public health and public safety risks of these new classes of cannabis, and must be brought into force by no later than October 17, 2019.

Consistent with the comprehensive public health approach to the regulation of all cannabis products established by the Regulations, a series of targeted amendments to the Regulations are proposed to address the public health and public safety risks associated with edible cannabis and cannabis products with concentrated levels of phytocannabinoids. At the same time, the current proposal would enable a comprehensive range of cannabis product forms by regulating three new product classes, specifically “edible cannabis,” “cannabis extracts,” and “cannabis topicals.”

Background

In the 2015 Speech from the Throne, the Government of Canada committed to legalizing, strictly regulating, and restricting access to cannabis. In June 2016, the Task Force on Cannabis Legalization and Regulation (the Task Force) was established. Composed of nine distinguished experts in public health, substance use, law enforcement and justice, the Task Force was mandated to consult broadly with Canadians and to provide advice on the design of a new legislative and regulatory framework. The Task Force consulted extensively on a detailed discussion paper with provinces and territories, Indigenous governments and organizations and experts in relevant fields, including public health, substance use, criminal justice, law enforcement and industry, as well as with youth.

The Task Force received more than 30 000 responses to its public consultation and more than 300 written submissions from organizations or individuals. It delivered its final report, A Framework for the Legalization and Regulation of Cannabis in Canada, on December 13, 2016. In it, the Task Force made 85 recommendations for the establishment of a comprehensive framework for the legalization and regulation of cannabis across five themes: minimizing harms of use; establishing a safe and responsible supply chain; enforcing public safety and protection; medical access; and implementation.

On April 13, 2017, the Government of Canada introduced Bill C-45 (the Cannabis Act) in the House of Commons. Based in large part on the advice provided by the Task Force, the Cannabis Act created the foundation for a comprehensive national framework to provide restricted access to regulated cannabis, and to control its production, distribution, sale, importation, exportation, and possession. Following Parliamentary study, the Cannabis Act received royal assent on June 21, 2018, and was brought into force on October 17, 2018.

As set out in section 7, the purpose of the Act is to protect public health and public safety and in particular to

Protect the health of young persons by restricting their access to cannabis;

Protect young persons and others from inducements to use cannabis;

Provide for the legal production of cannabis to reduce illegal activities in relation to cannabis;

Deter illegal activities in relation to cannabis through appropriate sanctions and enforcement measures;

Reduce the burden on the criminal justice system in relation to cannabis;

Provide access to a quality-controlled supply of cannabis; and

Enhance public awareness of the health risks associated with cannabis use.

The Cannabis Regulations, which also came into force on October 17, 2018, established the rules and standards that apply to the authorized production, distribution, sale, importation and exportation of cannabis (with the exception of industrial hemp), as well as other related activities respecting the five classes of cannabis (i.e. dried cannabis, fresh cannabis, cannabis oil, cannabis plants, and cannabis plant seeds) that can be sold by authorized persons.

The Cannabis Regulations set out a comprehensive public health approach to regulating the production, packaging and labelling of all classes of cannabis. More specifically, under the Regulations

Licences are required in order to cultivate or process cannabis, to sell cannabis for medical purposes, to manufacture prescription drugs containing cannabis, or to conduct analytical testing of or research with cannabis;

Licence holders are subject to strict physical and personnel security requirements;

The production of cannabis products by licence holders is subject to strict rules and standards, including limits on tetrahydrocannabinol (THC) content and the use of additives, as well as good production practices;

Plain packaging and labelling is required for cannabis products, including strict limits on the use of logos, colours, and branding; and

Continued access to cannabis for medical purposes is provided for patients who need it.

Further information on the Regulations is available in the Regulatory Impact Analysis Statement that was published in the Canada Gazette, Part II, on July 11, 2018.

Objective

Building on the framework established by the current Regulations, the objective of this regulatory proposal is to ensure that a strict regulatory framework is in place by no later than October 17, 2019, to address the unique public health and public safety risks posed by edible cannabis, cannabis extracts, and cannabis topicals.

In particular, the current proposal aims to protect public health and public safety by reducing the

Appeal of such products to youth;

Risk of accidental consumption, especially of edible cannabis, including by youth;

Risk of overconsumption associated with edible cannabis (because of the delay in experiencing the effects of cannabis when it is ingested rather than inhaled) and cannabis products with a higher concentration of THC;

Risk of foodborne illness associated with the production and consumption of edible cannabis;

Risk of dependence and other negative health outcomes associated with cannabis products with a higher concentration of THC or cannabis products that contain ethyl alcohol or caffeine; and

Potential health and, in some cases, safety risks associated with the use of certain solvents, carriers, and diluents.

At the same time, consistent with the objective as set out in section 7 of the Act to provide for the legal production of cannabis to reduce illegal activities in relation to cannabis, the current regulatory proposal aims to enable a comprehensive range of cannabis products by adding three new classes of cannabis to Schedule 4, and by making targeted amendments to the Regulations to allow for a broader variety of product forms within these new classes of cannabis.

Finally, a number of minor amendments to the Regulations are proposed to clarify the original policy intent behind the provisions being amended or to facilitate compliance with the regulatory requirements.

Description

The development of the current proposal, as well as the Cannabis Regulations, has been informed by

Consultations conducted by the Task Force on Cannabis Legalization and Regulation; The experience of U.S. jurisdictions that have legalized and regulated access to cannabis; Parliamentary study of Bill C-45; Consultations supporting the development of the Cannabis Regulations; and Ongoing feedback from regulated parties and other stakeholders.

The current proposal has two main parts:

It is proposed that Schedule 4 to the Cannabis Act be amended by Order in Council to add three new classes of cannabis that could be sold by authorized persons, namely “edible cannabis,” “cannabis extracts,” and “cannabis topicals.” It is proposed that the Cannabis Regulations be amended to establish new regulatory controls to address the public health and public safety risks associated with these new classes of cannabis.

The proposed amendments to the Regulations focus on those necessary to regulate the new classes of cannabis, and are based on the following policy principles:

New classes of cannabis are integrated into the existing cannabis control framework: Consistent with the Government of Canada’s stated public health and public safety objectives, all cannabis products are to be strictly regulated under the Cannabis Act and its regulations.

Proposed new requirements are evidence-informed: New regulatory requirements are based on the best-available public health information on the risks and harms posed by these new classes of cannabis, as well as relevant experience from U.S. jurisdictions that have legalized and regulated access to cannabis.

Proposed new requirements are consistent with analogous regulatory frameworks: To the extent that they support the Government’s stated public health and public safety objectives, new regulatory requirements draw from, and are consistent with, other relevant control frameworks, including those for food, vaping products and cosmetics.

Amendments would enable a comprehensive range of product forms: Consistent with the objective of enabling the legal industry to displace the illegal industry, amendments to the Regulations are proposed with a view to enabling a comprehensive range of product forms intended for human use.

Schedule 4: Classes of cannabis that an authorized person may sell

Schedule 4 to the Act sets out the classes of cannabis that can legally be sold by “authorized persons,” including federal licence holders and provincially and territorially authorized distributors and retailers. Currently, the following five classes of cannabis are listed on Schedule 4: dried cannabis, cannabis oil, fresh cannabis, cannabis plants, and cannabis plant seeds.

As per section 193.1 and subsection 226(2) of the Act, “edibles containing cannabis” and “cannabis concentrates” must be added to Schedule 4 to the Act by no later than October 17, 2019. The Governor in Council may authorize the legal sale of these product classes in advance of this date, by order.

Therefore, it is proposed that the Governor in Council make an order adding three new classes of cannabis to Schedule 4. These three classes of cannabis would be as follows:

Edible cannabis: products containing cannabis that are intended to be consumed in the same manner as food (i.e. eaten or drunk);

products containing cannabis that are intended to be consumed in the same manner as food (i.e. eaten or drunk); Cannabis extracts: products that are produced using extraction processing methods or by synthesizing phytocannabinoids; and

products that are produced using extraction processing methods or by synthesizing phytocannabinoids; and Cannabis topicals: products that include cannabis as an ingredient and that are intended to be used on external body surfaces (i.e. skin, hair, and nails).

It is also proposed that an order would be made to remove “cannabis oil” from Schedule 4 six months after the amended Regulations come into force, in order to provide for an appropriate transition period. Following the six-month transition period, cannabis oil would be subsumed under the new product classes.

As will be described in greater detail below, while the term “cannabis concentrates” would not be one of the names of the new permitted classes of cannabis listed on Schedule 4, the current proposal would nonetheless permit the legal production and sale of cannabis products with higher concentrations of THC, consistent with the will of Parliament.

Licensing

Part 2 of the Regulations establishes the classes (e.g. cultivation, processing, sale) and subclasses (e.g. standard and micro-cultivation, standard and micro-processing) of licences that authorize activities with cannabis at the federal level, as well as the rules and requirements that apply to each licence class and subclass.

No major amendments to Part 2 are proposed. As is currently the case for dried cannabis, fresh cannabis and cannabis oil, it is proposed that a processing licence (standard or micro) would be required in order to manufacture edible cannabis, cannabis extracts and cannabis topicals, and to package and label these types of cannabis products for sale to consumers.

