Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements): SOR/2025-43

Canada Gazette, Part II, Volume 159, Number 6

Registration
SOR/2025-43 February 26, 2025

CANNABIS ACT
FOOD AND DRUGS ACT

P.C. 2025-168 February 25, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Health, makes the annexed Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements) under

Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements)

Cannabis Act

Cannabis Regulations

1 (1) Subparagraphs (c)(i) and (ii) of the definition non-therapeutic research on cannabis in subsection 1(2) of the Cannabis Regulations footnote 1 are replaced by the following:

(2) Subsection 1(2) of the Regulations is amended by adding the following in alphabetical order:

cultivation waste
means cannabis leaves, shoots or branches that are obtained during the cultivation, propagation or harvesting of cannabis and that are intended for destruction. (déchet de culture)

2 (1) The portion of paragraph 5.2(1)(b) of the Regulations before subparagraph (i) is replaced by the following:

(2) Section 5.2 of the Regulations is amended by adding the following after subsection (1):

Cannabis topical

(1.1) For the purposes of subsection 34(1) of the Act,

3 (1) Paragraph 11(1)(b) of the Regulations is replaced by the following:

(2) The portion of paragraph 11(5)(a) of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 11(5)(b) of the Regulations is replaced by the following:

4 Paragraph 13(1)(a) of the Regulations is replaced by the following:

5 (1) Paragraph 14(1)(b) of the Regulations is replaced by the following:

(2) The portion of paragraph 14(5)(a) of the Regulations before subparagraph (i) is replaced by the following:

6 Paragraphs 16(1)(a) and (b) of the Regulations are replaced by the following:

7 Section 18 of the Regulations is repealed.

8 Subsection 19(3) of the Regulations is replaced by the following:

Alternate

(3) The holder of a licence for processing may designate one or more individuals as alternate quality assurance persons who are qualified to replace the quality assurance person.

9 Subsection 21(1) of the Regulations is replaced by the following:

Micro-processing — threshold

21 (1) A holder of a licence for micro-processing must not possess, in a calendar year, cannabis of one or more classes of cannabis — other than cannabis plants and cannabis plant seeds — that has been sold or distributed to them, the total amount of which, as determined in accordance with the table to this section, is equivalent to more than 2,400 kg of dried cannabis.

10 (1) The portion of paragraph 28(1)(b) of the Regulations before subparagraph (i) is replaced by the following:

(2) The portion of paragraph 28(5)(b) of the Regulations before subparagraph (i) is replaced by the following:

11 The Regulations are amended by adding the following after section 28:

Research not involving human participants or animals

28.01 (1) Subject to subsection (2), a person, other than a young person, may conduct research on cannabis without a licence for research if the person

Authorized activities

(2) The person is authorized, to the extent necessary to conduct the research,

Use of organic solvent

(3) A person that is authorized to conduct the activity referred to in paragraph (2)(b) is also authorized to alter or to offer to alter the chemical or physical properties of cannabis by the use of an organic solvent when conducting that activity.

12 Section 28.2 of the Regulations is replaced by the following:

Irradiated edible cannabis

28.2 The holder of a licence for research that administers or distributes irradiated edible cannabis to human participants in the conduct of non-therapeutic research on cannabis must ensure that the requirement set out in subsection 42(1) has been met in addition to the conditions set out in paragraph 28.1(4)(d).

13 Paragraph 30(b) of the Regulations is replaced by the following:

14 Section 42 of the Regulations is replaced by the following:

Antimicrobial treatment

42 (1) A holder of a licence, other than a licence for analytical testing, may conduct antimicrobial treatment of cannabis at a location other than the site set out in the licence only if the cannabis is subsequently returned to the site set out in the licence or distributed in accordance with these Regulations.

Irradiation of edible cannabis

(2) For greater certainty, in the case of the irradiation of edible cannabis by a holder of a licence for processing, the requirement set out in subsection (1) applies in addition to the conditions set out in section 102.6.

15 (1) Paragraphs 43(1)(b) and (c) of the Regulations are replaced by the following:

(2) Subsection 43(2) of the Regulations is replaced by the following:

Exception

(2) Paragraphs (1)(b) and (c) do not apply in cases where the holder of a licence destroys cultivation waste.

16 Section 44 of the Regulations is repealed.

17 Sections 65 and 66 of the Regulations are repealed.

18 Section 67 of the Regulations is repealed.

19 Subsection 68(2) of the Regulations is repealed.

20 Paragraphs 73(a) to (c) of the Regulations are replaced by the following:

21 Section 78 of the Regulations is replaced by the following:

Exemptions — operations area

78 (1) A holder of a licence referred to in subsection 62(1) is exempt from the application of subsections 70(1), 71(1) and 72(1) in respect of any operations area if no activities conducted under the licence are in progress in the operations area and no cannabis is present in the operations area.

Exemption — cannabis drug licence

(2) A holder of a cannabis drug licence is exempt from the application of this Part in respect of the site set out in the licence if they are securely storing cannabis in accordance with 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.

22 Section 88 of the Regulations is renumbered as subsection 88(1) and is amended by adding the following:

Activities under the responsibility of quality assurance person

(2) The activities assigned to the quality assurance person under paragraphs (1)(b) to (e) can also be conducted under the responsibility of that person.

23 Section 100 of the Regulations is repealed.

24 Subsection 101.3(6) of the Regulations is replaced by the following:

Ethyl alcohol — inhaled cannabis extract

(5.1) A cannabis extract referred to in subsection (1) that is intended to be consumed by means of inhalation may contain the following quantities of ethyl alcohol if the net weight of the cannabis extract in each immediate container of the cannabis product does not exceed 7.5 g:

Ethyl alcohol — ingested cannabis extract

(6) A cannabis extract referred to in subsection (1) that is intended to be ingested may contain ethyl alcohol if

25 The Regulations are amended by adding the following after section 101.3:

Cannabis topical — denatured ethyl alcohol

101.31 A cannabis topical that is a cannabis product or that is contained in a cannabis accessory that is a cannabis product may contain denatured ethyl alcohol.

26 Section 102.8 of the Regulations is repealed.

27 Subsection 104(2) of the Regulations is replaced by the following:

Exceptions

(2) Subsection (1) does not prohibit the presence of

28 (1) The definition label in subsection 105(1) of the Regulations is replaced by the following:

label
does not include inserts or leaflets referred to in subsection 132(1), nor does it include a panel referred to in subsection 132.27(1). (étiquette)

(2) Subsection 105(2) of the English version of the Regulations is replaced by the following:

Definition of panel

(2) For the purposes of sections 112 to 117, 121 and 132.13, subsections 132.27(2) to (7) and (9) and sections 132.28 to 132.32, panel means a panel referred to in subsection 132.27(1).

29 Section 108 of the Regulations is renumbered as subsection 108(1) and is amended by adding the following:

Exception — paragraph (1)(a)

(2) Despite paragraph (1)(a), the immediate container in which dried cannabis or fresh cannabis is packaged may be transparent.

30 Subsection 113(1) of the Regulations is replaced by the following:

Uniform colour

113 (1) Except as otherwise provided under the Act, any other Act of Parliament or any provincial Act, the colour of the interior surface, exterior surface and panel of any container in which a cannabis product is packaged must be one uniform colour.

