Legislative Progress Towards Legalization

An Overview of the Recently Published Cannabis Regulations

Howard Borlack,
Partner

September 2018

by Howard Borlack

Introduction

After a comprehensive regulatory consultation period with Canadians, municipal, provincial, and territorial governments, law enforcement officials, public health representatives, stakeholders, and Indigenous governments and representative organizations, among others, the federal government published the Cannabis Regulations to support the coming into force of the Cannabis Act (the "Act") in the Canada Gazette on July 11, 2018.

The Cannabis Regulations under the Act will serve to establish the rules and standards that will apply to the authorized production, distribution, sale, importation and exportation of cannabis, as well as other related activities respecting the classes of cannabis (i.e. cannabis oil, cannabis seeds) that will be permitted to be sold by authorized individuals once the legislative regime comes into force on October 17, 2018.

The two primary sets of regulations under the Act include the Cannabis Regulations and the Industrial Hemp Regulations. As the Cannabis and Industrial Hemp Regulations were canvassed and published at the federal level, municipal governments will still retain the authority to consult, draft, and enforce their own by-laws.

Industrial Hemp Regulations

Industrial hemp is a variety of the cannabis plant species that is grown specifically for the commercial uses of its derivative products, which include food, biofuel, clothing, and building materials. Industrial hemp is defined as a cannabis plant, or any part of that plant, which has been proven to consistently have a concentration of tetrahydrocannabinol ("THC") of 0.3% or less in the flowering heads and leaves.

The regulation of industrial hemp under the Industrial Hemp Regulations pursuant to the Act remains largely consistent with the previous regulatory regime pursuant to the Controlled Drugs and Substances Act (the "CDSA"). The licensing requirements in relation to the production, sale, import, and export of industrial hemp remain unchanged.

One notable change provides that the industrial hemp industry will now be authorized to commercially distribute hemp plants to licensed cannabis processors for the purpose of providing processors with cannabis products with lower concentrations of THC content and higher concentrations of cannabidiol ("CBD") content, of which industrial hemp is rich.

Cannabis Regulations

The Cannabis Regulations represent a robust regulatory framework designed to support the implementation of the Act and to appropriately address the public health and safety risks associated with cannabis use. Notable provisions of the newly published Cannabis Regulations include:

I. Licensing

The Cannabis Regulations established the following classes of licenses authorizing activities in relation to cannabis: a license for cultivation; a license for processing; a license for analytical testing; a license for sale; a license for research; and a cannabis drug license. In accordance with the Cannabis Regulations, these licenses will be subject to various requirements and conditions specific to the activities they authorize.

The Cannabis Regulations also mandate that valid license holders will require additional permits in order to authorize the importation or exportation of cannabis for medical or scientific purposes.

Additionally, the Cannabis Regulations outline how existing licenses authorizing cannabis-related activities (i.e. licenses pursuant to the Access to Cannabis for Medical Purposes Regulations) will be transitioned under the new regime pursuant to the Act.

II. Security Clearance Requirements

The Cannabis Regulations lists positions whose occupants will be mandated to hold a valid security clearance granted by the Minister of Health, including individual license holders, directors and officers of the license holder corporation, and any organizations that exert organizational control over the license holder.

With respect to all licenses issued under the Act, the Minister of Health will have the statutory discretion to require any individual or occupant of a position to hold a security clearance, depending on the activity being undertaken and the potential risks posed to public health and safety.

As it pertains to security clearance for applicants with criminal histories, Health Canada officials have indicated that prior criminal records would not automatically exclude applicants from applying for and subsequently obtaining a security clearance to access the legal cannabis market. Health Canada officials previously indicated that they would be open to the provision of security clearances to applicants with minor, non-violent, and low-risk criminal histories.

III. Packaging, Labeling, and Branding

The Cannabis Regulations will establish specific requirements that will apply to cannabis products packaged and labelled for retail sale, including safety features and plain packaging requirements. Cannabis will be required to be sold in opaque or translucent containers that are tamper-evident, child-resistant, and designed to subvert the risks of contamination. Product packaging will be required to be plain and in compliance with regard to brand images, logos, and mandatory warnings.

With respect to packaging, the maximum amount of dried cannabis that will be permitted to be sold in a single package will be 30 grams.

The Cannabis Regulations will establish strict rules on the use of colours, images, and branding elements. A standardized red cannabis symbol and a yellow warning label will be required on the label of cannabis products that contain higher concentrations of, along with mandatory health warning messages and the THC and CBD content of the within products.

Conclusion

The provisions outlined above represent only a portion of the requirements found in the newly enacted regulations. The Cannabis and Industrial Hemp Regulations provide detailed direction regarding legislative compliance with respect to the authorized production, distribution, sale, importation and exportation of cannabis.

During the transitional period between the Royal Assent and the coming into force of the Act on October 17, 2018, the Canadian Government will continue to assist the provinces, territories, Indigenous organizations, and all regulated and prospective regulatory parties to promote compliance with the Act and its regulations to ensure an orderly transition pursuant to the new regulatory regime.

See all articles in this theme of Legalized Marijuana:

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2. Product Liability for Producers, Distributors, and Dispensers
3. Drugged driving and how insurers can manage risk
4. Medical Marijuana: Considerations for Employers
5. Drug Recognition Experts and Drug-Impaired Driving
6. And The Litigation Begins...
7. Potential Impact on Social Hosts
8. Marijuana Legalization: Ontario Weighs In

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