The following minor amendments are proposed:

It is proposed that a past conviction for an offence under the Safe Food for Canadians Act (SFCA) or any of the Acts that will be repealed when the SFCA comes into force would be added as a ground for the refusal or revocation of a processing licence, if the conviction occurred within the preceding 10 years.

Section 19 of the Regulations states that a licensed processor must retain the services of an individual with the necessary training, experience and technical knowledge to act as a quality assurance person (QAP). It is proposed that the Regulations would specify that the QAP would need to have the necessary qualifications to oversee the production of all classes of cannabis that the licensed processor is authorized to produce (including training, experience, and technical knowledge of both good production practices and product rules). In the event that the QAP does not have the requisite knowledge and training with respect to edible cannabis, the licence holder would be required to retain the services of another individual with the necessary qualifications.

Section 46 of the Regulations requires licence holders to establish and maintain a system of control to support efficient product recalls. Building on that requirement, it is proposed to add a new requirement that licence holders conduct, at least once every 12 months, a recall simulation to evaluate the effectiveness of their recall systems and processes, and that they prepare a document describing how the simulation was conducted and the results. This document would need to be kept for at least two years. This is adapted from a requirement under the Safe Food for Canadians Regulations (SFCR).

Personnel and physical security

Parts 3 and 4 of the Regulations set out requirements pertaining to security clearances and physical security measures, respectively. No amendments are proposed to either part. Licence holders conducting activities with the new classes of cannabis would be subject to the same strict physical and personnel security requirements established under the Regulations.

Good production practices

Part 5 of the Regulations establishes requirements pertaining to the production, distribution and storage of cannabis to control the quality of cannabis produced by federal licence holders (i.e. good production practices). Requirements set out in Part 5 apply to many aspects of the production process, including the equipment being used, the sanitation program, quality assurance, storage and distribution of cannabis products, and standard operating procedures.

It is proposed that Part 5 would be amended to incorporate additional good production practices to prevent contamination of cannabis products and to address the risk of foodborne illness associated with edible cannabis. Many of the new requirements, particularly those pertaining to edible cannabis, are adapted from the SFCR. For example, it is proposed that

Requirements that pertain to the cleanliness of equipment used with cannabis or ingredients would be expanded to also include conveyances (in this context, the term “conveyance” refers to anything that is used within the licensed facility to transport cannabis or ingredients used in the production of cannabis products; an example would be a forklift or hand lift), consistent with the SFCR (the requirement would apply to both licensed cultivators and licensed processors).

Building on existing air filtration requirements to prevent the escape of odours, there would be a new requirement to have a ventilation system that provides clean air and removes unclean air that may have a negative impact on the cannabis or ingredients. These measures, which would apply to both licensed cultivators and processors, are intended to prevent contamination, and are consistent with measures under the SFCR.

Sanitation program requirements would be expanded to explicitly require hand cleaning/sanitizing stations and lavatories in buildings where cannabis is produced (by licensed cultivators and licensed processors), if necessary, to prevent the contamination of cannabis or ingredients. There would also be a new requirement (that would apply to licensed processors only) pertaining to employee clothing, footwear, and protective coverings. Both new requirements are consistent with the SFCR. While current sanitation program requirements under the Regulations do not explicitly include such requirements, it is anticipated that most, if not all, of the new elements already form part of sanitation programs in place at most licensed facilities.

Existing controls designed to prevent the contamination of cannabis would be expanded to also cover ingredients intended to form part of a cannabis product (licensed processors only).

Consistent with the SFCR, licensed processors (that produce edible cannabis or cannabis extracts) would be required to prepare, retain, maintain and implement a written preventive control plan (PCP) to identify and address through effective control measures any potential hazards that pose a risk to the production of these products. The QAP would be required to sign-off on the PCP prior to its implementation. Furthermore, the PCP would need to include documents that substantiate that the PCP has been implemented.

Employees of licensed processors who conduct activities involving edible cannabis (or ingredients used in the production of edible cannabis) would be required to have the necessary competencies and qualifications to carry out their duties, consistent with the SFCR.

Currently, the QAP is required to investigate every complaint received in respect of the quality of the cannabis and to take measures to address any identified risk. In addition to the current requirement, it is proposed that the QAP would be required to proactively conduct an investigation any time they suspect that cannabis or an ingredient may present a risk of injury to human health or does not meet requirements in Part 5 or Part 6 of the Regulations, and, if necessary, to immediately take measures to mitigate any risk. The proposed new requirement, which is adapted from the SFCR, would apply, for example, in a situation where the QAP suspects that an ingredient may have been improperly stored, resulting in contamination that presents a risk to human health.

Licensed processors would need to ensure that steps are taken so that animals and pests are not able to enter into any building or part of a building where cannabis is being processed. While this requirement is taken from the SFCR, it would apply to all licensed processors (not just those processing edible cannabis). Although this is not currently a requirement under the Regulations, it is anticipated that most, if not all, of licensed facilities already have such measures in place.

There would be a requirement that any water (including ice or steam used in the production of a cannabis product) coming into contact with cannabis or an ingredient be potable, unless the water does not present a risk of contamination, consistent with the SFCR. This requirement would apply to licensed processors producing the new classes of cannabis.

A number of measures are proposed to prevent the contamination of cannabis or ingredients. One proposed requirement is that licensed processors would be required to separate incompatible activities and ensure that contaminated waste is disposed of properly. Another measure is that licensed processors producing edible cannabis would be required to identify and place contaminated ingredients in a designated area, also consistent with the SFCR. Furthermore, the requirement (section 80 of the Regulations) to prepare standard operating procedures for the production, packaging, labelling, distribution, storage, sampling, and testing of cannabis would be amended to also pertain to a licence holder’s handling of ingredients, and to specify that all such activities must be conducted in accordance with the requirements set out in both Part 5 and Part 6 of the Regulations (currently, section 80 applies only to cannabis, and specifies only that activities must be conducted in accordance with Part 5).

In addition, it is proposed that production of edible cannabis at a site where conventional food products are also being manufactured for sale could only be done if the edible cannabis was being produced within another building within the licensed site. This proposal is intended to mitigate against the food safety and public health concerns associated with multiproduct manufacturing facilities, and in particular to mitigate against the risks of cross-contamination between ingredients and products, and the increased risk of mislabelling and product mix-ups. It also provides Canada’s international trade partners or importers of Canadian food products with assurance that there can be absolutely no cross-contamination of Canadian food products with cannabis.

Testing

Part 5 of the Regulations also sets out requirements pertaining to the sampling and testing of cannabis. The current Regulations require that the following testing be conducted on the final form of cannabis products:

Testing to determine the content of THC, tetrahydrocannabinolic acid (THCA), cannabidiol (CBD), and cannabidiolic acid (CBDA);

Testing for microbial and chemical contaminants;

Testing for the residues of solvents used in the production of cannabis oil; and

Dissolution or disintegration testing (on discrete units intended for ingestion or nasal, rectal, or vaginal use).

The following amendments to the Regulations are proposed:

While the Regulations currently distinguish between testing for solvent residues and chemical contaminants, solvent residues are a form of chemical contaminant. For this reason, it is proposed that the amended Regulations would treat solvent residues in the same way as other chemical contaminants, such as heavy metals. Solvent residue testing would continue to be required any time a solvent is used in the preparation of a cannabis product.

It is proposed that the licensed processor, when conducting microbial and chemical contaminant testing (including solvent residue testing), would have the option of conducting testing on either the final form of the cannabis product, or at the final step in the production process during which the contaminants could be concentrated (i.e. on the “input” cannabis). For example, if a cannabis extract is used in the production of a cannabis topical, the licensed processor would have the option of conducting testing on the cannabis extract or on the final form of the cannabis topical.

Furthermore, whereas currently, levels of microbial and chemical contaminants must be within established limits for herbal medicines, it is proposed that microbial and chemical limits would need to be within the limits that are appropriate for the intended use of the product (e.g. ingestion, inhalation).

Proposed product rules for the new classes of cannabis

Part 6 of the Regulations sets out the rules that apply to the production of cannabis products, by product class. Given that no rules currently exist with respect to the new classes of cannabis, amendments to this part are required in order to establish rules for edible cannabis, cannabis extracts, and cannabis topicals. It is proposed that these would include THC limits per serving and/or per package, and rules pertaining to product composition and ingredients.

THC limits

To reduce the risks associated with overconsumption and accidental consumption, it is proposed that limits would be placed on the amount of THC that could be in the products of the new classes of cannabis, in individual servings (or “discrete units”) and in a single package. Specifically, it is proposed that

For edible cannabis , there would be a limit of 10 milligrams of THC per discrete unit and per package. This would mean, for example, that a package could contain one discrete unit of edible cannabis that contains 10 milligrams of THC; or two discrete units that each contain 5 milligrams of THC.