Exceptions

(1.1) Despite subsection (1), the following may be different:

31 (1) Subsection 116(1) of the Regulations is replaced by the following:

Hidden features

116 (1) The interior surface, exterior surface and panel of any container in which a cannabis product is packaged and any covering of such a container must not include any hidden feature that is designed to change the appearance of the container, covering or panel, such as heat-activated ink or a feature that is visible only through technological means, except a bar code or a feature that is used to prevent counterfeiting.

(2) Subsection 116(2) of the French version of the Regulations is replaced by the following:

Composants conçus pour modifier la superficie

(2) Sous réserve de l’article 132.27, les surfaces intérieures et extérieures de tout contenant dans lequel est emballé un produit du cannabis et toute enveloppe qui recouvre un tel contenant ne peuvent inclure de composant conçu pour modifier la superficie du contenant ou de l’enveloppe, tel un panneau à rabat.

32 Section 121 of the Regulations is renumbered as subsection 121(1) and is amended by adding the following:

Exception

(2) Despite subsection (1), any container in which dried cannabis, fresh cannabis or cannabis plant seeds are packaged may include cut-out windows.

33 Section 122 of the Regulations is replaced by the following:

Bar code

122 (1) One or two bar codes may be displayed, only once each, on any container in which a cannabis product is packaged.

Colour

(2) Every bar code must be printed in black and white.

34 Subsections 122.4(2) and (3) of the Regulations are replaced by the following:

Exception — multiple immediate containers

(2) Despite paragraph (1)(c), the outermost container may contain more than one immediate container if the following requirements are met:

Interpretation — “unit”

(3) References to “unit” are to be read as references to “immediate container”

35 (1) Paragraph 123(1)(c) of the Regulations is amended by adding “and” after subparagraph (iii), by striking out “and” after subparagraph (iv) and by repealing subparagraph (v).

(2) Subsection 123(1) of the Regulations is amended by adding “and” after paragraph (e), by striking out “and” after paragraph (f) and by repealing paragraph (g).

(3) Subsections 123(2) to (3) of the Regulations are replaced by the following:

Exception — packaging date

(2) Despite subparagraph (1)(c)(iv), the packaging date that is included on the label that is applied to the container may differ from the date on which the cannabis product is packaged if the product is packaged no more than seven days before or after the packaging date that is included on the label.

Exemption — multiple immediate containers

(3) In the case of an outermost container that contains multiple immediate containers in accordance with subsection 122.4(2), the outermost container is exempt from the requirement of subparagraph (1)(c)(iv).

(4) Subsection 123(4) of the French version of the Regulations is replaced by the following:

Alternance

(4) Les mises en garde visées à l’alinéa (1)e) doivent figurer en alternance sur chaque type de contenants de chaque nom commercial d’un produit du cannabis qui est emballé au cours d’une année de façon à ce que chacune de ces mises en garde figure, dans la mesure du possible, sur un nombre égal de contenants de ce produit.

36 The Regulations are amended by adding the following after section 123:

Amended health warning message

123.01 (1) Despite paragraph 123(1)(e), a health warning message that applies to a cannabis product, as set out in the document entitled Cannabis Health Warning Messages as it read immediately before the day on which the amended version of the document is published by the Government of Canada, may be used on the label that is applied to any container in which a cannabis product is packaged for a period of 12 months following the day on which the amended version of the document is published.

Rotation

(2) The health warning messages referred to in subsection (1) must be displayed in rotation on each type of container of each brand name of the cannabis product that is packaged during the 12-month period referred to in subsection (1), so that each health warning message is displayed, to the extent possible, on equal numbers of containers of that product.

Exemption — holder of a licence

(3) A holder of a licence that is authorized to sell or distribute cannabis is, in respect of the sale or distribution of cannabis products, exempt from the application of subsection 106(1) of these Regulations and from section 25 of the Act if the cannabis products are packaged and labelled in accordance with subsections (1) and (2) and the other applicable provisions of these Regulations.

Exemption — other person

(4) A person, other than a holder of a licence, that is authorized to sell cannabis is, in respect of the sale of cannabis products, exempt from the application of section 25 of the Act if those products are packaged and labelled in accordance with subsections (1) and (2) and the other applicable provisions of these Regulations.

Expiry date

123.02 (1) The label of a container in which cannabis other than edible cannabis is packaged must not include an expiry date unless the holder of the licence for processing that manufactured the cannabis product has data that establishes the stability period during which, after the cannabis is packaged in accordance with these Regulations and stored under its recommended storage conditions,

No expiry date — edible cannabis

(2) The label of a container in which edible cannabis is packaged must not include an expiry date.

Stability period — retention of document

(3) The holder of the licence for processing that manufactured the cannabis product must, if they include an expiry date on the label of the container, retain a document that contains the data referred to in subsection (1) for at least two years after the day on which the last sale or distribution of any portion of the lot or batch of the cannabis product with that expiry date takes place, other than for destruction.

37 Section 123.1 of the Regulations is amended by adding the following after subsection (1):

Images or information

(1.1) Despite paragraph (1)(b), images or information authorized under the Act, any other Act of Parliament, any provincial Act or their regulations may be displayed on the interior or exterior surface of the wrapper.

38 (1) Paragraph 124(1)(d) of the Regulations is repealed.

(2) Paragraph 124(1)(f) of the Regulations is repealed.

39 (1) Paragraph 124.1(d) of the Regulations is repealed.

(2) Paragraph 124.1(f) of the Regulations is repealed.

40 (1) Paragraph 125(b) of the Regulations is repealed.

(2) Section 125 of the Regulations is amended by adding “and” after paragraph (c) and by repealing paragraph (d).

41 (1) Paragraph 130(3)(c) of the Regulations is replaced by the following:

(2) Paragraph 130(3)(e) of the Regulations is replaced by the following:

42 Section 132 of the Regulations is replaced by the following:

Insert or leaflet

132 (1) Any container in which a cannabis product is packaged may include, or be accompanied by, one or more inserts or leaflets, as long as the insert or leaflet does not present a risk of contamination of the cannabis product.

Presentation of information

(2) All information that is included on an insert or leaflet must be in English and French, except for the INCI name and the European Union (EU) technical name.

43 (1) Paragraph 132.1(1)(d) of the Regulations is repealed.

(2) Paragraph 132.1(1)(f) of the Regulations is repealed.

44 (1) Paragraph 132.11(d) of the Regulations is repealed.

(2) Paragraph 132.11(f) of the Regulations is repealed.

45 (1) Paragraph 132.12(1)(b) of the Regulations is repealed.

(2) Paragraph 132.12(1)(d) of the Regulations is repealed.

46 Subsection 132.13(1) of the Regulations is replaced by the following:

Flavours — cannabis extract

132.13 (1) It is prohibited to display on a cannabis extract that is a cannabis product or on a cannabis accessory that contains a cannabis extract and that is a cannabis product — or on the package of such a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — an indication or illustration, including a brand element, that could cause a person to believe that the cannabis product has a flavour set out in column 1 of Schedule 3 to the Tobacco and Vaping Products Act, other than the flavour of cannabis.

47 (1) Paragraph 132.15(d) of the Regulations is repealed.

(2) Paragraph 132.15(f) of the Regulations is repealed.

48 (1) Paragraph 132.16(b) of the Regulations is repealed.

(2) Paragraph 132.16(d) of the Regulations is repealed.

