Regulations Amending the Narcotic Control Regulations (Licences and Permits): SOR/2019-169

Canada Gazette, Part II, Volume 153, Number 12

Registration
SOR/2019-169 June 3, 2019

CONTROLLED DRUGS AND SUBSTANCES ACT
CANNABIS ACT

P.C. 2019-604 May 31, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Health, makes the annexed Regulations Amending the Narcotic Control Regulations (Licences and Permits) pursuant to

Regulations Amending the Narcotic Control Regulations (Licences and Permits)

Amendments

1 The long title of the Narcotic Control Regulations footnote 1 is replaced by the following:

Narcotic Control Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 The heading before section 2 and sections 2 to 29 of the Regulations are replaced by the following:

Interpretation

Definitions

2 (1) The following definitions apply in these Regulations.

Act means the Controlled Drugs and Substances Act. (Loi)

advertisement includes any representation by any means for the purpose of promoting, directly or indirectly, the sale or other disposal of a narcotic. (publicité.)

common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year. (conjoint de fait)

competent authority means a public authority of a foreign country that is authorized under the laws of the country to approve the importation or exportation of narcotics into or from the country. (autorité compétente)

compound includes a preparation. (composé)

designated criminal offence means

destroy means, in respect of a narcotic, to alter or denature it to such an extent that its consumption is rendered impossible or improbable. (destruction)

diacetylmorphine (heroin) includes the salts of diacetylmorphine. (diacétylmorphine (héroïne))

hospital means a facility

international obligation means an obligation in respect of a narcotic set out in a convention, treaty or other multilateral or bilateral instrument that Canada has ratified or to which Canada adheres. (obligation internationale)

licensed dealer means the holder of a licence issued under section 10.1. (distributeur autorisé)

methadone includes the salts of methadone. (méthadone)

midwife has the same meaning as in section 1 of the New Classes of Practitioners Regulations. (sage-femme)

narcotic means, subject to subsection (2),

nurse practitioner has the same meaning as in section 1 of the New Classes of Practitioners Regulations. (infirmier praticien)

pharmacist means a person who is entitled under the laws of a province to practise pharmacy and who is practising pharmacy in that province. (pharmacien)

podiatrist has the same meaning as in section 1 of the New Classes of Practitioners Regulations. (podiatre)

prescription means an authorization given by a practitioner that a stated amount of a narcotic be dispensed for the person named in it or the animal identified in it. (ordonnance)

qualified person in charge means the individual designated under subsection 9.2(1). (responsable qualifié)

Security Directive means the Directive on Physical Security Requirements for Controlled Substances and Drugs Containing Cannabis, as amended from time to time and published by the Government of Canada on its website. (Directive en matière de sécurité)

senior person in charge means the individual designated under section 9.1. (responsable principal)

test kit means a kit

verbal prescription narcotic means a narcotic that is contained in medication that may be prescribed verbally and that has the following characteristics:

Exception

(2) Despite subitem 2(2) of the schedule, the following are not narcotics for the purposes of these Regulations:

Possession

Authorized persons

3 (1) A person is authorized to possess a narcotic if the person has obtained the narcotic in accordance with these Regulations, in the course of activities conducted in connection with the administration or enforcement of an Act or regulation, or from a person who is exempt under section 56 of the Act from the application of subsection 5(1) of the Act with respect to that narcotic, and the person

Agent or mandatary

(2) A person is authorized to possess a narcotic if the person is acting as the agent or mandatary of any person who is authorized to possess it in accordance with any of paragraphs (1)(a) to (e), (h) and (i).

Agent or mandatary — person referred to in paragraph (1)(g)

(3) A person is authorized to possess a narcotic if

Test Kits

Authorized activities

4 A person may sell, possess or otherwise deal in a test kit if the following conditions are met:

Application for registration number

5 (1) The manufacturer of a test kit may obtain a registration number for it by submitting to the Minister an application containing

Signature and attestation

(2) The application must

Additional information or document

(3) The applicant must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Issuance of registration number

6 On completion of the review of the application for a registration number, the Minister must issue a registration number for the test kit, preceded by the letters “TK”, if the Minister determines that the test kit will only be used for a medical, laboratory, industrial, educational, law administration or enforcement, or research purpose and that it contains

Cancellation of registration number

7 The Minister must cancel the registration number for a test kit if

Licensed Dealers

Authorized Activities

General

8 (1) A licensed dealer may produce, assemble, sell, provide, transport, send, deliver, import or export a narcotic if they comply with these Regulations and the terms and conditions of their dealer’s licence and any permit issued under these Regulations.

Qualified person in charge present

(2) A licensed dealer may conduct an activity in relation to a narcotic at their site only if the qualified person in charge or an alternate qualified person in charge is present at the site.

Permit — import and export

(3) A licensed dealer must obtain a permit in order to import or export a narcotic.

Possession for export

(4) A licensed dealer may possess a narcotic for the purpose of exporting it if they have obtained it in accordance with these Regulations.

Opium poppy — production

(5) A licensed dealer may cultivate, propagate or harvest opium poppy only for scientific purposes.

Dealer’s Licences

Preliminary Requirements

Eligible persons

9 The following persons may apply for a dealer’s licence:

Senior person in charge

9.1 An applicant for a dealer’s licence must designate only one individual as the senior person in charge, who has overall responsibility for management of the activities with respect to narcotics that are specified in the licence application. The applicant may designate themself if the applicant is an individual.

Qualified person in charge

9.2 (1) An applicant for a dealer’s licence must designate only one individual as the qualified person in charge, who is responsible for supervising the activities with respect to narcotics that are specified in the licence application and for ensuring that those activities comply with these Regulations. The applicant may designate themself if the applicant is an individual.

Alternate qualified person in charge

(2) An applicant for a dealer’s licence may designate an individual as an alternate qualified person in charge, who is authorized to replace the qualified person in charge when that person is absent. The applicant may designate themself if the applicant is an individual.

Qualifications

(3) Only an individual who meets the following requirements may be designated as a qualified person in charge or an alternate qualified person in charge:

Exception

(4) An applicant for a dealer’s licence may designate an individual who does not meet any of the requirements of paragraph (3)(b) as a qualified person in charge or an alternate qualified person in charge if

Ineligibility

9.3 An individual is not eligible to be a senior person in charge, a qualified person in charge or an alternate qualified person in charge if, during the 10 years before the day on which the dealer’s licence application is submitted,

Issuance of Licence

Application

10 (1) A person who intends to conduct an activity referred to in section 8 must obtain a dealer’s licence for each site at which they intend to conduct activities by submitting an application to the Minister that contains the following information:

Documents

(2) An application for a dealer’s licence must be accompanied by the following documents:

Signature and attestation

(3) The application must

Additional information and documents

(4) The applicant must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Issuance

10.1 Subject to section 10.3, on completion of the review of the licence application, the Minister must issue a dealer’s licence, with or without terms and conditions, that contains

Validity

10.2 A dealer’s licence is valid until the expiry date set out in the licence or, if it is earlier, the date of the suspension or revocation of the licence under section 16 or 17.

Refusal

10.3 (1) The Minister must refuse to issue a dealer’s licence if

Exceptions

(2) The Minister must not refuse to issue a licence under paragraph (1)(b) or (i) if the applicant meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before refusing to issue a licence, the Minister must send the applicant a notice that sets out the Minister’s reasons and gives the applicant an opportunity to be heard.