, there would be a limit of 10 milligrams of THC per discrete unit and per package. This would mean, for example, that a package could contain one discrete unit of edible cannabis that contains 10 milligrams of THC; or two discrete units that each contain 5 milligrams of THC. For cannabis extracts , as is currently the case for cannabis oil, there would be a limit of 10 milligrams of THC per discrete unit that is intended to be ingested or for nasal, rectal, or vaginal use, such as a capsule. In addition, there would be a new limit of 1 000 milligrams (or 1 gram) of THC in a single package. This would mean, for example, that a package could contain 100 capsules of an extract that each contain 10 milligrams of THC; or 200 capsules of an extract that each contain 5 milligrams of THC.

, as is currently the case for cannabis oil, there would be a limit of 10 milligrams of THC per discrete unit that is intended to be ingested or for nasal, rectal, or vaginal use, such as a capsule. In addition, there would be a new limit of 1 000 milligrams (or 1 gram) of THC in a single package. This would mean, for example, that a package could contain 100 capsules of an extract that each contain 10 milligrams of THC; or 200 capsules of an extract that each contain 5 milligrams of THC. For cannabis topicals, there would be a limit of no more than 1 000 milligrams (or 1 gram) of THC in a package.

In addition, a lower possession limit and smaller package sizes would apply to any cannabis product that contains more than 3% THC by weight. Consistent with the Act and current Regulations (paragraph 108(f)), the maximum package size and public possession limit of 7.5 grams (equivalent to 30 grams of dried cannabis) would apply to edible cannabis, cannabis extracts, or cannabis topicals that contain more than 3% w/w THC (i.e. products that are considered “concentrates” for the purposes of Schedule 3 to the Act).

Establishing limits on the amount of THC that could be in the new classes of cannabis is considered a more effective means of addressing the risks of accidental consumption and overconsumption than establishing a maximum concentration of THC (or “potency”) that could be in a product.

Product composition and ingredients

Currently, the Regulations do not permit the addition of anything other than cannabis to cannabis products (with the exception of cannabis oil, which may only contain the carrier oil and any additives necessary to preserve the quality and stability of the product). Consistent with the objective of enabling the legal cannabis industry to displace the illegal market, targeted amendments to the Regulations are proposed that would permit a broader diversity of product forms for human use.

At the same time, consistent with the comprehensive public health approach to the Regulations, certain limits are important safeguards and would remain in place. For example, product forms that pose a greater risk to human health, such as products that are intended to be used in the area of the human eye (e.g. eye drops) or products that are intended to be used on damaged or broken skin or to penetrate the skin barrier by means other than by absorption (e.g. through the use of abrasives or needles) would continue to be prohibited.

It is proposed that the Regulations would establish the following “variability limits” for the amount of THC and CBD in the new classes of cannabis:

For edible cannabis, if the total quantity of THC or CBD that is displayed on the label exceeds 5 mg, the product would be subject to a 15% variability limit (i.e. the container and any discrete units, if applicable, could not contain less than 85% of that amount, or more than 115% of that amount). If the quantity of THC or CBD that is displayed on the label is more than 2 mg but less than 5 mg, the variability limit would be 20%, and if the quantity of THC or CBD is less than 2 mg, the variability limit would be 25%.

All cannabis extracts and cannabis topicals would be subject to a variability limit of 15%.

In addition, it is proposed that new rules would be established for edible cannabis, cannabis extracts, cannabis topicals, and cannabis accessories as described below.

A. Edible cannabis

All edible cannabis products would need to be shelf-stable (i.e. they could not require refrigeration or freezing).

Aside from cannabis itself, only food and food additives could be used as ingredients in edible cannabis, and the use of food additives would need to be in accordance with the limits and purposes that are prescribed for foods in the Food and Drug Regulations (FDR). Edible cannabis could not contain poisonous or harmful substances, nor could it be fortified with vitamins or mineral nutrients. Finally, if the edible cannabis product contains anything that would be considered unsafe and would cause the sale of a food regulated under the Food and Drugs Act (FDA) to be unsaleable, then its sale would similarly be prohibited under the Cannabis Act. It would similarly be prohibited to use any food described in a Temporary Marketing Authorization Letter issued under the FDR as an ingredient in edible cannabis.

The use of meat products, poultry products and fish as ingredients would be prohibited. Because dried products pose a lower risk from a food safety perspective than raw products, an exception to this prohibition would be provided for dried meats, poultry or fish, provided they are obtained from a person who is authorized to produce such products under provincial or territorial laws or the SFCA, and that they have a water activity of 0.85 or less at the time they are obtained. Furthermore, because of the increased risk of botulism associated with low-acid canned foods, it is proposed that the Regulations would prohibit the sale of edible cannabis in a hermetically sealed container if any constituent of the edible cannabis has a pH above 4.6 and a water activity higher than 0.85.

The use of ingredients containing naturally occurring caffeine would be permitted in edible cannabis provided the total amount of caffeine in a package does not exceed 30 mg. The proposed amendment would allow for the use of ingredients that contain naturally occurring caffeine, such as chocolate, tea, or coffee. The use of caffeine as a food additive would, however, be prohibited.

Furthermore, the Regulations would allow for a small concentration of ethyl alcohol in edible cannabis (that does not exceed 0.5% w/w), given that ethyl alcohol is often present as a by-product in fermented ingredients or products (e.g. vinegars).

B. Cannabis extracts

It is proposed that cannabis extracts could contain flavouring agents in addition to one or more carrier substances and any substance necessary to maintain the quality or stability of the cannabis product. Cannabis extracts could not contain ingredients that are sugars, sweeteners or sweetening agents. Furthermore, they could not contain any ingredient listed in Column 1 of Schedule 2 to the Tobacco and Vaping Products Act (which is a list of ingredients that are prohibited in vaping products). Any ingredient, other than a flavouring agent, used in the preparation of a cannabis extract that is intended to be inhaled would need to comply with a standard set out in one of the publications referred to in Schedule B to the FDA (which is a list of official publications that set out standards, such as the European Pharmacopoeia).

The use of ethyl alcohol would be permitted in cannabis extracts that are intended to be ingested (such as tinctures). However, it is proposed that the Regulations would prescribe a maximum package size of 7.5 g for all cannabis extracts that contain ethyl alcohol, and that this limit would apply regardless of the THC content of the product. As will be described under the “Packaging and labelling” section below, other controls would also apply to these products to address the risks associated with the co-use of alcohol and cannabis, as well as the risks associated with accidental consumption and overconsumption.

It is proposed that cannabis extracts could not contain any ingredients that may cause injury to the health of the consumer when the product is used as intended.

C. Cannabis topicals

It is proposed that cannabis topicals could not contain any ingredients that may cause injury to the health of the consumer when the product is used as intended. Health Canada’s Cosmetic Ingredient Hotlist, which is a list of substances that are prohibited or restricted in cosmetics, could be used as a resource by licensed processors when looking to determine whether a particular ingredient could pose a risk of injury to the health of the consumer.

D. Cannabis accessories

Targeted amendments are proposed to ensure that cannabis accessories do not increase the potential for harm associated with cannabis products, and to establish dispensing limits for accessories containing certain cannabis extracts. More specifically, it is proposed that

A cannabis accessory must not, through chemical means other than heating or combustion, alter or enhance the effects of the product, increase the potential for physical dependence on the product, or increase the toxicity of the cannabis product when used as intended.

The maximum amount of THC that could be dispensed per activation of a cannabis accessory containing an extract that is intended to be ingested, or for nasal, rectal, or vaginal use (e.g. a spray bottle), would be 10 mg. This provision would operate in concert with the proposed integrated dispensing mechanism, which is described in the “Proposed amendments to packaging requirements” section below.

Packaging and labelling

Part 7 of the Regulations sets out requirements that apply to cannabis products packaged and labelled for sale at the retail level. These packaging and labelling requirements aim to protect the health of young persons by restricting their access to cannabis and to protect young persons and others from inducements to use cannabis. The requirements also help to promote informed consumer choice and encourage the safe handling and storage of cannabis.

It is proposed that the Regulations would maintain the core plain packaging and labelling requirements that currently apply to all cannabis products, such as the standardized cannabis symbol, health warning messages, THC and CBD content, and child-resistant packaging. Specific additions and adjustments would be made to the Regulations to account for the new classes of cannabis and to address the public health risks associated with these new classes, in particular the risk of accidental consumption and overconsumption.

Mandatory information

As is currently the case, the Regulations would set out the mandatory information that must appear on the label of all cannabis products according to product class. The following label requirements would apply to the new classes of cannabis and to cannabis accessories containing those classes of cannabis.

A. Edible cannabis

Consistent with requirements that apply to food under the FDR, it is proposed that the following would be required on the label of edible cannabis products, in addition to the current labelling requirements, which apply to all cannabis products:

A list of ingredients;

The common name of the cannabis product;

An indication of the source of an allergen or gluten, or that sulphites have been added to the product (alternatively, this information could appear as part of the ingredient list);

A “durable life date” (more commonly known as a “best-before date”), which would apply only to edible cannabis products whose qualities are expected to deteriorate over a period of 90 days or less; and

A cannabis-specific nutrition facts table (NFT).