49 (1) Paragraph 132.18(1)(c) of the Regulations is repealed.

(2) Paragraph 132.18(1)(e) of the Regulations is repealed.

(3) Paragraph 132.18(1)(g) of the Regulations is repealed.

(4) Paragraph 132.18(1)(i) of the Regulations is repealed.

(5) Subsection 132.18(2) of the Regulations is replaced by the following:

Maximum quantity of THC on label

(2) The quantity of THC that is included on the label of an immediate container in accordance with paragraph (1)(f) must not exceed 10 mg.

50 (1) Paragraph 132.19(1)(b) of the Regulations is repealed.

(2) Paragraph 132.19(1)(d) of the Regulations is repealed.

51 (1) Subsection 132.27(1) of the Regulations is replaced by the following:

Immediate container

132.27 (1) A label of an immediate container in which a cannabis product is packaged may extend beyond the exterior display surface, or a peel-back or accordion panel may be applied to the immediate container, to ensure that all the required information to be included on the label in accordance with these Regulations is displayed on the label or panel.

(2) The portion of paragraph 132.27(3)(c) of the Regulations before subparagraph (i) is replaced by the following:

(3) Subparagraphs 132.27(3)(c)(iv) and (v) of the Regulations are repealed.

(4) Section 132.27 of the Regulations is amended by adding the following after subsection (3):

Exception — packaging date

(3.1) Despite subparagraph 132.27(3)(c)(iii), the packaging date that is included on the panel may differ from the date on which the cannabis product is packaged if the product is packaged no more than seven days before or after the packaging date that is included on the panel.

(5) Paragraph 132.27(8)(a) of the Regulations is replaced by the following:

52 Section 132.28 of the Regulations is replaced by the following:

Prohibited representation — health and cosmetic benefits

132.28 It is prohibited to make an express or implied representation, including by way of a brand element, on a cannabis product — or on the package of a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — if there are reasonable grounds to believe that the representation could create the impression that health or cosmetic benefits may be derived from the use of the cannabis product.

53 Subsection 132.29(1) of the Regulations is replaced by the following:

Prohibited representation — energy value and amount of nutrient

132.29 (1) It is prohibited to make an express or implied representation, including by way of a brand element, on edible cannabis that is a cannabis product or on a cannabis accessory that contains edible cannabis and that is a cannabis product — or on the package of such a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — concerning the energy value referred to in item 2 of the table to section 132.22 or the amount of any nutrient referred to in items 3 to 15 of that table or in items 5 to 37 of the table to section B.01.402 of the Food and Drug Regulations.

54 The portion of section 132.3 of the Regulations before paragraph (a) is replaced by the following:

Prohibited representation — dietary requirements

132.3 It is prohibited to make an express or implied representation, including by way of a brand element, on edible cannabis that is a cannabis product or on a cannabis accessory that contains edible cannabis and that is a cannabis product — or on the package of such a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — if there are reasonable grounds to believe that the representation could create the impression that the cannabis product is intended

55 Section 132.31 of the Regulations is replaced by the following:

Prohibited representation — alcoholic beverages

132.31 It is prohibited to make an express or implied representation, including by way of a brand element, on a cannabis product — or on the package of a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — if there are reasonable grounds to believe that the representation could associate the cannabis product with an alcoholic beverage.

56 Section 132.32 of the Regulations is replaced by the following:

Prohibited representation — tobacco products and vaping products

132.32 It is prohibited to make an express or implied representation, including by way of a brand element, on a cannabis product — or on the package of a cannabis product, on an insert or leaflet that is included in a container in which such a cannabis product is packaged or that accompanies that container or on the label or panel of a container in which such a cannabis product is packaged — if there are reasonable grounds to believe that the representation could associate the cannabis product with a tobacco product, as defined in section 2 of the Tobacco and Vaping Products Act, or a vaping product to which that Act applies.

57 Section 134.1 of the Regulations is replaced by the following:

Number of immediate containers

134.1 The number of immediate containers in an outermost container that is labelled in accordance with subparagraphs 122.4(2)(a)(i), (b)(i), (c)(i) and (d)(i) must be equal to the number of immediate containers specified on the label.

58 Section 145 of the Regulations is replaced by the following:

Antimicrobial treatment

145 A holder of a cannabis drug licence may conduct antimicrobial treatment of cannabis at a location other than the licensed site only if the cannabis is subsequently returned to the licensed site or distributed in accordance with this Part.

59 Paragraphs 205(e) and (f) of the Regulations are repealed.

60 Paragraph 214(e) of the Regulations is replaced by the following:

61 Paragraph 224(1)(b) of the Regulations is replaced by the following:

62 Paragraph 227(1)(f.1) of the Regulations is repealed.

63 (1) Paragraphs 229(1)(b) to (e) of the Regulations are replaced by the following:

(2) Subsection 229(2) of the Regulations is replaced by the following:

Statement by witness

(2) The holder must obtain, for each instance in which cannabis is destroyed, a statement signed and dated by the employee referred to in paragraph 43(1)(b) stating that they witnessed the destruction and that the cannabis was destroyed in accordance with a method referred to in paragraph 43(1)(a).

(3) Section 229 of the Regulations is amended by adding the following after subsection (3):

Exception

(4) Subsections (1) and (2) do not apply in cases where a holder of a licence destroys cultivation waste.

64 Paragraph 231(1)(c) of the Regulations is replaced by the following:

65 (1) Paragraph 236(a) of the Regulations is repealed.

(2) Paragraphs 236(b) and (c) of the English version of the Regulations are replaced by the following:

66 (1) Subsection 241(1) of the Regulations is amended by adding “and” after paragraph e) and by repealing paragraphs (g) to (i).

(2) Subsection 241(2) of the Regulations is replaced by the following:

Exception — published market

(2) Subsection (1) does not apply to a holder that

67 The portion of subsection 244(1) of the Regulations before paragraph (a) is replaced by the following:

Notice — new cannabis product

244 (1) A holder of a licence for processing must, at least 60 days before making available for sale a cannabis product — except dried cannabis, fresh cannabis, cannabis plants or cannabis plant seeds — that they have not previously sold in Canada, provide the Minister with a written notice that contains the following information:

68 Section 245 of the Regulations is repealed.

Industrial Hemp Regulations

69 Section 2 of the Industrial Hemp Regulations footnote 2 is repealed.

70 Paragraph 9(d) of the Regulations is repealed.

71 Paragraph 13(d) of the Regulations is repealed.

Regulations Amending the Cannabis Regulations (New Classes of Cannabis)

72 Subsection 77(3) of the Regulations Amending the Cannabis Regulations (New Classes of Cannabis) footnote 3 is repealed.

73 Subsection 78(3) of the Regulations is repealed.

Food and Drugs Act

Natural Health Products Regulations

74 The portion of item 7 of Schedule 2 to the Natural Health Products Regulations footnote 4 is replaced by the following:
Item Substances
7 Cannabis as defined in subsection 2(1) of the Cannabis Act

Cannabis Exemption (Food and Drugs Act) Regulations

75 Section 1 of the Cannabis Exemption (Food and Drugs Act) Regulations footnote 5 is amended by adding “or” after paragraph (d) and by repealing paragraph (e).

Transitional Provisions

Words and expressions

76 (1) Words and expressions used in this section have the same meaning as in the Cannabis Regulations.

