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Health Canada Proposes Sweeping Changes

The federal government is proposing a series of changes to cannabis regulations in an effort to reduce regulatory burden and support diversity and competition in the legal cannabis market.

The changes were announced by Health Canada in the June 8, 2024 edition of the Canada Gazette and are part of a 30-day consultation process ending on July 8, 2024.

Changes are proposed under five priority areas: licensing, personnel and physical security measures, production requirements, packaging and labeling requirements, and record-keeping and reporting requirements.

Health Canada says the changes will mean about $41 million in annualized net benefits in terms of administrative and compliance cost savings.

The proposed changes align with the findings and recommendations from the expert panel’s final report on the Legislative Review of the Cannabis Act released in March. The panel identified 54 recommendations and 11 observations to strengthen and improve the administration of the Act.

Licensing

Health Canada is proposing a number of changes under licensing to streamline regulations, promote research and development, and benefit small businesses in the cannabis industry.

These include:

  • Reduced burden for research and development: Small amounts of cannabis for non-human research wouldn’t require a license.
  • Increased production limits for micro-businesses: This would allow them to be more competitive.
  • More flexibility for quality assurance persons: This would streamline operations for licensed producers.
  • Simplified import/export procedures: Alternate ports of entry would be allowed.
  • Temporary license suspension for non-payment: This would encourage compliance.
  • Exemption for certain cannabis derivatives: This reduces unnecessary regulations.

Personnel and Physical Security Measures

Proposed changes under personnel and physical security measures include:

  • Security clearance not required on-site: Instead, focus will be on physical security measures and record-keeping.
  • Security cameras and alarms not required everywhere: They won’t be needed in areas where cannabis isn’t stored or handled.
  • Less strict storage area requirements: A separate “room within a room” won’t be mandatory, and entry/exit logs aren’t required.
  • Reduced video recording storage: Only recordings showing movement need to be kept for a year.

Overall, these changes would allow businesses more flexibility without compromising security of cannabis products.

Production Requirements

Health Canada is proposing the following changes to production requirements:

  • More flexibility for dried cannabis size: The one-gram limit per pre-rolled joint would be removed.
  • New cannabis products with alcohol:

o   Inhaled extracts (like vape pens) could contain up to 7.5g of total product, with a maximum of 10mg of ethyl alcohol per individual dose.

o   Edibles (ingested extracts) over 7.5g could contain up to 0.5%/weight of ethyl alcohol.

o   Topical cannabis products (creams, lotions) could contain denatured ethyl alcohol without concentration limits.

  • Restrictions to limit co-intoxication: Packaging, labels and advertising can’t associate cannabis products with alcohol.

Packaging and Labeling

Health Canada’s proposed changes to cannabis packaging and labelling regulations aim to improve consumer information and choice, promote public health, and reduce the burden on businesses.

Key changes to packaging include:

  • Allowing for more variation in packaging design, including different colours for lids and containers, and clear windows or transparent containers for certain products.
  • Removing the cumulative 10mg THC limit for an outermost container of edible cannabis product to allow greater flexibility in packing multiple immediate containers, as long as the immediate containers do not have more than 10mg of THC each.

Key changes to labelling include:

  • Allowing QR codes on packaging to link to additional information online.
  • Increasing the font size for key information such as cannabinoid content and potency.
  • Simplifying potency labelling to focus on total THC and CBD content.
  • Eliminating redundant information on labels, such as equivalency statements and expiry dates (unless determined).
  • Providing a window of flexibility for the packaging date on labels.

Record-Keeping and Reporting

Health Canada is also proposing a number of record-keeping and reporting changes to reduce the burden on cannabis licence holders while maintaining necessary oversight. These include:

  • Reduced record-keeping: Less information will be required about substances applied to cannabis, destruction methods for cannabis waste, and pre-destruction weight of cannabis plants.
  • Fewer reports: Licence holders will no longer need to submit reports on promotion spending or some key investor details.
  • Simplified reporting: Reporting on cannabis plant seeds and cultivation waste will be streamlined to align with industry practices and tax reporting requirements.

Industry Response

The proposed changes have been met with mixed reactions from industry.

Jim Southam, President & CEO of Prairie Cannabis, welcomes measures like increased production capacity and edible multipacks, but laments the lack of excise tax reduction: “The recommendations for regulation changes are a big step forward and will benefit the industry. Reducing the regulatory burden on LPs and increasing the grow canopy and processing capacity for micros will be a huge game changer. Allowing for 10mg edible multipacks will be welcomed by consumers, as well. It is unfortunate, however, that there was no mention of lowering the excise tax. That will continue to be a heavy burden for the industry.”

Others, like Joshua Vera, CEO of Elevate, believes some issues are being overlooked, particularly regarding potency limits: “As an industry we welcome the proposed amendments to the Cannabis Regulations and appreciate that Health Canada has a difficult task trying to strike a balance between public health interests and the natural evolution of a new market that is constantly evolving. While the news is a step in the right direction, as an industry we are also of the opinion that there are some glaring and simple regulatory changes that can be made in the interest of public health that continue to be overlooked. Specifically, when it comes to the potency limits around cannabis infused edibles.”

There’s also positive sentiment from retailers. Cory Waldron, CEO of Mood Cannabis and President of the Licensed Retail Cannabis Council of BC, commends the consideration of changes like increased THC limits and clearer packaging: “It’s really great that Health Canada has listened to our advocacy efforts regarding increasing edibles THC limits per package, allowing transparent windows on cannabis dried flower packaging, and changing the labelling on packaging, so that consumers can understand the contents better.”

He adds, “These changes are in alignment with what we have been advocating for, and consumers have been looking for changes like this for years now, and we commend the Expert Panel for reinforcing why consumers need these positive changes, and to Health Canada for considering these changes. I understand that regulations can take a long time to change, and it’s been a long five years. Consumers and the industry will welcome these changes, which help to remove the stigma and normalize cannabis in Canada.”

Overall, industry seems cautiously optimistic, with some concerns and a call for further reform. Read about the full changes here and add your comments before July 8th.

Tags: Canadian Cannabis (113), Cannabis Act (41), Cannabis Act review (7), Cannabis Industry (186), Cannabis Regulations (104), Government of Canada (6), Health Canada (65), legislative review (3)