It is proposed that the cannabis-specific NFT would be modelled on the standard format NFT for pre-packaged food, incorporating the display of the energy value of the product (i.e. calories) as well as the amounts of the 12 core nutrients and, in some cases, the percent daily value (% DV), on a “per container” basis. The font size, font type, leading and spacing of the proposed cannabis-specific NFT would be consistent with other labelling requirements for cannabis products. The proposed requirement would allow consumers to make informed choices based on this information. For further information on the proposed NFT, please see Figure 1 below.

Figure 1. Proposed cannabis-specific nutrition facts table

B. Cannabis extracts

In addition to the current labelling requirements that apply to all cannabis products, it is proposed that a list of ingredients, the identity of the cannabis product in terms of its common name or function, and a list of allergens would be required on the label of cannabis extracts, as well as the intended use of the product (e.g. “for vaping”).

C. Cannabis topicals

In addition to the current labelling requirements that apply to all cannabis products, it is proposed that a list of ingredients as well as the intended use of the product (e.g. “apply to skin”) would need to appear on the label of all cannabis topicals. Directions for use would also need to appear on the label, but the content would not be prescribed by the Regulations. Furthermore, the following warning statement would need to appear on the label of all cannabis topicals: “Do not swallow or apply internally or to broken, irritated, or itching skin.”

D. Standardized cannabis symbol on vaping products and wrappers

The Regulations require that the standardized cannabis symbol appear on the label of cannabis products that contain more than 10 parts per million (ppm) THC (equivalent to 10 mcg per gram). It is proposed that the Regulations would be amended to also require the display of the standardized cannabis symbol on any cannabis accessory that contains a cannabis extract that is intended to be inhaled and that contains more than 10 ppm THC. For example, this would require vaping devices or vaping cartridges that contain a cannabis extract with THC to have the symbol directly on the device or cartridge. It is also proposed that the standardized cannabis symbol would need to be clearly and prominently displayed on the exterior surface of any wrapper that is in direct contact with edible cannabis, a cannabis extract, or cannabis topical that contains more than 10 ppm THC.

Reducing inducements to use cannabis (prohibitions on representations)

Consistent with the objective, as set out in section 7 of the Cannabis Act, to “protect young persons and others from inducements to use cannabis,” it is proposed that the amended Regulations would prohibit the following representations on all product packages and labels:

Representations regarding health benefits, including those that are currently permitted on food, such as “a healthy diet low in saturated and trans fat may reduce the risk of heart disease,” or “oat fibre helps lower cholesterol” (all classes of cannabis);

Nutrient content representations that go beyond those permitted in the list of ingredients and cannabis-specific NFT, including those that are currently permitted on food, such as “high source of fibre” or “low fat,” or additional information pertaining to the vitamin or mineral content of the product (edible cannabis only); and

Representations regarding cosmetic benefits, such as “reduces the appearance of wrinkles” or “softens skin” (all classes of cannabis).

It is proposed that the amended Regulations would also prohibit all representations that associate a cannabis product, its packaging or its labelling (including its brand element) with an alcoholic beverage. For example, it would be prohibited to use terms related to alcoholic beverages, such as “beer” or “wine,” on cannabis products. It would similarly be prohibited for the name or logo of a company that manufactures alcoholic beverages to be used on a cannabis product. In addition to reducing inducements to use cannabis, this prohibition is felt to be necessary given the known health risks associated with the concurrent use of alcohol and cannabis.

Consistent with rules that apply to vaping products under the Tobacco and Vaping Products Act, it is proposed that the Regulations would prohibit the representation of certain flavours that are appealing to youth, such as dessert or confectionery flavours, on the packaging and labelling of cannabis extracts.

In addition, it is proposed that it would be prohibited to represent edible cannabis as being a suitable means of meeting the particular dietary requirements of an individual. For example, it would be prohibited to say that edible cannabis is suitable for people with diabetes, or as part of a low-calorie diet.

The prohibitions described above would be in addition to prohibitions set out in the Cannabis Act that prohibit the promotion, packaging and labelling of cannabis that could be considered reasonably appealing to young persons, the sale of cannabis products or cannabis accessories that have an appearance, shape or other attribute or function that could be appealing to young persons, as well as the use of false or misleading claims.

Proposed amendments to packaging requirements

It is proposed that the current plain packaging requirements for all cannabis products would be maintained, including the requirement for child-resistant packaging, with two minor adjustments.

First, it is proposed that an exception to the current prohibition on the use of a naturally occurring metallic colour on the external surface of an immediate container that is made of metal would be provided, which would allow for the use of containers such as metal beverage cans. Second, it is proposed that the exterior surface of any container in which a cannabis product is packaged would no longer need to have a matte finish, given that this requirement is incompatible with both the use of metal containers and the proposal to allow for the use of peel-back labels, which is described further below. Both proposed changes would facilitate compliance and provide additional flexibility for regulated parties.

In addition, the following specific additions and adjustments are proposed to account for the new classes of cannabis:

The immediate container of cannabis extracts would need to be designed in such a way that the extract could not easily be poured, or drunk directly from the container (thereby mitigating against the risk of accidental consumption). For extracts in liquid form that are not intended to be inhaled and that contain at least 10 mg of THC, the immediate container would need to contain an integrated dispensing mechanism (e.g. a metered spray) that dispenses no more than 10 mg of THC, unless the extract is in the form of discrete units (such as a capsule).

There would be a new requirement to use “food-grade” packaging (i.e. packaging that meets requirements set out in the FDR and the SFCR for food) for the immediate container of edible cannabis and for any wrappers.

The co-packaging of edible cannabis and a food would be prohibited, as would the co-packaging of more than one class of cannabis in the same exterior container.

An exterior container could not contain more than one immediate container, thereby preventing the sale of sampler packs.

The immediate container of a cannabis product could not be pressurized; however, an exception would be provided for edible cannabis in liquid form, such as carbonated beverages.

As described under the “THC limits” section above, a number of restrictions on the amount of THC that could be in a package are proposed (e.g. 10 mg of THC per package of edible cannabis, 1 000 mg of THC per package for cannabis extracts and topicals). In addition, it is proposed that the following new maximum package sizes would apply:

7.5 g for all cannabis extracts that contain ethyl alcohol and are intended to be ingested (irrespective of the concentration of THC in that product); and

90 mL for all liquid cannabis extracts.

This is in addition to the maximum package size of 7.5 g that would apply to all “cannabis concentrates,” by virtue of paragraph 108(f) of the current Regulations.

A. Allowances for smaller containers

Currently, the Regulations set out prescriptive display rules and plain packaging requirements that do not allow for the use of expanded panels on labels (such as peel-back and accordion panels), tags, or package inserts. To accommodate smaller containers, and based in part on feedback from regulated parties, the provinces and territories, and consumers, it is proposed that the Regulations would be amended to enable the use of expanded panels and alternative display formats for certain required information when the immediate container is too small to otherwise accommodate all required information on the exterior display surface. Tags and package inserts would continue to not be permitted.

The cannabis health warning messages, standardized cannabis symbol and information pertaining to the THC and CBD content of the product would always be required on the exterior display surface, regardless of the size of the container. However, information such as the packaging date, recommended storage conditions, the list of ingredients, and the NFT could be displayed on a peel-back or accordion panel. In such cases, regulated parties would be required to maximize the display of required information on the exterior display surface, and would be prohibited from adding any additional “voluntary” information to the alternative display. Brand elements appearing on the outer display could not be any larger than the minimum size of the standardized cannabis symbol (i.e. 1.27 cm by 1.27 cm), and no brand elements would be allowed on the peel-back or accordion panel.

These amendments are considered to be necessary given the proposed restrictions on the package sizes (e.g. the maximum package size of 7.5 g for cannabis extracts containing ethyl alcohol), and also in light of the new labelling requirements that increase the amount of required information (e.g. the NFT that is proposed for edible cannabis or the directions for use that are proposed for cannabis topicals).

Drugs containing cannabis

Part 8 and Part 9 of the Regulations set out rules for prescription drugs containing cannabis and medical devices containing cannabis or that are intended to be used with cannabis. No major changes are proposed to these parts of the Regulations.

Minor amendments to Part 8 are proposed that would remove the requirement to hold a drug establishment licence (DEL) under the FDR in order to be eligible to apply for a cannabis drug licence. This change is proposed because a small number of limited activities with drugs do not require a DEL (e.g. the sale and importation of a drug for use in clinical trials in humans). The grounds for refusal of a cannabis drug licence would be amended to include the applicant not holding a DEL at the proposed site, if one is required under the FDR, and the suspension or cancellation of an applicant’s DEL, if one is required under the FDR, at the proposed site. Similarly, the grounds for suspension or revocation of a cannabis drug licence would be amended to clarify that the suspension or revocation of a DEL would only be grounds for suspension or revocation in cases where a DEL is required under the FDR.