Exemption — quantity or concentration of THC and CBD

(2) The requirements set out in paragraph 130(8)(a) of the Cannabis Regulations do not apply in relation to the quantity or concentration of THC and CBD that is included on the label of a cannabis product in accordance with paragraphs 124(1)(d) and (f), 124.1(d) and (f), 125(b) and (d), 132.1(1)(d) and (f), 132.11(d) and (f), 132.12(1)(b) and (d), 132.15(d) and (f), 132.16(b) and (d), 132.18(1)(c), (e), (g) and (i) and 132.19(1)(b) and (d), as the case may be, and paragraph 130(3)(e) of the Cannabis Regulations as they read before the coming into force of these Regulations.

Exemption — licence holder

(3) A holder of a licence that is authorized to sell or distribute dried cannabis, fresh cannabis, cannabis extracts, cannabis topicals or edible cannabis that are cannabis products — or that are contained in an accessory that is a cannabis product — is, in respect of such a sale or distribution, exempt from the application of subsection 106(1) of the Cannabis Regulations and from section 25 of the Act if the cannabis products are packaged and labelled in accordance with subsection (2) and the Cannabis Regulations as they read before the coming into force of these Regulations.

Exemption — other person

(4) A person, other than a holder of a licence, that is authorized to sell dried cannabis, fresh cannabis, cannabis extracts, cannabis topicals or edible cannabis that are cannabis products — or that are contained in an accessory that is a cannabis product — is, in respect of such a sale, exempt from the application of section 25 of the Act if the cannabis products are packaged and labelled in accordance with subsection (2) and the Cannabis Regulations as they read before the coming into force of these Regulations.

Cessation of effect

(5) Subsection (2) ceases to have effect on the day that, in the 12th month after the month in which the present section comes into force, has the same calendar number as the day on which it comes into force or, if that 12th month has no day with that number, the last day of that 12th month.

Coming into Force

77 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations or the orders.)

Executive summary

Issues: Since the coming into force of the Cannabis Act (the Act) and the Cannabis Regulations (the Regulations) in 2018, the legal cannabis industry has matured, the market has evolved, and there is increased knowledge and data on public health and public safety risks associated with certain activities. Stakeholders, including cannabis industry groups, have indicated that the legal cannabis market will benefit from the reduction or elimination of certain regulatory requirements without compromising the government’s comprehensive public health approach to regulating cannabis.

Description: Amendments to the Regulations, the Cannabis Tracking System Order (the Order), the Industrial Hemp Regulations (IHR), the Cannabis Exemption (Food and Drugs Act) Regulations (CER), the Natural Health Products Regulations (NHPR), and Schedule 2 to the Act will reduce regulatory burden and support diversity and competition in the legal cannabis market while maintaining the Act’s public health and public safety objectives. The amendments target five priority areas: licensing, including increasing production thresholds for micro-class licences and allowing for the designation of more alternate Quality Assurance Persons; personnel and physical security, including adjusting requirements for certain activities to be supervised by security cleared personnel; production to support product innovation, including the allowance for limited use of ethyl alcohol in certain product types; packaging and labelling to allow for a broader range of packaging options and simplify product labels; and record-keeping and reporting requirements, such as reporting on substances applied to cannabis or promotion expenditures, to address duplication of requirements and lower burden on regulated parties.

Rationale: The purpose of the Act is to protect public health and public safety and, in particular, to enhance public awareness of the health risks associated with cannabis use, provide access to a quality-controlled supply of cannabis, and provide for the licit production of cannabis to reduce illicit activities in relation to cannabis, among other things.

Based on the implementation experience gained since the coming into force of the Act and in keeping with the original policy principles, Health Canada recognizes that there may be regulatory measures that could be made more efficient and streamlined without compromising the public health and public safety objectives of the Act. This is supported by recommendations from the independent Expert Panel (the Panel) that completed the statutory review of the Act in 2024. In their final report, the Panel recommended Health Canada reduce the regulatory and administrative burden placed on regulated parties, while maintaining public health and public safety objectives. The amendments implement several of the Expert Panel’s recommendations, including permitting the use of quick response (QR) codes and transparent packaging for dried and fresh cannabis products.

The cost-benefit analysis estimates that these amendments will result in total incremental costs to Health Canada. The total costs associated with the amended regulations are estimated at $13,412 present value (PV) (or $1,910 in annualized value). The total costs associated with the amended Order are estimated at $716 PV (or $102 in annualized value). The sum of the costs of both the amended regulations and Order is $14,128 PV over 10 periods (or $2,012 in annualized value). There will be no incremental costs to the cannabis industry associated with these amendments. The total incremental benefits for regulated parties, in terms of administrative and compliance cost savings, is estimated at $295.5 million PV over 10 periods (or $42.1 million annualized value) due to the amended regulations and $506,076 PV over 10 periods (or $72,054 annualized value) due to the amended Order. The total incremental benefits for regulated parties are estimated at $296.0 million PV over 10 periods (or $42.1 million in annualized value), as the sum of impacts from both the amended regulations and Order. The net benefit of the amended regulations is estimated at $295.5 million PV over 10 periods (or $42.1 million annualized value) and $505,361 PV over 10 periods (or $71,952 annualized value) for the amended Order. Total net benefits are estimated at $296.0 million PV over 10 periods (or $42.1 million in annualized value), as the sum of impacts from the amended regulations and Order. The reported total incremental benefits and net benefits for regulatory parties appear the same due to rounding.

Under the small business lens, the amendments result in a net reduction in costs to small businesses in the Canadian cannabis industry. The total cost savings associated with the amended regulations is estimated at $263.0 million PV over 10 periods (or $37.4 million in annualized value), while the total cost savings associated with the amended Order is estimated at $450,408 PV over 10 periods (or $64,128 in annualized value). The sum of the total cost savings for all amendments is estimated at $263.5 million PV over 10 periods (or $37.5 million in annualized value).

The one-for-one rule applies and will result in a reduction of $7.8 million annually (in 2012 dollars) for the amended regulations and $23,162 annually (in 2012 dollars) for the amended Order. The sum of all amendments is a total reduction of $7.8 million annually (in 2012 dollars) in administrative burden on business.

Issues

Since the coming into force of the Act and the regulations in 2018, the legal cannabis industry has matured and evolved. As well, more is now known about public health and public safety risks associated with regulated cannabis activities. In legalizing and strictly regulating cannabis, the Government of Canada took a precautionary approach. Over time, stakeholders, particularly licence holders under the Act, have identified that certain regulatory requirements are overly burdensome or unnecessary to achieve the Act’s public health and public safety objectives. They indicated that some requirements could be reduced or eliminated without compromising these objectives, and there would be benefits for both licence holders and the government from the reduction in regulatory burden.

In addition, the cannabis industry is facing economic difficulties which threaten a key objective of the Act, which is to provide for the legal production of cannabis to displace the illegal cannabis market. A healthy, well-regulated, diverse, and competitive legal industry is a key element of the cannabis framework. Reducing the regulatory and administrative burden will improve the economic sustainability of the legal industry and support the objectives of the Act.