Renewal of Licence

Application

11 (1) To apply to renew a dealer’s licence, a licensed dealer must submit to the Minister an application that contains the information and documents referred to in subsections 10(1) and (2).

Signature and attestation

(2) The application must

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Renewal

11.1 (1) Subject to section 11.3, on completion of the review of the renewal application, the Minister must issue a renewed dealer’s licence that contains the information specified in section 10.1.

Terms and conditions

(2) When renewing a dealer’s licence, the Minister may, if he or she has reasonable grounds to believe that it is necessary to do so, add a term or condition to it or modify or delete one in order to

Validity

11.2 A renewed dealer’s licence is valid until the expiry date set out in the licence or, if it is earlier, the date of the suspension or revocation of the licence under section 16 or 17.

Refusal

11.3 (1) The Minister must refuse to renew a dealer’s licence if

Exceptions

(2) The Minister must not refuse to renew a licence under paragraph (1)(b) or (i) if the licensed dealer meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before refusing to renew a licence, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Amendment of Licence

Application

12 (1) Before making a change affecting any information referred to in section 10.1 that is contained in their dealer’s licence, a licensed dealer must submit to the Minister an application to amend the licence that contains a description of the proposed amendment, as well as the information and documents referred to in section 10 that are relevant to the proposed amendment.

Signature and attestation

(2) The application must

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Amendment

12.1 (1) Subject to section 12.3, on completion of the review of the amendment application, the Minister must amend the dealer’s licence.

Terms and conditions

(2) When amending a dealer’s licence, the Minister may, if he or she has reasonable grounds to believe that it is necessary to do so, add a term or condition to it or modify or delete one in order to

Validity

12.2 An amended dealer’s licence is valid until the expiry date set out in the licence or, if it is earlier, the date of the suspension or revocation of the licence under section 16 or 17.

Refusal

12.3 (1) The Minister must refuse to amend a dealer’s licence if

Exceptions

(2) The Minister must not refuse to amend a licence under paragraph (1)(f) if the licensed dealer meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before refusing to amend a licence, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Changes Requiring Prior Approval by Minister

Application

13 (1) A licensed dealer must obtain the Minister’s approval before making any of the following changes by submitting a written application to the Minister:

Information and documents

(2) The licensed dealer must provide the Minister with the following with respect to a change referred to in subsection (1):

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Approval

13.1 (1) Subject to section 13.2, on completion of the review of the application for approval of the change, the Minister must approve the change.

Terms and conditions

(2) When approving a change, the Minister may, if he or she has reasonable grounds to believe that it is necessary to do so, add a term or condition to the licence or modify or delete one in order to

Refusal

13.2 (1) The Minister must refuse to approve the change if

Exceptions

(2) The Minister must not refuse to approve a change under paragraph (1)(c) if the licensed dealer has carried out, or signed an undertaking to carry out, the necessary corrective measures to ensure compliance with the Act, the Cannabis Act and their regulations, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use.

Notice

(3) Before refusing to approve a change, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard in respect of them.

Changes Requiring Notice to Minister

Prior notice

14 (1) A licensed dealer must notify the Minister in writing before

Information and list

(2) The notice must contain the information referred to in paragraph 10(1)(f) that is necessary to update the list and be accompanied by the revised version of the list.

Notice — five days

14.1 A licensed dealer must notify the Minister in writing within five days after a person ceases to act as the qualified person in charge or an alternate qualified person in charge.

Notice — 10 days

14.2 (1) A licensed dealer must notify the Minister in writing within 10 days after one of the following changes occurs:

Information and list

(2) A notice submitted under paragraph (1)(b) must specify which information referred to in paragraph 10(1)(f) is being changed and be accompanied by the revised version of the list.

Notice of cessation of activities

14.3 (1) A licensed dealer that intends to cease conducting activities at their site — whether on or before the expiry of their licence — must notify the Minister in writing to that effect at least 30 days before ceasing those activities.

Content of notice

(2) The notice must be signed and dated by the senior person in charge and contain the following information:

Update

(3) After having ceased to conduct the activities, the licensed dealer must submit to the Minister a detailed update of the information referred to in subsection (2) if it differs from what was set out in the notice. The update must be signed and dated by the senior person in charge.

Changes to Terms and Conditions of Licence

Addition of or modification to term or condition

15 (1) The Minister may, at any time other than at the issuance, renewal or amendment of a dealer’s licence, add a term or condition to it or modify one if the Minister has reasonable grounds to believe that it is necessary to do so to

Notice

(2) Before adding a term or condition to a licence or modifying one, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Urgent circumstances

(3) Despite subsection (2), the Minister may add a term or condition to a licence or modify one without prior notice if the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use.

Urgent circumstances — notice

(4) The addition or modification of a term or condition that is made under subsection (3) takes effect as soon as the Minister sends the licensed dealer a notice that

Deletion of term or condition

15.1 (1) The Minister may delete a term or condition of a dealer’s licence that the Minister determines is no longer necessary.

Notice

(2) The deletion takes effect as soon as the Minister sends the licensed dealer a notice to that effect.

Suspension and Revocation of Licence

Suspension

16 (1) The Minister must suspend a dealer’s licence without prior notice if the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use.

Notice

(2) The suspension takes effect as soon as the Minister sends the licensed dealer a notice that

Reinstatement of licence

(3) The Minister must reinstate the licence if the Minister has reasonable grounds to believe that the suspension is no longer necessary.

Revocation

17 (1) Subject to subsection (2), the Minister must revoke a dealer’s licence if

Exceptions

(2) The Minister must not revoke a dealer’s licence for a ground set out in paragraph (1)(e) or (g) if the licensed dealer meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before revoking a licence, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Return of licence

17.1 The licensed dealer must return the original of the licence to the Minister within 15 days after the effective date of the revocation.

Import Permits

Application

18 (1) A licensed dealer must submit to the Minister, before each importation of a narcotic, an application for an import permit that contains the following information:

Signature and attestation

(2) The application must

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Issuance

18.1 Subject to section 18.4, on completion of the review of the import permit application, the Minister must issue to the licensed dealer an import permit that contains

Validity

18.2 An import permit is valid until the earliest of

Return of permit

18.3 If an import permit expires, the licensed dealer must return the original of the permit to the Minister within 15 days after its expiry.

Refusal

18.4 (1) The Minister must refuse to issue an import permit if

Notice

(2) Before refusing to issue the import permit, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Providing copy of permit

18.5 The holder of an import permit must provide a copy of the permit to the customs office at the time of importation.

Declaration

18.6 The holder of an import permit must provide the Minister, within 15 days after the day of release of the narcotic specified in the permit in accordance with the Customs Act, with a declaration that contains the following information:

Suspension

19 (1) The Minister must suspend an import permit without prior notice if

Notice

(2) The suspension takes effect as soon as the Minister sends the licensed dealer a notice that

Reinstatement of permit

(3) The Minister must reinstate the import permit if the Minister has reasonable grounds to believe that the suspension is no longer necessary.