Importation and exportation of cannabis

Part 10 of the Regulations deals with the importation and exportation of cannabis. As set out in the Cannabis Act, the import and export of cannabis is permitted only for medical or scientific purposes, or in respect of industrial hemp. No major changes are proposed to this part of the Regulations. Each importation and exportation of cannabis will continue to require a permit issued by the Minister. The following minor change is proposed: whereas import and export permits must currently set out “the description of the cannabis,” they would now set out “a description of the cannabis.”

Record keeping

Record-keeping requirements are set out in Part 11 of the Regulations.

Current record-keeping requirements that apply to cannabis oil (as set out in section 225) would be amended to apply to edible cannabis, cannabis extracts, and cannabis topicals.

It is also proposed to amend subsection 231(1) of the Regulations to specify that for each lot or batch of cannabis sold or exported, a document must be retained demonstrating that the cannabis meets the requirements set out in both Part 5 and Part 6 of the Regulations (as opposed to just Part 5, as is currently the case).

In addition to current record-keeping requirements, the following new requirements are proposed:

Records would need to be kept pertaining to ingredients used in the production of edible cannabis, cannabis extracts, and cannabis topicals. In particular, it is proposed that the following records pertaining to ingredients would need to be kept by licensed processors: the name and business address of the person who supplied the ingredient; the date the ingredient was obtained or produced; a description of the ingredient, including its name (or, if applicable, its chemical name, common name, International Nomenclature Cosmetic Ingredient [INCI] name, or Chemical Abstracts Service [CAS] registry number); and a lot code or other unique identifier, if applicable.

For cannabis extracts, it is proposed that a record be kept regarding the purpose of each ingredient (e.g. carrier substance, flavouring agent), as well as a description of the flavour of the product, if applicable.

A record would need to be kept regarding every investigation undertaken by the QAP, including any proactive investigation of a possible risk of injury to human health or in response to a complaint received in respect of the quality of the cannabis. This record would also need to indicate any measures taken in response.

Licence holders (all classes of cannabis, except plants and seeds) would be required to keep a record of any information that is obtained through testing that relates to the phytocannabinoid and terpene content of the cannabis product. Currently, licence holders are only required to keep a record of the quantity or concentration of THC, THCA, CBD, and CBDA. However, testing methodologies typically generate a more complete phytocannabinoid and terpene profile. Where this additional information exists, licence holders would be required to keep a record of it.

All of the above records would need to be kept for a period of two years, consistent with the retention periods for most existing record-keeping requirements (adverse reaction reports must be kept for 25 years).

Reporting

Reporting requirements are set out in both Part 12 of the Regulations and the Cannabis Tracking System Order.

No changes to Part 12 of the Regulations are proposed. Health Canada intends to update the ministerial order for the Cannabis Tracking System to reflect the new classes of cannabis.

Test kits

No changes are proposed to Part 13 of the Regulations, which deals with test kits.

Access to cannabis for medical purposes

No changes are proposed to Part 14 of the Regulations, which enables access to cannabis for medical purposes. Patients who have the authorization of their health-care practitioner and who are registered with the Minister or a federally licensed seller would benefit from the comprehensive range of new cannabis products that would be enabled through the current proposal, including several alternatives to smoking cannabis.

Transitional provisions

Part 15 of the Regulations deals with transitional provisions.

It is proposed that a six-month transition period would be provided for activities in relation to cannabis oil. During this proposed six-month transition period, cannabis oil could continue to be sold as a class of cannabis (by federal licence holders and provincially and territorially authorized distributors and retailers), subject to the current rules as they apply to cannabis oil. For example, cannabis oil would continue to be subject to the limit of 10 milligrams of THC per discrete unit, but the new limit of 1 000 milligrams of THC per package would not apply to cannabis oil during this transition period. Six months following the coming into force of the amended Regulations, cannabis oil would be removed as a class of cannabis under Schedule 4 to the Act.

It is also proposed that a six-month transition period for dried or fresh cannabis would be provided in relation to microbial and chemical contaminants (i.e. for a six-month period, microbial and chemical contaminants could remain within established limits for herbal medicines, rather than within limits appropriate for the intended use of the product, as described under the “Testing” section above).

Amendments to Schedule 3

Schedule 3 to the Act (Equivalent Amounts) is used to determine, for example, how many grams of fresh cannabis would be equivalent to 30 grams of dried cannabis, for the purposes of determining the maximum amount of cannabis that an adult could legally possess in a public place.

Currently, both “cannabis solid concentrates” and “cannabis non-solid concentrates” are listed in Schedule 3. In both cases, the quantity that is deemed equivalent to 1 gram of dried cannabis is the same (i.e. 0.25 grams). Therefore, an amendment to Schedule 3 is proposed that would replace these two categories with a single category known as “cannabis concentrates.” The term cannabis concentrate would be defined in the Regulations as “a substance that has a maximum yield percentage of greater than 3% w/w of THC, taking into account the potential to convert THCA into THC.” This is consistent with the current definitions of both “cannabis solid concentrates” and “cannabis non-solid concentrates” in the Regulations.

Regulatory development

Consultation

Task Force on Cannabis Legalization and Regulation

As noted above, the Task Force was formed in June 2016 with a mandate to consult broadly with Canadians and to provide advice on the design of a new legislative and regulatory framework for cannabis in Canada. In its final report, A Framework for the Legalization and Regulation of Cannabis in Canada, the Task Force made 85 recommendations, including a number of recommendations specific to regulating edible cannabis and cannabis extracts, including extracts containing a higher concentration of THC.

Specifically with respect to edible cannabis, the Task Force recommended that

Any product deemed to be appealing to children, including products that resemble or mimic familiar food items, or that are packaged to look like candy, should be prohibited;

Packaging be implemented with standardized single servings, as well as a standardized cannabis symbol;

A maximum amount of THC per serving be established, both on a per-serving and a per-product basis;

Mixed products be prohibited; for example, cannabis-infused alcoholic beverages, or cannabis products with tobacco, nicotine or caffeine; and

Labelling requirements that apply to food and beverage products should also apply to edible cannabis.

With respect to cannabis extracts containing higher concentrations of THC, the Task Force recommended that

Regulatory oversight be provided in order to minimize the risks associated with the illegal production of such products (for example the use of highly combustible solvents, such as butane, and potentially toxic solvents, such as naphtha, which can be used to extract THC);

Strategies be developed to encourage consumption of less potent cannabis;

All cannabis products be required to include labels identifying levels of THC and CBD;

A flexible legislative and regulatory framework be enabled at the federal level, which could adapt to new evidence and establish rules for limits on THC or other components; and

The Government of Canada develop and implement factual public education strategies to inform Canadians about the risks of problematic use and to provide guidance on lower-risk use.

Parliamentary study of Bill C-45

During Parliamentary consideration and debate on Bill C-45, the Cannabis Act, the question of whether these new classes of cannabis should be permitted under the legal framework was the subject of considerable debate. Among those who supported their inclusion in the legal framework, there was debate as to whether these products should be legally available immediately upon the coming into force of the Act, or whether their legal sale should be enabled within a certain time frame. Ultimately, the House of Commons amended the Act to authorize the legal sale of “edibles containing cannabis” and “cannabis concentrates” no later than 12 months following the coming into force of the Cannabis Act.

During the debate in the Senate, some Senators expressed concern regarding the inclusion of cannabis products with a higher concentration of THC in the legal framework, given the greater health risks associated with such products. While there was some discussion of imposing a limit on THC, no such amendments were made to the legislation.

Consultations supporting the development of the Regulations

On November 21, 2017, Health Canada launched a 60-day public consultation to solicit public input and views on a proposed approach to developing regulations to support the coming into force of the Cannabis Act. To support the consultation, Health Canada published a detailed consultation paper entitled Proposed Approach to the Regulation of Cannabis. The consultation paper outlined a comprehensive series of regulatory proposals to help achieve the Government’s public health and public safety goals of restricting youth access to cannabis, minimizing the harms of cannabis use, and preventing criminals and organized crime from profiting from the illegal production, distribution and sale of cannabis.

During the 60-day public comment period, Health Canada received more than 3 200 responses to an online questionnaire and 450 written submissions. Targeted consultations were also undertaken with interested parties, such as the provinces and territories, Indigenous governments and representative organizations, the cannabis industry (including both existing and prospective licensees), public health organizations, and patients and patient advocates. In total, 192 interested parties participated in the in-person round tables, and 343 interested parties participated in webinars. In addition, Health Canada held both multilateral and bilateral meetings with representatives of all provinces and territories, as well as a series of focused meetings with First Nations, Inuit, and Métis, to seek their feedback on the proposed regulatory approach.

On March 19, 2018, Health Canada published a report entitled Summary of Comments Received During the Public Consultation. In addition to highlighting areas where changes were being considered to the regulatory proposals, this document also provided advance notice of certain regulatory requirements — in particular those pertaining to the plain packaging and labelling of cannabis products.

A majority of those who responded to the November 2017 consultation paper indicated that the industry must be able to offer the same diversity of products that are available in the illegal market in order to be able to successfully displace the illegal market, and suggested that a broader range of products would provide alternatives to smoking cannabis. Many respondents felt that vaping products in particular should have been permitted through the first phase of the Cannabis Regulations.