Background

The Act came into force on October 17, 2018, and created a legal framework for the production, distribution, sale, import, export, and possession of cannabis in Canada based on a comprehensive public health and public safety approach. The objectives of the Act are to protect public health and public safety, and in particular to

Cannabis Regulations

To help achieve the objectives of the Act, the Regulations set out the rules and standards that apply to the authorized possession, production, distribution, sale, importation, and exportation of cannabis, as well as other related activities. This includes

Cannabis Tracking System Ministerial Order

To help prevent inversion of illicit cannabis into, and diversion of cannabis out of, the legal market, Health Canada tracks the high-level movement of cannabis throughout the supply chain through reporting requirements set out in the Order. The Order requires the monthly provision of information (including cannabis production, inventory, distribution, and sales volumes) from reporting parties. The Order works to prevent inversion and diversion in an integrated way with other aspects of the regulatory framework, such as compliance and enforcement measures, physical and personnel security obligations, and record-keeping requirements.

Unlike the other regulatory instruments covered by this regulatory impact analysis statement, which are Governor in Council regulations, the Order is being made via a separate regulatory stream known as a ministerial authority by the Minister of Health. Given that the amendments made to the Order and the Cannabis Regulations are linked, presenting both instruments in this regulatory impact analysis statement offers a more transparent and coherent approach.

Industrial Hemp Regulations

In 1998, Canada established a legal framework for industrial hemp under the Controlled Drugs and Substances Act. The Industrial Hemp Regulations, SOR/98-156 (IHR 1998) enabled the cultivation, processing, sale, distribution, import, and export of hemp seed, grain, and fibre. The IHR 1998 also permitted the production of derivatives by processing hemp grains (e.g. hemp seed oil) for the purpose of exporting and wholesale sale. With the legalization and regulation of cannabis in 2018, the IHR 1998 were repealed and new regulations, the IHR, were enacted under the Act. The IHR maintain key provisions of the previous framework with a few substantive amendments to permit the sale of additional plant parts (e.g. flowering heads and branches) to licensed cannabis producers.

Schedule 2 to the Cannabis Act

For the purposes of the Act, cannabis means a cannabis plant as well as anything referred to in Schedule 1 to the Act. The parts of the plant that fall outside of this definition are identified in Schedule 2 to the Act. These exempted parts include non-viable seeds; mature stalks without any leaf, flower, seed, or branch; fibre from the aforementioned stalks; and roots. These parts of the plant do not pose the same risk to public health or public safety and are therefore not subject to control under the Act.

Cannabis Exemption (Food and Drugs Act) Regulations

The CER play an important role in the cannabis regulatory framework by exempting cannabis for which activities are conducted in accordance with the Act, from the application of the Food and Drugs Act (FDA). The CER provide clarity on when the FDA applies to certain cannabis-related activities and when exemptions exist. For example, cannabis is exempt from the FDA if it is sold to be used for non-therapeutic research conducted in accordance with the Regulations.

Natural Health Products Regulations

Health Canada regulates the safety, efficacy, and quality of natural health products under the FDA. Under the NHPR, natural health products can only contain cannabis plant parts which either do not meet the definition of cannabis in the Act or that have been exempted from the Act through the IHR. These natural health products must not contain more than 10 parts per million delta-9-tetrahydrocannabinol (THC) nor phytocannabinoids that have been isolated or concentrated, or their synthetic duplicates.

Objective

The amendments aim to reduce regulatory and administrative burden faced by licence holders, while maintaining the Act’s public health and public safety objectives. These changes also amend the framework to clarify potential inconsistencies that have been identified since legalization. Several of these regulatory amendments address the findings and recommendations from the Panel’s final report on the legislative review of the Act.

Description

The amendments to the Regulations, the IHR, the CER, the NHPR, and Schedule 2 to the Act are under five priority areas: licensing; personnel and physical security; production; packaging and labelling; and record-keeping and reporting. Amendments to the Order related to these priority areas will be made via Ministerial Order.

Licensing

Cannabis Regulations

Under the Act, a licence is required to conduct various activities with cannabis and industrial hemp. The Regulations set out rules and requirements that apply to each licence class (e.g. cultivation, processing, sale for medical purposes, research) and subclass (e.g. standard and micro).

Health Canada recognizes that researchers find the research licence application process cumbersome when working with small amounts of cannabis. As such, amendments to the Regulations exempt organizations or individual researchers, other than a young person, from requiring a research licence when conducting non-human or non-animal research (e.g. research on cannabis chemistry or in vitro studies) while possessing no more than 30 grams (g) of dried cannabis or its equivalent for research purposes at any given time. The individual or organization will be permitted to produce cannabis for research purposes, but not cultivate, propagate, or harvest it. The use of organic solvents will also be permitted. However, it will be prohibited for any research activities to take place in a dwelling house or at a site that is authorized for personal or designated production of cannabis for medical purposes to mitigate the risks posed from using organic solvents, as defined by the Act. The amendments will not change an individual’s ability to process cannabis that they possess lawfully in their homes, and they will continue to be prohibited from using organic solvents to do so. Researchers exempt from the licensing requirements will not be authorized to import, export, or sell cannabis; should they wish to conduct these additional activities, they will need to obtain the appropriate licence or permit.

Feedback from existing licence holders and potential applicants indicates that the current threshold limits for cultivating and processing cannabis for micro-cultivation, micro-processing, and nursery licences impede their ability to be competitive and achieve economies of scale. Therefore, the amendments increase the amount of cannabis that can be cultivated or processed by micro-class licences and nursery licences by a factor of four. This change will increase the growing area threshold for micro-cultivation licences to 800 square metres (m2) and the processing threshold for micro-processing licences to 2 400 kilograms (kg) of dried cannabis or its equivalent. As well, the canopy size for nurseries will increase to 200 m2 and nurseries will be permitted to harvest up to 20 kg of flowering heads. Increasing the limits for cultivating and processing cannabis should allow for increased economies of scale and more capacity for product development. These amendments support one of the key objectives of the framework: providing for the licit production of cannabis in order to reduce illicit activities. Since physical security, and record-keeping and reporting requirements will apply to these licence classes, there is a low risk of diversion with the increased threshold limits. Furthermore, Health Canada’s ongoing compliance and enforcement activities will continue to address risks of non-compliance with the Regulations.

Licensed processors must have a Quality Assurance Person (QAP) on staff who is responsible for assuring the quality of cannabis before it is made available for sale, among other things. The amendments increase the number of permitted alternate QAPs to “one or more” from the current allowance of “up to two” and expressly permit the QAP to delegate activities (e.g. approving every lot or batch of cannabis before it is made available for sale), while maintaining accountability and overall responsibility. These changes will provide licence holders with flexibility to manage QAP workloads and address bottlenecks created by the Regulations. As the QAP, and ultimately the licence holder, will remain responsible for ensuring compliance with all applicable requirements, there are no risks anticipated with this change.

Currently, cannabis pollen (which is required for plant breeding) cannot be obtained, sold, or distributed by nurseries or other cultivation licence holders, or sold by research licence holders. Pollen does not fall under the existing categories of dried cannabis, fresh cannabis, cannabis plants, or cannabis plant seeds, thus creating an inadvertent regulatory gap for the intra-industry sale of pollen. The amendments expand the authorized activities for cultivation, nursery, and research licence holders to include the intra-industry sale of cannabis pollen, to better enable the development of cannabis plant genetics. The sale and distribution of pollen between licence holders will not pose any additional risks compared to the existing authorization of intra-industry sale and distribution of other forms of cannabis.