Revocation

20 (1) Subject to subsection (2), the Minister must revoke an import permit if

Exceptions

(2) The Minister must not revoke an import permit for a ground set out in paragraph (1)(d) or 17(1)(e) or (g) if the licensed dealer meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before revoking an import permit, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Return of permit

20.1 If an import permit is revoked, the licensed dealer must return the original of the permit to the Minister within 15 days after the effective date of the revocation.

Export Permits

Application

21 (1) A licensed dealer must submit to the Minister, before each exportation of a narcotic, an application for an export permit that contains the following information and document:

Signature and attestation

(2) The application must

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Issuance

21.1 Subject to section 21.4, on completion of the review of the export permit application, the Minister must issue to the licensed dealer an export permit that contains

Validity

21.2 An export permit is valid until the earliest of

Return of permit

21.3 If an export permit expires, the licensed dealer must return the original of the permit to the Minister within 15 days after its expiry.

Refusal

21.4 (1) The Minister must refuse to issue an export permit if

Notice

(2) Before refusing to issue the export permit, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Providing copy of permit

21.5 The holder of an export permit must provide a copy of the permit to the customs office at the time of exportation.

Declaration

21.6 The holder of an export permit must provide the Minister, within 15 days after the day of export of the narcotic specified in the permit, with a declaration that contains the following information:

Suspension

22 (1) The Minister must suspend an export permit without prior notice if

Notice

(2) The suspension takes effect as soon as the Minister sends the licensed dealer a notice that

Reinstatement of permit

(3) The Minister must reinstate the export permit if the Minister has reasonable grounds to believe that the suspension is no longer necessary.

Revocation

23 (1) Subject to subsection (2), the Minister must revoke an export permit if

Exceptions

(2) The Minister must not revoke an export permit for a ground set out in paragraph (1)(d) or 17(1)(e) or (g) if the licensed dealer meets the following conditions, unless the Minister has reasonable grounds to believe that it is necessary to do so to protect public health or safety, including to prevent a narcotic from being diverted to an illicit market or use:

Notice

(3) Before revoking an export permit, the Minister must send the licensed dealer a notice that sets out the Minister’s reasons and gives the dealer an opportunity to be heard.

Return of permit

23.1 If an export permit is revoked, the licensed dealer must return the original of the permit to the Minister within 15 days after the effective date of the revocation.

Identification

Name

24 A licensed dealer must include their name, as set out in their dealer’s licence, on all the means by which they identify themself in regard to their activities in relation to narcotics, including labels, orders, shipping documents, invoices and advertising.

Sale of Narcotics

Sale to another licensed dealer

25 A licensed dealer may sell or provide a narcotic to another licensed dealer.

Sale to pharmacist

25.1 (1) Subject to subsection (2), a licensed dealer may sell or provide a narcotic to a pharmacist.

Exception — pharmacist named in notice

(2) A licensed dealer must not sell or provide to a pharmacist who is named in a notice issued under subsection 48(1) the narcotics referred to in the notice.

Retraction

(3) Subsection (2) does not apply to a licensed dealer that has received a notice of retraction issued under section 49 in respect of a pharmacist named in a notice issued under subsection 48(1).

Sale to practitioner

25.2 (1) Subject to subsections (2) and (3), a licensed dealer may sell or provide to a practitioner a narcotic other than diacetylmorphine (heroin).

Exception — heroin

(2) A licensed dealer may sell or provide diacetylmorphine (heroin) to the following practitioners:

Exception — practitioner named in notice

(3) A licensed dealer must not sell or provide to a practitioner who is named in a notice issued under subsection 59(1) the narcotics referred to in the notice unless the dealer has received a notice of retraction issued under section 60.

Provision to hospital employee

25.3 (1) Subject to subsection (2), a licensed dealer may provide a narcotic to a hospital employee.

Exception — heroin

(2) A licensed dealer may provide diacetylmorphine (heroin) to a hospital employee only if that hospital provides care or treatment to persons.

Sale to exempted person

25.4 A licensed dealer may sell or provide a narcotic to a person who is exempted under section 56 of the Act with respect to the possession of that narcotic.

Sale to Minister

25.5 A licensed dealer may sell or provide a narcotic to the Minister.

Written order

25.6 A licensed dealer may sell or provide a narcotic under any of sections 25 to 25.5 if

Verbal order

25.7 (1) A licensed dealer may sell or provide a verbal prescription narcotic under sections 25 to 25.5 if

Receipt

(2) A licensed dealer that receives a verbal order from a pharmacist or practitioner must, within five working days after filling the order, obtain and keep a receipt that includes

No further sale without receipt

(3) If the licensed dealer has not obtained the receipt within five working days, the dealer must not sell or provide a narcotic to the pharmacist or practitioner in accordance with a further verbal order received from them until after obtaining the receipt.

Packaging and Transportation

Packaging — sale and provision

26 (1) A licensed dealer that sells or provides a narcotic, other than a preparation described in section 36, must securely package it in its immediate container, which must be sealed in such a manner that the container cannot be opened without breaking the seal.

Packaging — transport and export

(2) A licensed dealer that transports or exports a narcotic must ensure that its package is sealed in such a manner that the package cannot be opened without breaking the seal.

Exception

(3) Subsection (1) does not apply to a test kit that contains a narcotic and that has a registration number.

Transport

26.1 (1) A licensed dealer must, in taking delivery of a narcotic that they have imported or in making delivery of a narcotic,

Exception

(2) A licensed dealer may have a verbal prescription narcotic transported by a common carrier.

Thefts, Losses and Suspicious Transactions

Protective measures

27 A licensed dealer must take any measures that are necessary to ensure the security of any narcotic in their possession and any licence or permit in their possession.

Theft or loss — licences and permits

27.1 A licensed dealer that becomes aware of a theft or loss of their licence or permit must provide a written report to the Minister within 72 hours after becoming aware of it.

Theft or unexplainable loss — narcotics

27.2 A licensed dealer that becomes aware of a theft of a narcotic or of a loss of a narcotic that cannot be explained on the basis of normally accepted business activities must

Suspicious transaction

27.3 (1) A licensed dealer must provide a written report containing the following information to the Minister within 72 hours after becoming aware of a transaction occurring in the course of their activities that they have reasonable grounds to suspect may be related to the diversion of a narcotic to an illicit market or use:

Good faith

(2) No civil proceedings lie against a licensed dealer for having provided the report in good faith.

Non-disclosure

(3) A licensed dealer must not disclose that they have provided the report or disclose details of it, with the intent to prejudice a criminal investigation, whether or not a criminal investigation has begun.

Partial protection against self-incrimination

27.4 A report made under any of sections 27.1 to 27.3, or any evidence derived from it, is not to be used or received to incriminate the licensed dealer in any criminal proceeding against them other than a prosecution under section 132, 136 or 137 of the Criminal Code.

Destruction of Narcotics

Destruction at site

27.5 A licensed dealer that intends to destroy a narcotic at the site specified in their licence must ensure that the following conditions are met:

Destruction elsewhere than at site

27.6 A licensed dealer that intends to destroy a narcotic elsewhere than at the site specified in their licence must ensure that the following conditions are met:

Application for prior approval

27.7 (1) A licensed dealer must submit to the Minister an application that contains the following information in order to obtain the Minister’s prior approval to destroy a narcotic:

Signature and attestation

(2) The application must

Additional information and documents

(3) The licensed dealer must, not later than the date specified in the Minister’s written request to that effect, provide the Minister with any information or document that the Minister determines is necessary to complete the review of the application.