In addition, respondents indicated that additional regulatory provisions would be required to address the unique public health and public safety risks associated with edible cannabis and extracts with a higher concentration of THC, such as provisions on quality control, THC limits, portion sizes, specific packaging and labelling requirements, and the use of highly combustible and/or potentially toxic solvents that are often used in the illegal manufacture of concentrated cannabis extracts. A small number of respondents felt that the regulations should be more restrictive in the types of cannabis products available through the legal system.

Among the proposals set out in the November 2017 consultation paper, it was proposed that a limit of 10 milligrams of THC per dose or unit for any cannabis product intended for ingestion be established, which most respondents supported. A maximum THC concentration for cannabis oil of 30 milligrams of THC per millilitre of oil was also proposed, and there were mixed views. Many respondents did not support the 30 milligrams per millilitre limit, stating that the limit was either too low or that there should not be a limit at all. Other respondents felt that the proposed limit was a prudent safeguard to mitigate risks of accidental overconsumption of a product class primarily intended for ingestion.

Modern treaty obligations and Indigenous engagement and consultations

Broadly speaking, Indigenous regulatory authority derives from different sources, including rights recognized and affirmed in section 35 of the Constitution Act, 1982, historic and modern treaties and land claim agreements, self-government agreements, and federal legislation, such as the Indian Act.

For example, section 81 of the Indian Act allows band councils to make by-laws in relation to the health of residents on the reserve and for the observance of law and order. First Nations would determine the types of restrictions they can establish, based on their interpretation of the authorities provided in the Indian Act. Such by-laws could co-exist with the Cannabis Act as long as they do not conflict with the Act or frustrate its purpose. The Government of Canada does not review, approve or maintain a list of by-laws enacted by First Nations under section 81 of the Indian Act.

Some First Nations and Inuit communities have negotiated self-government agreements and land claim agreements with the Government of Canada and provincial and territorial governments, which also contain legislative authority. Although self-government agreements vary across the country, the powers related to the making of by-laws they contain are generally similar to those found in the Indian Act. They allow for the making of by-laws in relation to protecting the health of the community and law and order, as well as in relation to the control or prohibition of “intoxicants.” Land claim agreements usually set out limited authorities in relation to the management of settlement lands and resources covered under the agreements. In the context of the Cannabis Act and its regulations, Indigenous communities with that authority may therefore choose to review their agreements in order to determine what laws or regulations they may wish to pass within their communities.

Support for the self-determination of Indigenous peoples is a key objective of the Government of Canada. This must be balanced with the need to ensure that the legal and regulatory framework for cannabis, including criminal prohibitions, is applied consistently across the country. Therefore, similar to the Criminal Code, the Cannabis Act is a federal law of general application that applies to all people in Canada, including Indigenous peoples, whether they live on a reserve or not.

Indigenous engagement and consultations



The Government of Canada is committed to a renewed, nation-to-nation relationship with Indigenous peoples, based on recognition of rights, respect, co-operation and partnership. Therefore, Health Canada continues to engage and work closely with Indigenous governments, organizations and communities across the country to help ensure the specific interests of Indigenous peoples are carefully considered. Health Canada welcomes the views of Indigenous peoples with respect to the new classes of cannabis and the current regulatory proposal.

Engagement with Indigenous peoples has been ongoing throughout the development of the Cannabis Act and its regulations, beginning with the work of the Task Force in June 2016. Health Canada officials sought to broaden the reach of consultation efforts in the context of the November 2017 regulatory consultation paper entitled Proposed Approach to the Regulation of Cannabis through meetings with national and regional Indigenous organizations. The Minister also engaged with the Assembly of First Nations, Inuit Tapiriit Kanatami, and Métis National Council to seek their active participation in public consultations on the proposed regulatory approach. The Government has also engaged extensively with Indigenous leadership, organizations and communities to provide information on the legislation and regulations and discuss the unique interests of First Nations, Inuit and Métis. As of November 1, 2018, Government of Canada officials have participated in approximately 85 engagement sessions with Indigenous leaders, organizations and communities. Through these discussions, First Nations, Inuit and Métis organizations and leaders have expressed a wide range of diverse views and objectives regarding cannabis legalization and regulation. Four themes have arisen consistently:

public health and public education;

taxation and revenue generation;

Indigenous authorities over activities related to cannabis; and

economic development.

The Government understands that there is significant interest among Indigenous communities in Canada regarding the Cannabis Act and its regulations and has taken important steps to address specific interests expressed by Indigenous communities and organizations. The Government will continue to work closely with Indigenous communities and organizations to ensure that their specific needs and interests are carefully considered throughout the implementation of the Cannabis Act.

To support the consultation on the draft Regulations described herein, Health Canada intends to publish a notice in the First Nations Gazette, with the goal of ensuring a robust consultation of Indigenous peoples. In addition, Health Canada will directly notify national Indigenous organizations, political-territorial organizations, modern treaty holders and self-governing Nations of the consultation and invite their input. All input received through the public consultation will inform the development of the final Regulations.

Instrument choice

Incorporation by reference

A number of documents have been incorporated by reference (IBR) as part of the Regulations. Of the existing IBR documents, the intent is to update three of them to coincide with the publication of the final Regulations in the Canada Gazette, Part II.

One of those documents is the Consumer Information – Cannabis document. This document, which was developed by Health Canada, supports one of the explicit purposes of the Cannabis Act, which is to enhance public awareness of the health risks associated with cannabis. It represents one of several tools being used to help educate consumers on cannabis and its effects and risks, and to promote informed and responsible use. This document is intended to be provided to all consumers when they purchase cannabis products. Health Canada plans to update the Consumer Information – Cannabis document to include specific messages pertaining to the health risks of edible cannabis, as well as cannabis extracts with a higher concentration of THC.

In a similar vein, Health Canada plans to update the Cannabis health warning messages to include new health warning messages pertaining to edible cannabis. Health Canada is currently considering options, including new health warning messages, to more effectively distinguish between lower THC-concentration and higher THC-concentration cannabis products, and thereby to promote informed consumer choices.

In addition, Health Canada intends to update the IBR document entitled Tolerance Limits for the Net Weight and Volume Declared on Cannabis Product Labelling to account for larger package sizes (currently, this document sets out a tolerance limit of 10% for package sizes of 2 grams or millilitres or less, and 5% for package sizes of more than 2 grams or millilitres).

In addition to the three updates to existing IBR documents, it is proposed that a new document entitled Directory of Nutrition Facts Table Format for Edible Cannabis would be incorporated by reference as part of the amended Regulations. This IBR document would set out specific requirements pertaining to the NFT, as described in the “Description” section above.

Finally, it is proposed that the current IBR document entitled Limits for Residual Solvents in Cannabis Products would no longer be incorporated by reference as part of the Regulations. Instead, given the proposal to treat solvent residues in the same way as other chemical contaminants, the limits for residual solvents and other chemical contaminants would be found in any of the publications listed in Schedule B to the FDA (which is a list of official publications that set out standards, such as the European Pharmacopoeia).

Baseline scenario

As explained previously, as per section 193.1 and subsection 226(2) of the Act, “edibles containing cannabis” and “cannabis concentrates” will automatically be added to Schedule 4 to the Act on October 17, 2019, unless the Governor in Council authorizes their addition to Schedule 4 in advance of this date, by Order.

For the purposes of this RIAS and the accompanying cost-benefit analysis (CBA), the baseline scenario assumes that section 193.1 of the Act would come into force automatically on October 17, 2019, and that the Government would adopt an approach that would effectively rely on other frameworks to regulate these new classes of cannabis.

Even under the baseline scenario, minor regulatory amendments would be required. This is because certain provisions of the current Regulations, such as restrictions on mixing cannabis with other ingredients, would effectively preclude the production of the new classes of cannabis, regardless of the fact that their legal sale would be permitted. For the purposes of the baseline scenario, it is assumed that amendments would be made to any provisions preventing the production of the new classes of cannabis. In particular, the baseline scenario assumes that the current maximum yield quantity of 30 milligrams of THC per millilitre of cannabis oil (equivalent to 3%) would be removed, thereby enabling the production and sale of cannabis oil products with a higher concentration of THC (i.e. “cannabis concentrates”), and that the use of ingredients in “edible cannabis” would be permitted. In the baseline scenario, such amendments would allow for the production of a limited suite of edible and concentrated products, but not the same comprehensive range of cannabis products that would be permitted under the proposed regulatory scenario. Under the baseline scenario, it is assumed, for example, that cannabis oil containing higher concentrations of THC would be permitted, but that other cannabis extracts that are not in liquid form at room temperature would not (e.g. wax, hash).

Because edible cannabis meets the definition of “food” under the FDA (and, by extension, the SFCA), the baseline scenario assumes that “edible cannabis” would be subject to the Safe Food for Canadians Regulations (SFCR) and the Cannabis Regulations. However, the FDA and its regulations would not apply. This is because the Cannabis Exemption (Food and Drugs Act) Regulations exempt cannabis produced by authorized persons from the application of the FDA. It is likely that this would result in confusing and potentially conflicting rules, which would increase the risks to public health and make compliance and enforcement difficult and potentially ineffective.