To further reduce burden, licensed processors will no longer be required to provide printed copies of the consumer information document with every package of cannabis product sent. Evidence indicates that paper copies of the consumer information document are not being distributed to consumers at point of sale and consumers receive information on cannabis in other ways, such as online. This document will continue to be available on Health Canada’s website and provided to individuals accessing cannabis for medical purposes from holders of a federal licence to sell cannabis for medical purposes and from hospitals.

During the COVID-19 pandemic, Health Canada implemented several temporary accommodations to regulatory requirements. One flexibility that was implemented was the allowance for cannabis and industrial hemp importers and exporters to use alternate ports of entry or exit (i.e. a port not listed on their import or export permit). The amendments formalize this COVID-19 flexibility by removing the requirement to list the ports of entry and exit on import and export permits. This change will apply to import and export permits for both cannabis and industrial hemp. Additionally, the amendments remove the requirement to list on an import permit the address of the intended customs office to which the shipment will be delivered. Customs offices are often located in close proximity to the port of entry; repealing this requirement ensures that the intent to allow for alternate ports of entry is captured.

Under the Act, Health Canada has the authority to suspend a licence for reasons that relate to the protection of public health and public safety, with additional prescribed circumstances set out in the Regulations. The amendments provide that any licences held by the same licence holder may be suspended should the licence holder have unpaid fees or have failed to submit a required statement of cannabis revenue for a licence as required under the Cannabis Fees Order. Suspensions are a temporary compliance measure that cause less disruption to operations than licence revocations; once outstanding fees are paid, the suspension can be lifted and the licence will resume. The option to use other measures, such as the more permanent option of licence revocation, remains available, if appropriate.

Schedule 2 to the Act

Amendments to Schedule 2 to the Act clarify that derivatives made from the processing of Schedule 2 plant parts or products made from those derivatives are also exempt from the application of the Act. These changes will allow derivatives of the Schedule 2 plant parts to be imported, exported, sold, and processed without a licence. In general, the exempted plant parts and their derivatives do not contain significant levels of phytocannabinoids. However, mature stalks are known to have trichomes, which are the structures on cannabis plants where phytocannabinoids are produced, so this plant part may contain more than trace amounts of phytocannabinoids. As such, persons are permitted to make derivatives from these Schedule 2 plant parts without a licence, but derivatives made from mature stalks (without any leaf, flower, seed or branch) may not contain isolated or concentrated phytocannabinoids. Similarly, it will not be permitted to make a derivative that contains isolated or concentrated phytocannabinoids by mixing non-viable seed, fibre or root with a mature stalk without a licence. Any concentration or isolation of phytocannabinoids from mature stalks will continue to require a cannabis licence. These amendments better align the regulatory controls with the level of risk these derivatives pose and will remove regulatory burden on the industry, including costs of testing and fees related to cannabis import and export permits, which will no longer be required for derivatives or products made from those derivatives. The processing, possession, and other regulated activities with cannabis, including viable cannabis and viable industrial hemp seeds or grain, will still require the appropriate licence.

Exempted parts and their derivatives used as an ingredient in food, cosmetics, veterinary health products, natural health products, or drugs must continue to meet applicable requirements under the FDA such as the Cosmetic Regulations, the Food and Drug Regulations, and the NHPR.

Industrial Hemp Regulations

To align the regulatory controls for derivatives of non-viable industrial hemp grains with other Schedule 2 derivatives, amendments to the IHR remove: the maximum THC concentration of 10 parts per million for industrial hemp grain derivatives; the testing requirement; labelling for wholesale sale; and import and export requirements. This will allow derivatives of non-viable industrial hemp grains to be imported, exported, sold, and processed without a licence or permit under the Act, thereby removing regulatory burden on industry, including costs of testing. Industrial hemp import and export permits will be required for other forms of industrial hemp but those permits will no longer require details about the ports of entry and exit into and out of Canada.

Once hemp grain is processed, such as through seed oil extraction or grinding, it typically becomes non-viable and is therefore excluded from the definition of cannabis and from requirements under the Act. Processing technologies can be used without a licence under the Act on hemp roots and devitalized hemp grain, for all purposes. Hemp stalks may be processed without an industrial hemp licence provided there is no concentration or isolation of phytocannabinoids. For example, a licence would not be required to make hemp hurd, which is the inner, woody fibres of the hemp plant. Possession of viable industrial hemp seeds or grain will continue to require an industrial hemp licence.

Cannabis Exemption (Food and Drugs Act) Regulations

Consequential amendments will repeal the reference to industrial hemp grain derivatives in the CER to align with the exclusion of industrial hemp grain derivatives from the definition of cannabis and the changes under the IHR. This amendment will remove the reference to a food or cosmetic containing cannabis that consists only of industrial hemp grain derivatives exempt under the IHR.

Natural Health Products Regulations

Schedule 2 to the NHPR excludes certain substances, such as cannabis, from the definition of a natural health product. A consequential amendment to Schedule 2 to the NHPR will repeal the exception for industrial hemp grain derivatives as referenced under the IHR. Cannabis as defined in the Act would remain an excluded natural health product substance. All exempted cannabis plant parts under Schedule 2 to the Act, their derivatives, or any product made from those derivatives that contain a THC concentration greater than 10 parts per million, will continue to be excluded from the definition of a natural health product. Similarly, an isolated or concentrated phytocannabinoid, or a synthetic duplicate of that phytocannabinoid will remain excluded from the definition of a natural health product.

Personnel and physical security

To prevent unauthorized access to licensed sites and diversion of cannabis to the illicit market, the Regulations set out personnel and physical security measures to ensure that licensed sites are secured and safeguarded. Health Canada recognizes that certain requirements cause financial, operational, and/or administrative burden to licence holders and can be amended while continuing to protect against the risk of cannabis inversion or diversion.

An individual who holds a valid security clearance is required to be on a licensed site when activities with cannabis are conducted. However, having a security-cleared person present on-site does not ensure direct oversight of activities involving cannabis, particularly where there are multiple rooms or buildings. Licence holders have stated that staffing and scheduling of security-cleared individuals impedes business operations. Therefore, amendments to the Regulations remove the requirement for the on-site presence of a security-cleared individual. However, the licence holder must continue to adhere to physical security, and record-keeping and reporting requirements.

Additionally, should the holder of a licence for processing or cultivation choose to send cannabis to a location other than their licensed site for antimicrobial treatment (such as for irradiation), a security-cleared individual will no longer be required to accompany the cannabis. Similarly, the holder of a research licence or a cannabis drug licence will not require a qualified individual to accompany cannabis off-site for antimicrobial treatment. This change aligns with the approach taken for cannabis distributed intra-industry or for retail sale, where no similar security requirement exists. This change is being made in response to feedback received during the Canada Gazette, Part I consultation.