Approval

27.8 On completion of the review of the approval application, the Minister must approve the destruction of the narcotic unless

Documents

Method of recording information

28 A licensed dealer must record any information that they are required to record under these Regulations using a method that permits an audit of it to be made at any time.

Information — general

28.1 A licensed dealer must record the following information:

Verbal prescription narcotic

28.2 A licensed dealer that receives a verbal order for a verbal prescription narcotic and sells or provides it to a pharmacist, a practitioner or a hospital employee must immediately record

Explainable loss of narcotic

28.3 A licensed dealer that becomes aware of a loss of a narcotic that can be explained on the basis of normally accepted business activities must record the following information:

Destruction

28.4 A licensed dealer must record the following information concerning any narcotic that they destroy at the site specified in their licence:

Annual report

28.5 (1) Subject to subsections (2) and (3), a licensed dealer must provide to the Minister, within three months after the end of each calendar year, an annual report that contains

Non-renewal or revocation within first three months

(2) If a licensed dealer’s licence expires without being renewed or is revoked during the first three months of a calendar year, the dealer must provide to the Minister

Non-renewal or revocation after third month

(3) If a licensed dealer’s licence expires without being renewed or is revoked after the first three months of a calendar year, the dealer must provide to the Minister, within three months after the expiry or revocation, a report in respect of the portion of the calendar year during which the licence was valid that contains the information referred to in subsection (1) for that period, in which the quantity in physical inventory is to be calculated as of the date of expiry or revocation.

Retention period

29 A licensed dealer and a former licensed dealer must keep any document containing the information that they are required to record under these Regulations, including every declaration and a copy of every report, for a period of two years following the day on which the last record is recorded in the document and in a manner that permits an audit of the document to be made at any time.

Location

29.1 The documents must be kept

Quality of documents

29.2 The documents must be complete and readily retrievable and the information in them must be legible and indelible.

4 The Regulations are amended by adding the following before section 30:

Record of Narcotics Received

5 The Regulations are amended by adding the following before section 31:

Sale of Narcotics

6 (1) Paragraphs 31(2)(b) and (c) are replaced by the following:

(2) Subsection 31(2.1) of the Regulations is repealed.

7 Paragraphs 32(d) and (e) of the Regulations are replaced by the following:

8 The portion of section 33 of the French version of the Regulations before paragraph (a) is replaced by the following:

33 L’article 32 ne s’applique pas au pharmacien auquel le ministre a donné un avis de rétractation de l’avis :

9 Section 34 of the Regulations is replaced by the following:

Verbal prescription narcotic

34 Subject to section 39, a pharmacist may dispense a verbal prescription narcotic on receipt of a verbal order or prescription given by a person whom the pharmacist has taken reasonable precautions to determine is a practitioner.

10 (1) Paragraph 35(1)(a) of the Regulations is replaced by the following:

(2) Paragraphs 35(1)(b) and (c) of the French version of the Regulations are replaced by the following:

11 Sections 37 to 40 of the Regulations are replaced by the following:

Maximum Quantity

37 A pharmacist must not use an order or prescription to dispense a narcotic after the quantity of the narcotic specified in the order or prescription has been dispensed.

Records

Written order or prescription

38 If, in accordance with a written order or prescription, a pharmacist dispenses a narcotic, other than dextropropoxyphene, the pharmacist must immediately enter in a book, register or other record maintained for such purposes

Verbal order or prescription

39 A pharmacist must, before dispensing a verbal prescription narcotic in accordance with a verbal order or prescription, make a written record of it that sets out

File by date and number

40 A pharmacist must maintain a special narcotic prescription file in which are filed, in sequence as to date and number, all written orders and prescriptions for narcotics that they have dispensed and the written record of all verbal prescription narcotics that they have dispensed in accordance with a verbal order or prescription.

Retention period

40.1 A pharmacist must retain in their possession for a period of at least two years any records which they are required to keep by these Regulations.

12 The Regulations are amended by adding the following before section 41:

General Obligations of Pharmacist

13 The Regulations are amended by adding the following before section 45:

Return or Emergency Sale

14 Section 46 of the Regulations is replaced by the following:

Communication of Information by Minister to Licensing Authority

Contraventions by pharmacist

46 The Minister must provide in writing any factual information about a pharmacist that has been obtained under the Act or these Regulations to the provincial professional licensing authority that is responsible for the authorization of the person to practise their profession

Notice of Prohibition of Sale

15 Sections 48 and 49 of the Regulations are replaced by the following:

Notice by Minister

48 (1) In the circumstances described in subsection (2), the Minister must send a notice to the persons and authorities specified in subsection (3) advising them that pharmacists practising in the notified pharmacies and licensed dealers must not sell or provide to the pharmacist named in the notice one or more of the following:

Circumstances requiring a notice

(2) The notice must be sent if the pharmacist named in the notice has

Recipients

(3) The notice must be sent to

Other circumstances

(4) The Minister may send the notice described in subsection (1) to the persons and authorities specified in subsection (3) if the Minister has taken the measures specified in subsection (5) and has reasonable grounds to believe that the pharmacist named in the notice

Measures before sending notice

(5) The measures that must be taken before sending the notice are that the Minister has

Notice of retraction

49 The Minister must provide the licensed dealers, pharmacies and provincial professional licensing authorities who were sent a notice under subsection 48(1) with a notice of retraction of that notice if

16 The Regulations are amended by adding the following before section 53:

Administer, Prescribe or Sell Narcotics

17 Paragraphs 54(1)(a) and (b) of the Regulations are replaced by the following:

18 The Regulations are amended by adding the following before section 55:

General Obligations of Practitioner

19 Section 57 of the Regulations is replaced by the following:

Communication of Information by Minister to Licensing Authority

Contraventions by practitioner

57 The Minister must provide in writing any factual information about a practitioner that has been obtained under the Act or these Regulations to the provincial professional licensing authority that is responsible for the registration and authorization of the person to practise their profession

Notice of Prohibition of Sale

20 Sections 59 and 60 of the Regulations are replaced by the following:

Notice by Minister

59 (1) In the circumstances described in subsection (2), the Minister must send a notice to the persons and authorities specified in subsection (3) advising them that

Circumstances requiring a notice

(2) The notice must be sent if the practitioner named in the notice has

Recipients

(3) The notice must be sent to

Other circumstances

(4) The Minister may send the notice described in subsection (1) to the persons and authorities specified in subsection (3) if the Minister has taken the measures specified in subsection (5) and has reasonable grounds to believe that the practitioner named in the notice

Measures before sending notice

(5) The measures that must be taken before sending the notice are that the Minister has

Notice of retraction

60 The Minister must provide the licensed dealers, pharmacies and provincial professional licensing authorities who were sent a notice under subsection 59(1) with a notice of retraction of that notice if

21 (1) The portion of section 63 of the French version of the Regulations before paragraph (a) is replaced by the following:

63 Le responsable d’un hôpital satisfait aux exigences suivantes :

(2) Subparagraph 63(a)(v) of the French version of the Regulations is replaced by the following:

22 The portion of section 64 of the French version of the Regulations before paragraph (a) is replaced by the following:

64 Le responsable d’un hôpital satisfait aux exigences suivantes :

23 (1) Subsection 65(1) of the French version of the Regulations is replaced by the following:

(1) Il est interdit au responsable d’un hôpital de permettre qu’un stupéfiant soit administré, vendu ou fourni si ce n’est en conformité avec le présent article.