The baseline scenario also assumes that a specific regulatory scheme designed to address the public health and public safety risks posed by edible and concentrated forms of cannabis would not be created, which is clearly inconsistent with the objectives of the Act.

Regulatory scenario

In contrast, under the proposed regulatory scenario, three new classes of cannabis would be added to Schedule 4 to the Act (i.e. edible cannabis, cannabis extracts, and cannabis topicals). Amendments would be made to the Regulations to address the public health and public safety risks of these new classes of cannabis, resulting in benefits for Canadians. Other amendments to the Regulations would be made to permit a comprehensive range of cannabis products, consistent with the Government’s objective of displacing the illegal market.

To reduce the risk of duplication and overlap between regimes and to create clarity and predictability for regulated parties, it is proposed that these new classes of cannabis would be regulated exclusively under the Cannabis Act and the Cannabis Regulations. More specifically, Health Canada intends to issue a notice of intent clarifying that edible cannabis would not be treated as a “food” and that it would be controlled exclusively under the Cannabis Act and its regulations (and, by extension, that edible cannabis will not be subject to the SFCA and its regulations).

Under the regulatory scenario, it is proposed that relevant provisions of other frameworks, such as those for food, cosmetics, and vaping products under the SFCA, the FDA, and the Tobacco and Vaping Products Act, would be incorporated or adapted into the Cannabis Regulations, thereby creating consistency between frameworks.

Regulatory analysis

Benefits and costs

It is estimated that the proposed amendments to the Regulations would result in a net cost to Canadians of approximately $40.5 million net present value (PV), in 2017 dollars. These costs, which would be borne entirely by the regulated industry (in particular, licensed processors), are primarily associated with costs to comply with new regulatory requirements for packaging and labelling, good production practices, testing, and record keeping. Despite the net cost, the qualitative benefits attributed to displacing the illegal market and providing adult consumers and registered clients of licensed sellers of cannabis for medical purposes with access to quality-controlled edible cannabis, cannabis extracts, and cannabis topicals can be expected to outweigh the net cost to Canadians of the current regulatory proposal.

Market projections

The CBA conducted for the Cannabis Regulations (i.e. the market projections described in the RIAS published in the Canada Gazette, Part II, on July 11, 2018) considered total demand for cannabis products, and did not distinguish between classes of cannabis that became legal to sell in Canada by authorized persons on October 17, 2018, and the proposed new classes of cannabis. In other words, the market projections included in the July 11, 2018, RIAS accounted for edible cannabis, cannabis extracts, and cannabis topicals.

According to a recent report, an average of 43% of the total cannabis market in Colorado, California and Oregon between January and July of 2018 was made up of cannabis products other than dried cannabis (based on the top 10 products). Assuming the trend is consistent in Canada, the new classes of cannabis will likely represent over time a significant portion of the total market.

Analytical approach

The Cabinet Directive on Regulation requires departments to analyze the costs and benefits of proposed federal regulations. To measure these impacts, the benefits and costs are estimated by comparing the incremental change from the current regulatory framework (i.e. the “baseline scenario”) to what is anticipated to occur under the proposed new regulatory approach (i.e. the “regulatory scenario”).

The baseline scenario, which is described under the “Instrument choice” section above, assumes that edible cannabis would be subject to the Cannabis Regulations and the SFCR, but that the FDA and its regulations would not apply. In contrast, under the regulatory scenario, edible cannabis would not be subject to the SFCR. Therefore, for the purposes of this CBA, any of the proposed regulatory requirements that have been adapted from the SFCR in the regulatory scenario do not represent a cost to industry. However, any of the proposed requirements adapted from the Food and Drugs Regulations in the regulatory scenario do represent a cost to industry. The projected regulatory scenario represents the most likely outcome of the proposed amendments and additions, based on current information.

The period of analysis for this CBA covers the 10-year period from 2019–2020 to 2028–2029, with each year starting on October 17 and ending on October 16 of the following calendar year. As per Treasury Board of Canada Secretariat guidelines, the CBA only assesses incremental impacts directly related to a regulatory requirement. Any impact that is not associated with a regulatory requirement is considered out of scope for the purposes of the CBA. A 7% discount rate is used to estimate the present value of the incremental costs and incremental benefits. All values are expressed in 2017 constant dollars and reported for the 10-year period unless otherwise stated.

A summary of the CBA is provided herein. A copy of the full CBA report is available upon request from cannabis@canada.ca.

Assessing regulatory impacts

Regulatory impacts in this analysis have been estimated using two approaches: quantitative analysis, where possible, and qualitative assessments. For the quantitative analysis, Health Canada relied on responses to a questionnaire distributed to licence holders in February 2018. Where data was not available from the questionnaire, internal Health Canada data, as well as data from previous cost-benefit analyses (such as the CBA supporting the Safe Food for Canadians Regulations) and data from the United States were used as proxies to quantify the impacts of the proposed regulatory changes. When quantification of estimates was not possible, qualitative assessments have been provided.

Health Canada intends to send another questionnaire to federal licence holders early in 2019. The results of this second survey will help to round out and refine the CBA, and will hopefully allow for the quantification of some of the costs and benefits that have been discussed qualitatively below prior to the publication of final regulatory amendments in the Canada Gazette, Part II.

Affected stakeholders

As mentioned above, it is proposed that no special licence would be required in order to produce edible cannabis, cannabis extracts, and cannabis topicals. Instead, a cannabis processing licence (either standard or micro) would be required in order to manufacture these classes of cannabis and to package and label final products for sale to consumers. Licensed processors would be subject to all of the new rules applying to the production of the new classes of cannabis. Therefore, costs to the industry associated with the proposed amendments to the Regulations would be borne primarily by licensed processors. At the same time, these licensed processors also stand to benefit financially from the sale of the new classes of cannabis.

Current consumers of edible cannabis, cannabis extracts and cannabis topicals purchased from the illegal market, as well as current consumers of cannabis products purchased legally (including those who have the authorization of their health-care practitioner to access cannabis for medical purposes) would also be impacted by the current proposal. The impacts on consumers are discussed further as part of the analysis below.

Government costs are not described as part of this CBA, as total government costs were included in the CBA conducted for the Cannabis Regulations. As will be described further below, it is expected that the Government of Canada would benefit from a small cost savings in the regulatory versus the baseline scenario.

Key assumptions

The following assumptions were made when developing the CBA:

As mentioned above, the CBA conducted for the Cannabis Regulations considered the total demand for cannabis products (including edibles, extracts, and topicals). As a result, this CBA assumes that there would be no new market entrants (i.e. no increase in the total number of federal licence holders) beyond those that were previously forecasted to enter the market.

Based on projections from the previous RIAS and CBA, it is assumed that there would be 435 licensed processors by the final year of this analysis (2028–2029). This projected number is itself based on a number of assumptions, including that the rate at which new licences would be granted would be consistent with the rate at which licences were being granted under the former Access to Cannabis for Medical Purposes Regulations. These assumptions likely underestimate the number of licences that will be granted, based on improvements and resources that Health Canada has put in place to improve the review of licence applications, as well as potential efficiencies to be gained through the new Cannabis Tracking and Licensing System.

For the purposes of this CBA, an assumption has been made that all licensed processors would manufacture all of the new product classes. This is not to say that there would not be room in the market for licensees who may choose to specialize in the processing of one or more of the new classes of cannabis (e.g. cannabis extracts only, or edible cannabis only). However, since no additional licence would be required for a licensed processor to manufacture all classes of cannabis, it is difficult to estimate how many would choose to expand their product lines and how many would not. This assumption may result in an overestimate of the costs to industry associated with the current regulatory proposal.

Assessment of costs and benefits

It is estimated that the proposed amendments to the Regulations would result in a total cost of $44.5 million and a total benefit estimated at $4.06 million. Taken together, the proposed amendments are estimated to generate a net cost of $40.5 million PV over 10 years (or $5.8 million annually). Total costs are attributed to federal licence holders only (primarily licensed processors), whereas the total benefits are attributed to both industry (including federal licence holders and provincially and territorially authorized distributors and retailers) and consumers, with the majority of benefits going to consumers.

The sale of edible cannabis, cannabis extracts and cannabis topicals (with the exception of cannabis oil) is currently illegal in Canada. However, a wide range of products are currently being sold in the illegal market. Should the legal sale of such products by authorized persons be permitted by the Governor in Council, it is expected that products produced by the legal industry would capture an increasing share of the market in the years following the coming into force of the amendments to Schedule 4 to the Act and to the Regulations. In other words, it is expected that the current proposal would help to achieve the Government’s objective of displacing the illegal market.

For the purpose of this CBA, the displacement of the illegal market is considered a transfer of cannabis revenue from the illegal to the legal market. Although federal licence holders (as well as provincially and territorially authorized retailers) can be expected to benefit from this transfer, as they would accrue profits from the sale of these new cannabis products, the economy-wide impact is neutral; therefore, the benefit has not been quantified as part of this CBA.