Amendments to the Regulations make several changes to the physical security requirements applicable to standard-class licensed sites. The intrusion detection system requirement for the site perimeter is removed. Operations areas (indoor and outdoor) where cannabis is not present and where no activities with cannabis are occurring will not require visual recording devices and intrusion detection systems to continually operate and be monitored. The “room within a room” requirement for storage areas and the requirement to record and retain a list of individuals entering or exiting the storage area is removed. Visual monitoring and the intrusion detection system will continue to be required for operations and storage areas, and access to all operations and storage areas will continue to be restricted to only people whose presence is required. Finally, licence holders will be required to retain only visual recordings showing movement on the site perimeter, operations areas (indoor and outdoor), and storage areas for at least one year after the day on which they are made. If the visual recording devices do not have the capability to capture motion-activated visual recordings only, all visual recordings will need to be retained for one year. Standard-class licensed sites will continue to be required to have physical barriers to prevent unauthorized access, restricted access, intrusion detection, and visual monitoring and recording in order to address the risk of diversion. Removing these targeted requirements will reduce the regulatory burden on licence holders, with no anticipated increased risk to public safety.

Production

The production of cannabis products by licence holders is subject to strict rules and standards. Two amendments specific to production requirements allow for greater product innovation without impacting public health and public safety.

Amendments to the Regulations remove the restriction on the weight limit of one gram for each discrete unit of dried cannabis that is intended to be consumed by inhalation (i.e. pre-rolled cannabis). Although cannabis products that are meant for inhalation could increase in size (e.g. from one gram to three grams), the overall limit on the amount of cannabis an adult can possess in public is being maintained to address public safety risks. The amendment also aligns with the approach for other classes of cannabis. For example, there is no weight limit for cannabis extract products, including pre-rolled cannabis infused with cannabis extracts. This change will provide greater flexibility for the size of dried cannabis products intended for inhalation in discrete units.

Amendments to the Regulations permit the use of ethyl alcohol as an ingredient in certain cannabis products, subject to limits to mitigate the public health risks associated with the co-consumption of ethyl alcohol and cannabis. Ethyl alcohol is currently permitted in cannabis extract products intended for ingestion and in edible cannabis products, subject to strict limits. This amendment will also permit the use of ethyl alcohol as an ingredient in inhaled cannabis extracts up to a maximum net weight of 7.5 g. If the cannabis product is in discrete units, it will not be permitted to contain more than 10 milligrams (mg) of ethyl alcohol. If the cannabis product is not in discrete units, each immediate container will not be permitted to contain more than 10 mg of ethyl alcohol unless it includes an integrated dispensing mechanism that dispenses no more than 10 mg of ethyl alcohol per activation, and is packaged in an immediate container that does not permit the extract to be easily removed, poured, or drunk from the container. This amendment will allow for innovation of additional product forms that contain ethyl alcohol and exist in other regulatory frameworks such as metered-dose inhalers and nicotine vaping products. The use of denatured ethyl alcohol as an ingredient in cannabis topicals is permitted with no concentration limit or maximum net weight. This is similar to the requirements for cosmetics. Ethyl alcohol is permitted as an ingredient up to a maximum concentration of 0.5% weight/weight in ingested cannabis extracts with a net weight greater than 7.5 g as the risk will be similar to that of the current ethyl alcohol allowance for edible cannabis products. To continue to mitigate the risks of intoxication from the co-consumption of cannabis and alcohol, it will remain prohibited for a cannabis package, label, or promotion to make an express or implied representation that associates the cannabis, accessory, or service with an alcoholic beverage.

Packaging

The Regulations set out requirements that apply to cannabis products packaged for sale at the retail level. These requirements aim to protect the health of young persons by restricting their access to cannabis and to protect young persons and others from inducements to use cannabis. The requirements also help to promote informed consumer choice and encourage the safe handling and storage of cannabis. Health Canada recognizes there are opportunities to improve the packaging of cannabis products while maintaining these public health objectives.

Amendments to the Regulations simplify packaging requirements to allow for differentiation in colour between the lid or cap of a container and the container itself; permit cut-out windows on packaging for dried or fresh cannabis products and cannabis seeds, while upholding the exclusion of cut-out windows for all other classes of cannabis; and allow dried or fresh cannabis products, in addition to cannabis plants and cannabis seeds, to be packaged in transparent containers, while maintaining existing rules prescribing opaque or translucent packaging of all other classes of cannabis. These changes will allow consumers to visually assess the quality of some cannabis products, particularly dried cannabis, before making a purchase, while maintaining restrictions for classes of cannabis that may be more appealing to young persons, such as edible cannabis products.

Amendments to the Regulations also extend the current provisions allowing the co-packing of multiple immediate containers of edible cannabis products into an outermost container to dried or fresh cannabis, cannabis topical, and cannabis extract products. Outermost containers are limited to holding up to the equivalent of 30 g of dried cannabis. The amendments remove the cumulative 10 mg THC limit for an outermost container of edible cannabis product to allow greater flexibility in packing multiple immediate containers, as long as each immediate container does not have more than 10 mg of THC. The amendments also require the label on the outermost container to display the Total THC and CBD concentration or quantity per discrete unit. In addition, all properties between the cannabis products that are contained in an outermost container must be consistent (i.e. all immediate containers must be the same). Applicable packaging requirements (e.g. child-resistant) for immediate containers will remain.

Cumulatively, these changes to the packaging requirements will enable more product packaging flexibility for licence holders and will be an additional way for licence holders to share information about the quality of their product without compromising public health objectives. It is expected that these changes will allow for a greater variety of packaging available for a lower price.

Labelling

The Regulations set out requirements that apply to cannabis products labelled for sale at the retail level. These requirements aim to protect young persons and others from inducements to use cannabis. The requirements also help to promote informed consumer choice and encourage the safe handling and storage of cannabis. Health Canada recognizes there are opportunities to improve the labelling of cannabis products while maintaining these public health objectives.

Health Canada is aware that consumers frequently misunderstand some of the information on cannabis product labels, that some of the information is of limited value to the consumers, and that there is additional information that may be useful for adults to make informed decisions about cannabis products. To help alleviate these issues, the following amendments to labelling requirements are being made.

Amendments to the Regulations expand the labelling options by permitting the use of QR codes on any container used to package a cannabis product and expanding the allowance for accordion or peel-back labels to all sizes of packages. Bar codes, including QR codes on cannabis products, could be used for a variety of purposes, such as inventory and tracking purposes or to provide consumers access to websites or other information. Any information must continue to comply with all of the promotion requirements of the Act and its regulations and any other applicable federal, provincial, or territorial legislation.

Amendments to the Regulations also allow for the use of inserts and leaflets, offering licence holders flexibility to provide consumers with additional product and brand information. While inserts and leaflets are not subject to the labelling requirements in the Regulations (e.g. font and type size), they are subject to other restrictions in the Act and the Regulations, including restrictions on associating a cannabis product with an alcoholic beverage, tobacco or vaping product, or making a cosmetic or health claim.

To improve the legibility of key information for consumers, the amendments allow the font size of cannabinoid and potency information to be as large as the required health warning message. No changes are being made to the health warning message labelling requirements; this text will remain bolded, and the text box will be highlighted in bright yellow. Under the current requirements, the label on a cannabis product must indicate in bold type the quantities or concentrations of THC and cannabidiol (CBD) within the product in its initial purchased condition, as well as after being heated for activation (i.e. the “total THC” and “total CBD”), as applicable. Evidence suggests that consumers struggle to understand this potency labelling. With these amendments, products will only be required to display on the label the total THC and total CBD, which is most relevant to consumers. Licence holders will still be permitted to include the actual THC, CBD, tetrahydrocannabinolic acid (THCA), or cannabidiolic acid (CBDA) potency on the label. For example, if they are selling THCA-only products. To ensure regulatory compliance, licence holders will be permitted to use old labels with both sets of potency information in bold type for up to 12 months after the coming into force of the amendments. Twelve months is consistent with transition periods provided in previous amendments to the Regulations. Those who are authorized to sell cannabis products (e.g. provincial and territorial distributors and retailers) can continue to sell products with old labels indefinitely in order to deplete any existing inventory. It is anticipated that these provisions will allow for a smooth transition to new labels, without posing any risk to public health.