(2) Subsection 65(2) of the Regulations is replaced by the following:

(2) On receipt of a written order or prescription signed and dated by a practitioner, the person in charge of a hospital may permit a narcotic, other than diacetylmorphine (heroin), to be administered to a person or an animal under treatment as an in-patient or out-patient of the hospital, or to be sold or provided for the person or to the person in charge of the animal.

(2.1) On receipt of a verbal prescription given by a practitioner, the person in charge of a hospital may permit a verbal prescription narcotic to be administered to a person or an animal under treatment as an in-patient or out-patient of the hospital, or to be sold or provided for the person or to the person in charge of the animal.

(3) Subsection 65(3) of the French version of the Regulations is replaced by the following:

(3) Sous réserve du paragraphe (5.1), le responsable d’un hôpital peut, à la réception d’une commande écrite qui est signée et datée par un pharmacien d’un autre hôpital ou par un praticien autorisé à signer celle-ci par le responsable de l’autre hôpital, permettre qu’un stupéfiant soit fourni pour une urgence à un employé de l’autre hôpital ou à un praticien exerçant dans celui-ci.

(4) Subsection 65(4) of the French version of the Regulations is replaced by the following:

(4) Sous réserve du paragraphe (5.1), le responsable d’un hôpital peut, à la réception d’une commande écrite, signée et datée par un pharmacien permettre qu’un stupéfiant soit vendu ou fourni pour une urgence à celui-ci.

(5) Subsection 65(5.1) of the French version of the Regulations is replaced by the following:

(5.1) Il est interdit au responsable d’un hôpital de permettre que le stupéfiant soit vendu ou fourni en vertu des paragraphes (3) ou (4) à moins que la personne qui vend ou fournit le stupéfiant vérifie la signature, lorsqu’elle ne la reconnaît pas, du pharmacien de l’autre hôpital ou du praticien autorisé à signer une commande par le responsable de l’autre hôpital.

(6) Subsection 65(6) and (7) of the Regulations are replaced by the following:

(6) A person in charge of a hospital may permit a narcotic to be provided to a person who is exempted under section 56 of the Act with respect to the possession of the narcotic and who is employed in a research laboratory in the hospital for the purpose of research.

(7) The person in charge of a hospital may permit diacetylmorphine (heroin) to be sold, provided or administered to a person under treatment as an in-patient or out-patient of the hospital on receipt of a written order or prescription signed and dated by a practitioner of medicine or dentistry or a nurse practitioner.

24 Sections 68 to 70 of the Regulations are replaced by the following:

Identification or analysis of narcotic

68 (1) Despite anything in these Regulations, a person may, for the purpose of identification or analysis of a narcotic, provide or deliver it to

Agent or mandatary of practitioner of medicine

(2) An agent or mandatary of a practitioner of medicine who receives the narcotic must immediately provide or deliver it to

Practitioner of medicine

(3) A practitioner of medicine who receives the narcotic must immediately provide or deliver it

Records — person who is exempted or who has received a narcotic for the purpose of identification or analysis

69 Every person who is exempted under section 56 of the Act with respect to the possession of a narcotic — other than a person to whom a narcotic has been administered, sold, delivered or provided by a practitioner of medicine who is exempted under section 56 of the Act from the application of any subsection of section 53 with respect to that narcotic —, every practitioner of medicine who has received a narcotic under subsection 68(1) or (2) and every agent or mandatary of a practitioner of medicine who has received a narcotic under subsection 68(1) must

Advertising

70 It is prohibited to

25 Section 71 of the Regulations is repealed.

26 Section 72 of the Regulations is replaced by the following:

Notification of application for order of restoration

72 (1) For the purpose of subsection 24(1) of the Act, notification of an application for an order of restoration must be given in writing to the Attorney General by registered mail and be mailed at least 15 days before the date on which the application is to be made to a justice.

Content of notice

(2) The notification must specify

27 Sections 73 and 74 of the Regulations are replaced by the following:

Communication of information by Minister to nursing statutory body

73 (1) The Minister may provide to a nursing statutory body any information concerning any member of that body that has been obtained under these Regulations or the Act.

Non-application

(2) Subsection (1) does not apply to a nurse practitioner.

Definitions

(3) The following definitions apply in this section.

member means any person who is authorized by a nursing statutory body to practice nursing. (membre)

nursing statutory body means any provincial professional licensing authority that, in accordance with the laws of that province, authorizes a person to practise nursing. (organisme régissant la profession d’infirmier)

Exemption — member of police force

74 A member of a police force or a person acting under their direction and control who, in respect of the conduct of the member or person, is exempt from the application of subsection 4(2) or section 5, 6 or 7 of the Act by virtue of the Controlled Drugs and Substances Act (Police Enforcement) Regulations is, in respect of that conduct, exempt from the application of these Regulations.

28 The portion of item 18 of the schedule to the Regulations before subitem (1) is replaced by the following:

Consequential Amendments

Precursor Control Regulations

29 Paragraph 6.1(a) of the Precursor Control Regulations footnote 2 is replaced by the following:

Cannabis Regulations

30 Paragraph 146(4)(a) of the Cannabis Regulations footnote 3 is replaced by the following:

Coming into Force

31 (1) These Regulations, except section 28, come into force on the 180th day after the day on which they are published in the Canada Gazette, Part II.

(2) Section 28 comes into force on the day on which these Regulations are published in the Canada Gazette, Part II.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

The legislative and regulatory framework in Canada for controlled substances has evolved over decades to address emerging issues and meet international commitments under the United Nations drug control conventions. As a result, some of the regulations under the Controlled Drugs and Substances Act (CDSA) are relatively recent while others are far older. The Narcotic Control Regulations (NCR), for example, first came into force in 1961 under the Narcotic Control Act (the legislation that preceded the CDSA), while the Benzodiazepines and Other Targeted Substances Regulations (BOTSR) only came into force in 2000.

This evolution has resulted in a set of regulations that, while containing broadly similar provisions, also feature several issues, gaps and inconsistencies regarding the issuance of licences and permits under the NCR and the BOTSR, as well as the Food and Drug Regulations, Part G (FDR-G), and the Food and Drug Regulations, Part J (FDR-J). The key issues, gaps and inconsistencies in terms of the licence and permit scheme set out in these regulations include

In addition, inconsistencies in the overall structure of these regulations result in reduced clarity and potential confusion, leading to administration and compliance problems. For example, while there are provisions requiring permits for import and export of controlled substances in the NCR, the FDR-G and the FDR-J, there are no provisions in these regulations outlining the permit application and issuance process similar to those in the BOTSR. Instead, the permit application and issuance process for the NCR, the FDR-G and the FDR-J has been established by Health Canada via policy.

Notwithstanding amendments made over the years to the above-noted regulations, particularly since the enactment of the CDSA, these and other issues, gaps and inconsistencies have remained unaddressed. As a result, challenges have arisen with respect to the administration of these regulations by Health Canada and with respect to regulatory compliance by licensed dealers.

