Time for reform: cannabis regulations to undergo amendment to reduce regulatory burden

Health Canada has published a Notice of Intent¹ to review the Cannabis Regulations (Regulations) with the aim of streamlining and clarifying existing requirements, eliminating inefficiencies and duplicated requirements and reducing administrative and regulatory burdens where possible. Simplifying and reducing the regulatory burden in licensing, security, production, labelling and record keeping/reporting is the stated objective. This consultation period will result in draft amendments to the Regulations (to be published at a later date) and could lead to a refreshed cannabis regulatory framework that is more reflective of the practical realities of operating a cannabis business.

In this bulletin, our cannabis team reviews the main features of Health Canada's Notice of Intent.

What you need to know

Health Canada has invited stakeholders to identify issues and propose ways to generate efficiencies in the federal regulation of cannabis for Health Canada’s consideration. The regulator has also published a list of questions for the targeted areas listed below for stakeholders, as these are of high priority and where many of the upcoming amendments will likely focus:

• Licensing
• Personnel and physical security measures
• Production requirements for cannabis products
• Packaging and labelling requirements for cannabis products
• Record keeping and reporting for cannabis license holders

Health Canada seeking to reduce regulatory burden as industry matures

The Cannabis Act (the Act) and the Regulations came into force in 2018 to legalize and strictly regulate the cannabis supply chain from production, distribution, sale, import and export to possession of cannabis. Since then, the “legal cannabis industry has matured, the marketplace has evolved, and there is increased knowledge and data on public health and public safety risks associated with certain activities”². According to the notice, Health Canada “recognizes there may be regulatory measures that could be made more efficient and streamlined without compromising the public health and public safety objectives in the Act”³. This is welcome news for stakeholders who want to scale back requirements that are duplicative, redundant or overly onerous⁴.

Targeted amendments in key areas

Health Canada has flagged five priority areas for which they are seeking comments:

• Licensing. The Regulations set out a complex licensing regime wherein multiple license classes (e.g., cultivation, processing, sale) and subclasses (e.g., standard and micro) are subject to specific rules and requirements. Health Canada is considering changes to this licensing regime and is asking stakeholders whether new cannabis-related activities not currently found under any license class/subclass can be authorized, or whether there are any activities that an organization should be able to undertake without a license or permit.
• Personnel and physical security measures. A licence holder must comply with personnel and physical security requirements specific to their license class/subclass, including having a head of security, an organizational security plan and physical security measures, such as visual recording devices. Health Canada is asking for comments on how flexibility could be provided to streamline personnel security requirements and physical security requirements without increasing risks to public safety. As an example, Health Canada is asking stakeholders to consider whether it is possible to lift the requirement for visual monitoring during the off-season for outdoor cultivation without impacting public safety. 
• Production requirements for cannabis products. There are many regulatory requirements related to the formulation, production and composition of cannabis products, such as microbial and chemical contamination limits and prohibited ingredients⁵. Health Canada has “heard that there are product requirements that are more burdensome than those in analogous frameworks, such as those for medical devices or cosmetics”⁶. As a result, the regulator is asking for feedback on which requirements should be changed or eliminated and whether requirements from other relevant control frameworks should be carried over to cannabis (e.g., food or cosmetics).
• Packaging and labelling requirements for cannabis products. The Regulations set out robust rules on the packaging and labelling of cannabis and cannabis products. These requirements include plain packaging and labelling, child-resistant containers, labeling with standardized cannabis (THC) symbols and the display of a mandatory health warning message. Health Canada is considering modifying the packaging and labelling requirements and is seeking industry feedback on how best to do so without compromising public health and safety (e.g., simplifying required labels on cannabidiol (CBD) content, etc.).
• Record keeping and reporting for cannabis license holders. Current requirements include establishing and maintaining up-to-date inventories and retaining documents, including those related to the production of cannabis products, Good Production Practices (GPP), packaging and labelling and investors in the cannabis business⁷. Health Canada is considering regulatory changes that would simplify reporting processes and remove requirements that are not effective in meeting the aims of the Act.

The current call for industry feedback on potential changes to the Regulations also coincides with, but is distinct from, the Government of Canada’s legislative review of the Act, the objective of which is to review the administration and operation of the Act with a focus on young persons, Indigenous persons and communities and personal cultivation, along with reviewing access to cannabis for medical purposes⁸.

What’s next?

Submissions can be made by email to [email protected] until May 24, 2023. Following the close of submissions, Health Canada will complete a cost-benefit analysis of proposed regulatory changes and publish a proposal in the Canada Gazette with further public consultations to follow. We encourage our clients in the cannabis industry to participate in this process and share their feedback with Health Canada.