Cannabis Producers – The Cannabis Regulations Have Now Been Published

On July 11, 2018, after several months of consultations, the federal government published in the Canada Gazette the Cannabis Regulations, which holders of a licence issued by Health Canada will have to comply with. Their publication is pursuant to the recent announcement by the government that the Cannabis Act and the regulations thereunder will come into force on October 17, 2018. The various industry players thus have several months to ready themselves for compliance with the regulations.

There is no great surprise regarding the types of licences that will be issued by Health Canada. As indicated during the consultation process, applications can be submitted for the following licence categories: standard cultivation, micro-cultivation, standard processing, micro-processing, analytical testing, sale, research, and a cannabis drug licence.

With respect to micro-cultivation, the total production surface-area must not exceed 200 m2, whereas for micro-processing, the holder must not possess more than 600 kg of dried cannabis, or its equivalent, in a calendar year.

Licence holders must also retain persons to fill certain key positions in accordance with the type of licence held.  Thus, the holder of a cultivation licence must retain the services of a master grower, while the holder of a processing licence must retain those of a quality assurance person. The holder of any licence must retain the services of a responsible person with authority to bind the holder, and of a person as the head of security.

There is a new opportunity where production is concerned: the federal government has opened the door to outdoor production of cannabis. It should be noted that the Quebec government has already indicated that it is not in favour of this idea and is contemplating restricting the practice under its own regulations, which should be published in a few weeks. This discord between the federal and Quebec governments could exacerbate the already existing bone of contention between them regarding home cultivation of cannabis for recreational purposes.

The major feature of these regulations is the requirement that holders of a licence for cultivation, processing or sale must keep a record of key investors, i.e. a person who, in respect of the holder of a licence, exercises or is in a position to exercise direct or indirect control over the holder by virtue of having provided money, goods or services to the holder, or who holds an ownership interest or any other right or interest in or in respect of the holder’s business. The holder must submit a copy of the record to Health Canada each year. This requirement however, will not apply to a holder that is an organization whose equity securities are listed on a published market.

Finally, the regulations also set out the guidelines for security clearances, physical security measures, packaging and labelling, as well as the importation or exportation of cannabis for medical or scientific purposes.

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