Background

The CDSA is one of the federal statutes that provides a legislative framework for the control of substances that can alter mental processes and that may cause harm to the health of an individual or to society when diverted or misused. Among other things, the CDSA enables the Governor in Council to make regulations with respect to authorizing legitimate activities with the substances controlled under the CDSA, particularly (although not exclusively) through the issuance of licences and permits.

The CDSA is one of the means by which Canada fulfills its obligations under the United Nations Single Convention on Narcotic Drugs, 1961 (1961 Convention), the Convention on Psychotropic Substances, 1971 (1971 Convention), and the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (1988 Convention). These conventions form the basis for the current global drug control system and require the signatories to, among other things, place controls on legitimate activities with controlled substances conducted by authorized persons or businesses.

The CDSA prohibits any person from conducting activities such as the production, sale and provision, importation and exportation of controlled substances unless authorized by regulation or specifically exempted by the Minister of Health. The CDSA also specifies the range of penalties associated with the conduct of illegal activities with controlled substances.

When the CDSA was enacted in 1996, it set out a new legislative framework for controlled substances by repealing the Narcotic Control Act and Part III and Part IV of the Food and Drugs Act. Since then, changes have been made to various provisions of the CDSA and to some of its regulations in order to address emerging issues and to allow Canada to meet its international obligations under the United Nations drug control conventions.

The following regulations under the CDSA contain provisions for the issuance, by the Minister of Health, of licences and permits authorizing certain activities with controlled substances, including their production, import and export:

Objectives

The objectives of this regulatory initiative are

Description

The majority of the amendments relate to provisions regarding the issuance of licences and permits. In particular, these amendments

Licences and permits

The provisions with respect to licences and permits in the NCR, the BOTSR, the FDR-G and the FDR-J are replaced with modernized and harmonized provisions, drafted in accordance with the current legal drafting convention. More specifically, the licence and permit part has been reorganized and includes additional headings identifying the processes involved in the application for, and the issuance of, licences and permits as well as requirements for licensed dealers.

The updated headings are organized along the following lines:

In addition to headings, there are also subheadings that generally cover the following topics:

While the above-noted modifications make requirements and conditions pertaining to the issuance of licences and permits easier to understand, this regulatory initiative also makes the following substantive changes to the licence and permit scheme in these regulations.

Issuance of licences and permits

Requirements for licensed dealers

The amendments introduce the following new substantive requirements for licensed dealers:

The regulatory amendments also add a provision in the NCR, the BOTSR, the FDR-G and the FDR-J regarding partial protection from self-incrimination for a licensed dealer who reports an incident of loss or theft to law enforcement that leads to a criminal investigation.

Addressing public health and safety issues

Given the risk to public health and safety caused by the diversion and misuse of controlled substances, the amended regulations authorize the Minister to add, modify or remove any terms or conditions in a licence at a time other than licence issuance, amendment or renewal.

Consequential and other amendments

The amendments also modify numerous definitions and provisions in other parts of these regulations either as consequential amendments or as a result of applying the current legislative drafting convention for greater clarity and readability. The amendments also repeal provisions relevant to inspectors, as the CDSA was amended in 2017 to include more detailed provisions regarding inspections.

In addition, the previous versions of the NCR, the FDR-G and the FDR-J did not contain marginal notes. In order to improve the accessibility of the provisions of these regulations, marginal notes have been included in the amendments to the FDR-J (which is being replaced as a whole) and in the amendments to the licence and permit provisions of the NCR and the FDR-G. After these amendments have been published in Part II of the Canada Gazette and come into force, marginal notes will be added administratively to the other (unamended) provisions of the NCR and Part G in the consolidated version of these regulations on the Department of Justice website, so that the NCR, the FDR-G and the FDR-J will have a full set of marginal notes.

Furthermore, due to the renumbered provisions in these regulations, which are referenced in other regulations, consequential amendments have been made to the relevant provisions in the following regulations:

A separate set of regulations, under the legislative authority of the Financial Administration Act, has also been made to make consequential amendments to the following regulations:

“One-for-One” Rule

The “One-for-One” Rule applies and this regulatory initiative is an “OUT” for the purpose of controlling administrative burden, as the regulatory modifications result in an overall reduction in administrative burden on affected industry stakeholders. The reduction in administrative burden cost is banked and the administrative credits are used to offset administrative burden costs imposed by other regulations implemented under the health portfolio.

Once the amended regulations are implemented, a number of activities that are resulting in an administrative burden on industry stakeholders will either no longer be required or be reduced, resulting in an overall reduction in administrative burden and related costs. The changes in the administrative burden are discussed in detail in the “Benefits and costs” section; essentially, impacted business licensed dealers will see benefits over the 10-year period of analysis for the following reasons:

It is assumed that completing the activities mentioned above usually involves someone with a technical or scientific background, such as a QPIC or an A/QPIC, and someone at management level, such as a SPIC. The estimated level of effort by QPICs and SPICs to complete each of the above administrative tasks was determined based on responses to a questionnaire sent to licensed dealers in March 2018 which provided estimates of the length of time necessary to fill in various forms associated with licences and permits. The time spent or avoided in relation to these activities is valued using average wage rates of $28.76 and $53.45 per hour (adjusted for overhead and in 2012 dollars) for QPIC and SPIC respectively.

As per the requirements of the Red Tape Reduction Act and the Red Tape Reduction Regulations, the reduction in administrative burden costs for all affected industry stakeholders is estimated over a 10-year period (2019–2028) and discounted to 2012 using a 7% real discount rate. The total net administrative cost savings to licensed dealers are estimated to be $373,218 or $53,138 annually. The annualized cost savings are $225 per licensed dealer.

Small business lens

The small business lens does not apply to this regulatory initiative, as the amendments will decrease costs to all businesses, including small businesses.

Consultation

Consultations prior to publication in the Canada Gazette, Part I

A notice to interested parties was published in the Canada Gazette, Part I, on May 23, 2015, outlining the proposed key changes to the NCR, the BOTSR, the FDR-G and the FDR-J described above. Feedback from stakeholders in response to this notice was very positive. Concerns were raised by key stakeholders during a subsequent targeted meeting regarding a newly proposed record keeping and reporting requirement, but the requirement has not been included in this regulatory proposal.

It should be noted that while the notice also signalled Health Canada’s intent to make certain amendments to the Precursor Control Regulations (PCR), the Department subsequently decided that the PCR will be the subject of a stand-alone regulatory review in the future. Therefore, the present regulatory initiative targets the NCR, the BOTSR, the FDR-G and the FDR-J only.

Comments received following publication in the Canada Gazette, Part I

Health Canada published the proposed amendments in the Canada Gazette, Part I, on June 23, 2018, for a 75-day public comment period. Two submissions were received from industry stakeholders.

Rationale

The evolution of the regulatory framework for controlled substances in Canada over the last few decades has resulted in a set of regulations that, while containing broadly similar parts and provisions, also feature a series of issues, gaps and inconsistencies related to provisions governing the issuance of licences and permits.

This has resulted in administrative burden and challenges to the implementation of these regulations. The amended regulations rectify these issues, gaps and inconsistencies, and, in so doing, modernize the NCR, the BOTSR, the FDR-G and the FDR-J and improve the administration of, and compliance with, these regulations.

