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Health Canada’s Rules for Promotions

Health Canada’s general enforcement policy is set out in its “Compliance and enforcement policy for the Cannabis Act” and the “Administrative monetary penalties under the Cannabis Act”. As these documents state, Health Canada would always prefer that parties voluntarily comply with the promotional requirements of the Cannabis Act, however, the promotional rules are nuanced and can be vague, which can lead to subjective determinations of what is compliant.

Q:  How are retailers allowed to promote cannabis products and accessories?

While designing compliant promotions can be tricky, I have seen some ingenious strategies from retailers over the last few years. The important thing to understand is that the federal prohibitions on cannabis promotion are prohibitive, not prescriptive. That means they state what you cannot do, rather than what you can do.

The general rule under the Cannabis Act is that the promotion of cannabis, cannabis accessories, and services related to cannabis is prohibited unless it falls under an exception. Some of the primary exceptions include the ability to promote by way of sending communications to adults by name (mailing lists, etc.), promoting in places where minors are prohibited by law (retail cannabis stores, etc), and telecommunications where the content creator has taken reasonable steps to ensure that the promotion cannot be accessed by a minor (websites with age gates, etc.). Don’t forget the ability to brand “things” with your brand elements—there are few limits on this exception—provided that the thing isn’t appealing or targeted at children and you are complying with the brand element display and sizing requirements. I think the two that offer the best possibilities are leveraging adult-only venues and branding “things”. Knowing which other businesses, venues, and events can obtain licenses that prohibit minors can provide an opportunity for offsite promotion. There is also value in branded gear and accessories, as long as it’s good quality and something people will use.

It is also important to understand and consider your provincial laws and policies when creating promotions as these may further restrict what options are available to you.

Q:  How does Health Canada enforce rules related to promotions?

When Health Canada identifies a promotion it considers offside, it has a variety of enforcement options available that are on a sliding scale of severity. These include, among other things: (a) issuing public advisories (such as clarifying what is considered appealing to minors); (b) sending letters flagging potential non-compliances; (c) sending warning letters requiring corrective action plans; and (d) levying administrative monetary penalties. The applicable enforcement approach is determined based on a number of factors, including the risk to public health and safety, the applicable behaviour or conduct, and the party’s compliance history. Our experience has been that Health Canada has prioritized education over penalization and that the first step is often a compliance or warning letter (provided it’s not an egregious non-compliance).

Examples of Health Canada’s enforcement outcomes are detailed in the “Compliance and enforcement report: Cannabis inspection data summary (fiscal year 2018-2019)” that sets out its promotional enforcement efforts between October 17, 2018 and March 31, 2019. During this period, Health Canada conducted 85 promotional compliance activities resulting in 48 enforcement actions, including 32 referrals to the RCMP. The other 16 enforcement actions were comprised of 12 compliance communications and four warning letters.

As mentioned previously, it’s also important to remember that your promotions may be subject to provincial law and policies. Provincial regulators generally have the power to condition, suspend, or revoke licenses as well as levy fines in the event of non-compliance and some may have more aggressive rules and enforcement approaches than Health Canada.

Q:  Why does there appear to be zero enforcement regarding age-gating and social media?

There is an old adage that “justice must not only be done, but must be seen to be done” and age-gating and social media enforcement is one area where there is room for improvement. Compared to other mediums, websites and social media still have the appearance of being the Wild West when it comes to cannabis promotion, due in part, to the sheer volume of content. There is also a debate about what constitutes reasonable efforts to ensure minors can’t access content online, which can complicate enforcement.

While investigations are regularly triggered by consumer and competitor complaints, in addition to proactive investigations by regulators, the main issue is that most enforcement actions are not public, which can lead to the perception that there is little enforcement. That being said, regulators are aware of these issues and enforcement is occurring at both the federal and provincial level.