While it can be expected that some displacement of the illegal market would occur even under the baseline scenario (given that the baseline scenario assumes that a minimal set of regulatory amendments would be made to allow for the production of edible cannabis and cannabis oil with a higher concentration of THC than is permitted under the current Regulations), the current regulatory proposal would authorize the production of a much broader suite of new cannabis products than would be allowed under the baseline scenario. Specifically, under the baseline scenario, only concentrated forms of cannabis oil would be permitted (not the broader category of cannabis extracts), and the vast majority of cannabis topicals would not be permitted.

It should be noted that there are a number of products currently available from the illegal market that would not be permitted under the current regulatory proposal. This would include products that pose a risk of injury to human health, products that could have serious effects if consumed accidentally, products that do not have restrictions in place to prevent overconsumption (e.g. no THC limits, no integrated dispensing mechanism), and products that are appealing to children. While these strict restrictions may be viewed as a “cost” to regulated parties, it is expected that any such costs would be outweighed by the significant benefits to public health and public safety. Furthermore, it is anticipated that alternatives to many of these riskier products would eventually become available through the legal market.

In order for federal licence holders to produce these new classes of cannabis and benefit financially from their sale, they would need to meet all of the proposed new regulatory requirements and incur the applicable compliance and administrative costs associated with the amended Regulations. These regulatory costs are described in further detail below.

Net costs

A. Packaging and labelling requirements

Given that it is currently illegal to sell edible cannabis, cannabis extracts, and cannabis topicals in Canada (with the exception of cannabis oil), it is reasonable to assume that the packages and labels for most of these products have not yet been designed or produced.

In both the baseline and regulatory scenarios, a one-time cost would be incurred to design and produce packages and labels for the new classes of cannabis. This analysis contends that because the design and production costs would be incurred regardless of the regulatory requirements, no incremental costs to regulated parties are associated with the proposed labelling requirements described earlier. All costs related to the placement of new mandatory information on the package or label (including the list of ingredients, the list of allergens, the durable life date, the cannabis-specific NFT, and the intended use of the product) are not considered to be incremental in comparison with the baseline scenario.

This assumption is consistent with cost-benefit analyses conducted for other packaging and labelling regulations, which have also assumed that companies regularly redesign their packaging and labelling in order to remain competitive and relevant. In a CBA guide to the costs and benefits of nutrition labelling, the United Nations Food and Agriculture Organization (FAO) stated: “If the imposition of mandatory nutrition labelling provides for a transition period, during which time industry can exhaust their existing stock of labels, it is possible to minimise redesigning and reprinting costs. Industry can then include the required nutrition information on future labels as part of routine redesigning/updating of food labels, and thereby minimise the costs arising from complying with mandatory labelling.”

One aspect of the proposed packaging and labelling requirements that does impose an incremental cost on industry is the Nutrition Facts Table (NFT). While the placement of the NFT on the package is not considered an incremental cost, the development of the NFT is. Licensed processors would be required to conduct an analysis of the number of calories, fat, carbohydrates, protein, etc., in edible cannabis products, in order to accurately specify nutrient content in the cannabis-specific NFT.

This cost would be assumed by licensed processors on an ongoing basis over the 10-year period. The cost is a one-time cost per stock keeping unit (SKU), with new SKUs expected to enter the market on an annual basis. For licensed processors, it is anticipated that complying with this requirement would result in a net cost of $15.2 million PV over 10 years (or $2.2 million annually).

B. Good production practices

As mentioned above, for the purposes of this CBA, any of the regulatory requirements that have been adapted from the SFCR are not considered to represent a cost to industry, given the way in which the baseline and regulatory scenarios have been defined. In other words, given that most of the proposed new good production practices (GPP) requirements are adapted from the SFCR, the incremental costs to industry associated with the proposed new GPP requirements are minimal.

One requirement that was not adapted from the SFCR is the proposed amendment to section 80 of the Regulations, whereby standard operating procedures would apply equally to cannabis (as is currently the case) and to ingredients used in the production of cannabis products. For licensed processors, it is anticipated that complying with this proposed new requirement would result in a net cost of $20.6 million PV over 10 years (or $2.9 million annually).

C. Solvent testing

The current Regulations require that cannabis oil be tested for the residues of solvents used in its production. Although minor adjustments to this requirement have been proposed, edible cannabis, cannabis extracts, and cannabis topicals would nonetheless need to be tested for solvent residues. It is anticipated that licensed processors would assume a net cost of $7.9 million PV over 10 years (or $1.1 million annually) to conduct solvent testing for the new classes of cannabis.

D. Record keeping

It is proposed that edible cannabis, cannabis extracts and cannabis topicals would be subject to all of the same record-keeping requirements that currently apply to all cannabis products, as well as to some additional requirements as described under the “Description” section above. The additional time required for the record keeping of these new products (over and above current record-keeping requirements) is assumed to be minimal. The CBA conducted for the Cannabis Regulations assumed that the amount of time needed to comply with current record-keeping requirements would be 30 minutes per week. The current CBA assumes that the additional proposed record-keeping requirements described herein would add an additional 10 minutes to the weekly record-keeping time. Records would be kept electronically, following the same procedures being used for the record keeping of products under the current Regulations. It is anticipated that the incremental cost of the proposed new record-keeping requirements for licence holders will be $689,816 PV over 10 years (or $98,214 annually).

E. Understanding the Regulations

Should the proposed amendments come into force, certain aspects of the regulatory framework for activities related to cannabis would change. This is especially true in respect of edible cannabis, cannabis extracts and cannabis topicals. In order to comply with any new or amended regulatory requirements, licence holders would spend time reviewing and understanding the requirements that would affect their day-to-day business operations. This CBA assumes that it would take the same amount of time, per licence holder, to read and understand the amended Regulations as it did for them to read and understand the current Regulations. It is anticipated that the measures taken to understand the amended Regulations would cost $190,021 PV over 10 years (or $27,055 annually).

Qualitative costs

A. Integrated dispensing mechanism

As noted in the “Description” section above, it is proposed that the immediate container of a cannabis extract in liquid form that is not in discrete units and that is not intended to be inhaled would be required to contain an integrated dispensing mechanism. The proposed requirement is intended to protect adult consumers and youth alike from the risks associated with overconsumption and accidental consumption. It is anticipated that the requirement to build an integrated dispensing mechanism into immediate containers would impose an incremental cost on licensed processors; however, Health Canada does not have the data necessary to quantify this cost at this time.

B. Limit of 1 000 milligrams of THC per package for cannabis extracts and cannabis topicals

As noted in the “Description” section above, it is proposed that the maximum amount of THC that would be allowed in a package for cannabis extracts and topicals would be 1 000 mg. As no such limit exists currently for cannabis oil, it is anticipated that this requirement would impose an incremental cost on licensed processors; however, Health Canada does not have the data necessary to quantify this cost at this time. It is proposed that a six-month transition period would be provided for activities in relation to cannabis oil, including this requirement. The proposed measure is considered an important safeguard in mitigating against the risk of accidental consumption and overconsumption.

C. Standardized cannabis symbol on vaping products

As noted in the “Description” section above, it is proposed that the display of the standardized cannabis symbol would be required on any cannabis accessory that contains cannabis extract that is intended to be inhaled and that contains more than 10 ppm THC, such as a vaping device or a vaping cartridge. This proposed new requirement is expected to result in a cost to federal licence holders; however, Health Canada does not have the data necessary to quantify this cost at this time.

D. Prohibition on manufacturing edible cannabis in a food facility

As noted in the “Description” section above, it is proposed that the production of edible cannabis at a site where conventional food products are also being manufactured for sale could only be done provided the edible cannabis were being produced within another building within the licensed site. It is anticipated that this proposed requirement would impose an incremental cost on licensed processors; however, Health Canada does not have the data necessary to quantify this cost at this time.

E. Prohibitions on representations

As noted in the “Description” section above, a number of prohibitions on representations have been proposed, including health benefit claims, nutrient content claims, cosmetic benefit claims, representations that associate a cannabis product with an alcoholic beverage, the representation of certain flavours that are appealing to youth in cannabis extracts, and the representation of edible cannabis as being a suitable means of meeting dietary requirements. It is anticipated that these proposed prohibitions would impose an incremental cost on licence holders, as the prohibitions would restrict the ability of licence holders to market their products. However, the proposed prohibitions are entirely consistent with the objective, as set out in the Act, to “protect young persons and others from inducements to use cannabis.”

Net benefits

A. No SFCR Licence

Under the baseline scenario, licensed processors would be subject to the Cannabis Act and the SFCA. Therefore, they would be required to obtain licences under the Cannabis Regulations and the SFCR. Under the regulatory scenario, licensed processors would not be required to obtain a licence under the SFCR.

This would result in a reduction in the administrative burden associated with the process of applying for a licence under the SFCR. It is anticipated that licensed processors wou