Benefits and costs

A cost-benefit analysis was conducted to estimate the impacts of the amendments on the NCR, the BOTSR, the FDR-G and the FDR-J on potentially affected stakeholders (i.e. businesses, universities and research institutions, and the Government of Canada). All identified costs and benefits were assessed in incremental terms by considering changes that only occur as a result of the regulatory modifications.

It should be noted that some of the requirements (e.g. submitting an annual report, reporting suspicious transactions, destroying remaining controlled substances, submitting a declaration after the completion of an importation/exportation or providing notification for the cessation of activities) will not result in any material incremental impacts on targeted stakeholders, since it is currently the practice for licensed dealers to undertake these activities.

The Government of Canada collects fees to process licence applications and renewals on a full cost-recovery basis. With the extension of the licence validity period, the majority of the licences will not have to be renewed every year. For those licences that will not be renewed, the service that will have been associated with processing those applications will no longer be provided and the associated fees will not be collected. The reduction in fees collected will be offset by a reduction in processing costs and will therefore not constitute an incremental impact on the Government of Canada.

All impacts are quantified and monetized to the extent possible. Where this is not possible due to data limitations or lack of sufficient information, the impacts are described qualitatively. Together, the quantified and non-quantified impacts provide a more accurate picture of the costs and benefits to stakeholders and allow for an adequate assessment of the net impact of the amendments.

All costs and benefits were estimated over a period of 10 years, from 2019 to 2028. This time period is considered long enough for all the costs and benefits to manifest themselves sufficiently.

All cost and benefit estimates are expressed in 2012 Canadian dollars (real monetary values).

A 7% real discount rate is used to estimate the present value (PV) of the incremental costs and incremental benefits and all values are discounted to 2019.

There were about 275 sites licensed to conduct activities with controlled substances (human or veterinary) in 2017. These sites are operated by businesses, research institutions, universities or government agencies. Among these sites, 236 are operated by businesses, 19 of which belong to small businesses. There is not enough historical data to observe the variations in the number of site licences over time; however, the number of licences in 2018 is similar to that of 2017. For this cost-benefit analysis, the number of licences is assumed to be constant over the analytical period.

Benefits

Benefits to businesses

Under the amended regulations, business licensed dealers will see a number of benefits associated with a reduction in both compliance and administrative burden. The present value of the total benefit to businesses over the 10-year analytical period is estimated to be $6.24 million (or $888,760 annually).

Increasing the maximum licence validity period

Extending the maximum licence validity period from one year to three years in the BOTSR harmonizes this provision in all four regulations and will provide significant benefit to licensed dealers, as the frequency of renewing a licence can be reduced from once every year to once every three years. Due to such amendments, Health Canada will make policy and operational adjustments when determining the validity period of a licence based on certain factors such as the compliance history of a licensed dealer. Health Canada estimates that 95% of licences (i.e. 224 licences) will receive a three-year validity period. These licensed dealers will enjoy both administrative burden cost savings as well as financial savings in the form of avoided payment of fees for two of the three years for which the licences are valid. Given the estimated time that will not be spent preparing a licence renewal application (1.5 hours, i.e. 1 hour for a QPIC and 0.5 hour for a SPIC) combined with the associated criminal record checks and the licensing fees footnote 4 that will not be paid, licensed dealers will save $4.62 million (PV) in costs (or $657,240 annually).

Removing the requirements on individuals authorized to place an order

The amendments remove the requirement that a business provide, in its licence application, the name of the individuals authorized to place an order as well as the requirement that businesses submit an application to amend the list of “individuals authorized to place an order.” Licensed dealers will benefit from these regulatory changes as they no longer need to spend time filling in and submitting the “Application for changes affecting personnel in charge” form (20 minutes, i.e. 15 minutes for a QPIC or an A/QPIC and 5 minutes for a SPIC) to have the list of individuals authorized to place an order updated whenever there is a change in personnel. In 2017, 226 submissions from businesses with respect to changes in personnel were received by Health Canada. Among them, 66% (149 amendment submissions) contained changes regarding individuals authorized to place an order. Assuming the number of such requests remains unchanged over time, it is estimated that the amendments will save the industry $12,300 (PV) or $1,751 annually.

Expansion of educational and professional criteria for QPIC or A/QPIC

Licensed dealers will benefit from broadening the scope of acceptable educational and professional qualifications for a QPIC or an A/QPIC. It is assumed that licensed dealers whose routine business consists of non-science-based activities such as wholesale or distribution do not necessarily require a QPIC or A/QPIC to hold a scientific or similar degree and will benefit most from the amendments. These licensed dealers will be able to designate an employee with other types of educational backgrounds (e.g. training as pharmacy technician, qualification in supply chain management) earning lower wages to be a QPIC or an A/QPIC. In 2017, there were approximately 60 licensed dealers engaged only in wholesale or distribution of controlled substances. It is assumed that these companies will assign the QPIC or A/QPIC function to an employee earning a lower wage. As a result of the change in personnel, these businesses will save about $1.41 million in PV (or approximately $200,959 annually).

Removing the annex to the licences

Currently, licensed dealers that make or assemble products or compounds containing controlled substances have to apply for a licence amendment to reflect in the annex to the licence any changes to requisite information (e.g. brand name, strength per unit) regarding these products and compounds. In 2017, 38% of licence amendment applications (62 applications) were submitted to make changes to the licences’ annexes. Given the absence of historical data on trends, this number is assumed to remain constant over time. Removing the annex to the licence and requiring instead a notification to the Minister in relation to these types of changes will eliminate the need for licence amendments. This change will provide benefits to affected licensed dealers as it will reduce the administrative burden they face, and at the same time eliminate the potential delay licensed dealers may face in conducting their activities while waiting for the licence amendment to be processed. When accounting for the time it would normally take to submit a notification to the Minister, around 15 minutes (10 minutes for a QPIC or A/QPIC and 5 minutes for a SPIC) will be saved by licensed dealers by not having to apply for a licence amendment. The associated administrative burden cost savings to licensed dealers are estimated to be approximately $4,120 in PV (or $587 annually).

Extending permit validity period

The amendments extend the validity period of import and export permits to up to 180 days. Some licensed dealers have indicated that insufficient permit validity length has prevented them from completing their import or export transactions. This has resulted in these licensed dealers not being able to use the permits, and in most of these cases, having to reapply for a permit.

On average, 23% of permits granted in 2016 and 2017 were not used. Licensed dealers had reapplied for 63% of the unused permits at a later date within the same year in order to complete the same transaction. It is not possible to determine with a large degree of certainty the number of permits that were not used and had to be reapplied for solely because of the length of the permit validity period. However, it is reasonable to assume that in 90% of the cases, the permits were not used because the validity period had expired. These regulatory amendments will benefit licensed dealers as they will reduce the risk of delay in completing their import or export transaction and will eliminate the additional administrative burden associated with reapplying for a permit (45 minutes to prepare the application: 30 minutes for a QPIC or A/QPIC and 15 minutes for a SPIC). The resulting administrative burden cost savings to impacted licensed dealers are estimated to be approximately $198,230 in PV (or $28,224 annually).

