The legalization of adult-use cannabis in Canada

On June 21, the Cannabis Act (Act) received royal assent and we now know that as of October 17, adult-use cannabis will be legal in Canada, subject to the requirements of the Act and its regulations. 

Four new sets of regulations will be enacted under the Act, including the Cannabis Regulations (Regulations) and the new Industrial Hemp Regulations (IH Regulations).¹ Effective October 17, cannabis will no longer be regulated under the Controlled Drugs and Substances Act (the CDSA) or its regulations. The two existing cannabis-related regulations made under the CDSA, the Access to Cannabis for Medical Purposes Regulations (ACMPR) and the existing Industrial Hemp Regulations, will be repealed at that time.

The Regulations and IH Regulations will be published in the Canada Gazette, Part II on July 11, which means they will be “enacted” as of that date. These regulations establish the rules and standards for the licensing, production, distribution, sale, import and export of cannabis.

The Regulations

The Regulations add a lot of meat to the bones of the Act. They are divided into 16 parts. Highlights of the Regulations include:

• Licensing: the Regulations outline the six classes of licences as follows: cultivation (micro, standard and nursery); processing (micro and standard); analytical testing; cannabis drug licence; sale for medical purposes; and research. Although the Regulations do not provide much detail about the information that must be included in licence applications, they do outline the permitted activities and key personnel that will be required for certain licence holders. Additionally, the Regulations outline how existing licences relating to cannabis (i.e., under the ACMPR and Narcotic Control Regulations) will be transitioned to licences under the Act.

• Security Clearances: one of the “big news stories” out of the Regulations is the expanded (compared to the current ACMPR) list of persons who will be required to hold a security clearance, including all key personnel and individuals who are in a position to control a licence-holding corporation. Of note, the Senate’s suggestion to create a registry of shareholders of cannabis companies did not make it into the Act.

• Physical Security Measures: as promised, the government established a risk-based approach to regulation, and the physical security requirements set out in the Regulations are dependent on the type of licence.

• Packaging and Labelling: the Regulations establish plain packaging labelling for all cannabis products. Among other things: packaging cannot include metallic or fluorescent colours, embossing, decorative ridges or other texture features; cannot be capable of emitting a scent or sound; cannot have a cut-out window; and cannot contain branding or other images on the inside. There are also restrictions on the use of bar codes, requiring them to be displayed once and only in black and white. For labelling, the Regulations prescribe the information that must be included on cannabis products labels (e.g., mandatory health warnings, a standardized cannabis symbol, and specific product information) and confirm that a label may include one brand element, in addition to the brand name.

The Regulations also speak to “Cannabis Products,” namely dried and fresh cannabis, cannabis oil and cannabis accessories or components and other product forms, namely “Drugs Containing Cannabis.” Drugs containing cannabis will require a “cannabis drug licence,” which can only be issued to the holder of an establishment licence under the Food and Drug Regulations. 

The IH Regulations

Industrial hemp is cannabis that contains 0.3% THC or less in the flowering heads or leaves. The regulation of industrial hemp under the IH Regulations will be largely consistent with the regulation of industrial hemp under the current regime, with one significant change: the industrial hemp industry will now be permitted to sell entire hemp plants (including flowers, leaves and branches) to licenced cannabis processors. While low in THC, industrial hemp is rich in CBD, and the Canadian industrial hemp industry has long advocated for “whole plant use.”

The authors wish to thanks law student Xavier Foccroulle Ménard for his help in preparing this legal update.

Footnote

¹ The other two sets of regulations under the Act are the Qualifications for Designation as an Analyst Regulations (Cannabis) and the Cannabis Act (Police Enforcement) Regulations.