Benefits to private laboratories, researchers and research institutions

Universities and other research institutions that hold a dealer’s licence will also benefit from the amendments to provisions regarding the licence validity period and the individuals authorized to place an order. Currently, there are 25 laboratories and research institutions, including 19 universities, holding dealers’ licences. As per the risk-based approach, it is expected that 95% of them (about 24) will see a reduction in administrative burden as they no longer have to renew their licences every year or amend their list of individuals authorized to place an order. These reductions in time spent by QPIC and SPIC and the avoided fees will translate into savings of $49,056 in PV over 10 years (or $6,984 annually).

Benefits to the Government

There are 14 government institutions (departments, agencies and laboratories) conducting activities with controlled substances. These activities include supplying controlled substances to third parties or conducting forensic laboratory work. These government licensed dealers will benefit from the expansion of a licence validity period in the form of time saved as they only need to renew a licence once every three years. Considering the time it normally takes to fill in a licence application, the amendments will save them 145 hours over 10 years.

Health Canada will also benefit from the amendments. The expected reduction in the number of submissions received by Health Canada in relation to permit reapplications will result in time savings. This time savings will total 4 840 hours over 10 years.

The total time saved by the Government will translate into savings of $139,127 in PV over 10 years (or $19,809 annually).

The reduced burden on government resources will also provide benefits in that the available resources will be used to ensure and likely further improve services provided by the Department under the controlled substances licensing and permitting regime, for example, by meeting the service standards for licence and permit issuance with a higher percentile.

Allowing the Minister to impose conditions on a licence at a time other than at issuance, renewal or amendments enables her to take timely actions to address areas of risk where controlled substances can be diverted to illicit markets and uses. Formalizing the reporting of suspicious transactions, and requiring the reporting of losses and thefts on a particular timeline will enhance the capacity of the Minister to identify any trend or instance of diversion attempts and take necessary enforcement actions, thereby increasing the overall effectiveness of the controlled substances regime.

Health and safety benefits

There will be additional non-quantifiable benefits to Canadians as the Minister is able to add, modify or remove terms and conditions on a licence (at a time other than at issuance, amendment or renewal) in order to protect public health and safety if activities are suspected to be taking place contrary to the regulations or are suspected to negatively impact the health and safety of Canadians.

Costs

Cost to businesses, researchers and research institutions

Regulated parties (businesses, researchers and research institutions) will need to thoroughly review the updated provisions to understand the changes in order to ensure compliance with the regulations. Researchers and research institutions will spend 90 hours and industry stakeholders will spend 825 hours to review and understand the regulatory modifications. As a result, the affected stakeholders will bear a cost of $27,856 in PV over 10 years (or $3,966 annually).

Cost to the Government

The Government is not expected to incur any material incremental cost as a result of the amendments.

Limited compliance promotion activities (including development of outreach materials such as a notice to licensed dealers and relevant associations, and updates to relevant websites) will be undertaken to raise awareness about the modernized regulatory language and the formalized requirements related to reporting. Licensed dealers are already reporting on losses and thefts, suspicious transactions and cessation of activities. Any incremental efforts associated with enforcement will be very limited given the transition towards a risk-based approach to inspections of licensed dealers. This approach will optimize the inspection process with the goal of continually mitigating the risk of diversion of controlled substances.

Any potential cost associated with these activities is very minor and has not been estimated.

Net impacts

Overall, all of the affected licensed dealers are expected to see a reduction in administrative and/or compliance burden due to these amendments. While the amendments will create some costs, the net impact is expected to be positive. The total net benefit of the amendments over the 10-year period will amount to $6.40 million (or $911,587 annually). The Department will also see its services improved (for example by meeting its service standards in areas where they are currently not adequately met), resulting in reduced costs to businesses as they will be able to conduct their activities in a more timely fashion.

Cost-benefit statement
A. Quantified impacts ($ of 2012) in thousands 2019 2028 Total
(2019–2028)		 Total
(2019–2028) (PV)		 Annualized average
Undiscounted Discounted to 2019
A1. Industry
Benefits (cost savings)
Increasing the length of the licences’ validity period $923.79 $923.79 $6,466.52 $4,616.18 $657.24
Removing the annex to the licences $0.59 $0.59 $5.87 $4.12 $0.59
Removing the requirements to authorize person to place orders $1.75 $1.75 $17.51 $12.30 $1.75
Extending permits validity period $20.07 $41.55 $295.22 $198.23 $28.22
Expansion of educational and professional criteria for designated QPIC and A/QPIC $200.96 $200.96 $2,009.59 $1,411.45 $200.96
Total benefits $1,147.15 $1,168.63 $8,794.71 $6,242.28 $888.76
Costs to industry
Learning the regulatory modifications to industry -$26.95 $0.00 -$26.95 -$25.19 -$3.59
Total costs -$26.95 $0.00 -$26.95 -$25.19 -$3.59
Net Benefits $1,120.20 $1,168.63 $8,767.76 $6,217.09 $885.17
A2. Research institutions
Benefits (cost savings)
Increasing the length of the licences’ validity period $9.69 $9.69 $67.81 $48.41 $6.89
Removing the requirements to authorize person to place orders $0.09 $0.09 $0.92 $0.65 $0.09
Total benefits $9.78 $9.78 $68.73 $49.06 $6.98
Costs
Learning the regulatory modifications -$2.85 $0.00 -$2.85 -$2.67 -$0.38
Total costs -$2.85 $0.00 -$2.85 -$2.67 -$0.38
Net Benefits $6.92 $9.78 $65.88 $46.39 $6.60
A3. Federal Government
Benefits (cost savings)
Reduction in volume of applications and other activities $14.49 $29.13 $206.84 $139.13 $19.81
Total benefits $14.49 $29.13 $206.84 $139.13 $19.81
Net Benefits $14.49 $29.13 $206.84 $139.13 $19.81
Overall net impacts $1,141.61 $1,207.54 $9,040.48 $6,402.61 $911.59
B. Non-quantified impacts
B1. Benefits to Government The department would be able to improve the services it provides for example by meeting the service standards for licence and permit issuance with a higher percentile.
B2. Benefits to public health and safety Formalizing certain activities, in addition to being able to impose conditions on a licence would allow the Minister to take appropriate actions to prevent diversion of controlled substances to illicit markets and uses, thereby protecting public health and safety.

Implementation, enforcement and service standards

The amended regulations do not alter the existing administration and compliance mechanisms for the affected regulations. Health Canada has developed reach out plans to communicate the updated requirements to licensed dealers and other stakeholders following the publication of the amendments in the Canada Gazette, Part II.

In the meantime, Health Canada will continue its operations in administering the regulations with modifications to reflect the improvements. For instance, the licence issuance cycle will be adjusted from one year up to three years and permits will be issued with validity period up to six months.

Furthermore, inspections of licensed dealers will be conducted as usual in accordance with the amended requirements for licensed dealers, i.e. more specific requirements regarding record keeping and reporting on loss/theft.

There are no additional service standards other than those that already exist for issuing licences and permits. Since the amendments aim to further improve the administration of and the compliance with these regulations, it is expected that the service standards for licence issuance, amendment, renewal and permit issuance will be improved as a result of the amendments.

Contact

Jennifer Geduld
Controlled Substances and Cannabis Branch
Health Canada
Main Stats Building
150 Tunney’s Pasture Driveway
Ottawa, Ontario
K1A 0K9
Email: hc.csd.regulatory.policy-politique.reglementaire.dsc.sc@canada.ca