Similarly, a provision has been proactively added to the Regulations to provide time to licence holders and authorized sellers (i.e. medical sale licence holders, and provincial and territorial distributors and retailers) to deplete existing inventories whenever the incorporated by reference document “Cannabis health warning messages” is updated. This document is published online and is updated from time to time by Health Canada. With this change, licence holders will be notified when the document is updated and will have up to 12 months to transition to the new health warning messages. Authorized sellers will be permitted to sell products labelled with the previous health warning messages indefinitely.

Amendments to the Regulations also remove the requirements for equivalency to dried cannabis statements on cannabis product labels (e.g. “contains the equivalent of XX g dried cannabis”) as well as the requirement to include a statement that “no expiry date has been determined” if stability studies have not been conducted. These changes will simplify information for consumers and will eliminate redundancy in labelling. Licence holders who wish to differentiate their products with other cannabinoid concentrations may continue to do so with voluntary additional information on the label and licence holders may continue to include an expiry date, if one has been determined. Additionally, packaging date information will no longer be required on outermost containers that contain multiple immediate containers, as the immediate containers will have this information.

As noted above, Health Canada implemented several temporary accommodations to regulatory requirements during the COVID-19 pandemic. One of these accommodations was to allow the packaging date of a cannabis product to be within a number of days of the printed packaging date on the label, as reprinting labels with new dates is time-consuming and costly when delays with production are encountered. Amendments to the Regulations permit a window of plus or minus seven days of the printed packaging date on the label. The licence holder will be required to continue to keep records indicating the actual packaging date.

Amendments to the Regulations permit images and information to be displayed on cannabis wrappers if such information is required by another federal or provincial act, such as the chasing arrows symbol that identifies recyclability. This change will allow labels to comply with other statutes, where necessary.

Record-keeping and reporting

Cannabis Regulations

The Regulations establish requirements for the retention of specific documents by licence holders, including time frames, and they identify what information must be submitted to the Minister and when. Health Canada is aware that some requirements may be overly burdensome for a low-value return on information about low-risk activities or may even be duplicative in some instances. The amendments to the Regulations change some of the record-keeping and reporting requirements.

Licence holders will no longer be required to record the quantity of any substance that is applied to cannabis, the method of application, or the rationale for the application. The name of the substance and the date of application will still need to be recorded and retained for two years. Additionally, licence holders will no longer be required to submit a notice of new cannabis product (NNCP) to the Minister for dried cannabis products or fresh cannabis products prior to making them available for retail sale. As dried and fresh cannabis products do not contain any additional ingredients and are less likely to be appealing to young persons than other product classes, like edible cannabis products, they are considered lower risk for non-compliance.

In response to comments received during the Canada Gazette, Part I consultation, Health Canada is also removing the requirement for licence holders to retain a document that lists the ingredients for cannabis extracts, cannabis topicals, or edible cannabis when they have sold, distributed, or exported those cannabis products. Comments received during the public comment period reiterated that this requirement is duplicative in nature; there are other requirements in place to effectively verify the ingredients used in those cannabis products, such as the list of ingredients on the product label itself, or reviewing the production batch records that contain this information.

Amendments to the Regulations change the witnessing and record-keeping requirements regarding the destruction of cannabis. The amendments to the Regulations remove all record-keeping requirements for cannabis cultivation waste (leaves, shoots, and branches collected during propagation, cultivation, or harvesting of cannabis) and the requirement to have qualified individuals witness and attest to the on-site and off-site destruction of this material.

Amendments to the Regulations repeal the requirements for recording the address of the location at which the cannabis is destroyed and the description of the destruction method. Amendments also change aspects of the record-keeping requirement for cannabis plant destruction. Instead of recording plant pre-destruction net weight or volume, only the number of whole cannabis plants destroyed will be recorded, regardless of the growth stage. Overall, these changes will remove the operational burden of weighing the plants prior to destruction, while providing more meaningful information and aligning the reporting requirements of the Regulations and the Order with those required by the Canada Revenue Agency (CRA). In addition, only the presence of, and attestation by, one individual who is an employee of the licence holder for on-site and off-site destruction will be required instead of the current requirement of two individuals, one of which required a security clearance. The individual will not need to hold a security clearance.

Amendments to the Regulations remove the requirement for licence holders to provide an annual report to the Minister outlining the amount of money they have spent on promotion. Amendments also remove the requirement for licence holders to keep information on promotion-related expenditures and a description of the types of promotion to which the expenditures relate. The requirement to keep a sample or copy of any promotional materials for at least two years is maintained.

With respect to key investor reporting, amendments to the Regulations remove the requirement for licence holders to submit information indicating whether any ownership interest or right held by a key investor was assigned or otherwise provided to any other person and other related details. Health Canada understands these requirements may pose an administrative burden to licence holders and having to submit this information on an annual basis may be duplicative to information submitted in the updated organization security plan provided through licence applications and renewals and in other parts of their key investor report. The amendments also exempt licence holders that are wholly owned by a publicly traded company from key investor reporting as they are already subject to financial securities reporting requirements, such as through provincial securities law reporting requirements. This approach aligns with the treatment of publicly traded companies, which are already exempt from key investor reporting requirements under the Regulations.

Amendments to the Regulations change the unit of measurement used in the record-keeping requirements for cannabis plant seeds that are sown from the net weight to the number of plant seeds. Adjusting to the number of seeds will align record-keeping requirements for cannabis seeds between the Regulations and the Order and with CRA reporting requirements.

Cannabis Tracking System Order

The Order is amended to change the monthly reported unit of measurement of unpackaged cannabis plant seeds from kilograms to the number of seeds to align the information with that reported to the CRA.

Amendments to the Order also exempt licence holders from certain monthly reporting requirements relating to the weight of cannabis cultivation waste. This information will no longer be required to be included in the quantity of unpackaged cannabis that either ceased to form part of, or was added to, the inventory during the previous month.

Regulatory development

Consultation

The cannabis regulatory framework has been in place since 2018 and Health Canada has received feedback through consultations, public opinion research, and other data as well as through meetings and correspondence with stakeholders including regulated parties.

In addition to general stakeholder feedback and Health Canada’s experience in implementing and administering the current regulatory framework, the responses to two formal consultations were considered in the development of these regulatory changes. The first consultation, Notice of Intent — Consultation on the Cannabis Regulations: Cannabis research and other regulatory issues, was published in the Canada Gazette, Part I on December 12, 2020. This 30-day public consultation provided stakeholders and all Canadians with the opportunity to comment on Health Canada’s intent to amend the Regulations and associated frameworks to facilitate non-therapeutic cannabis research involving human participants and cannabis testing. Interested stakeholders also had the opportunity to provide feedback and comment on additional regulatory issues, including several considered in this regulatory proposal (i.e. product labelling, micro-class and nursery licences, and COVID-19 measures).

Health Canada published a Notice of Intent — Consultation on potential amendments to the Cannabis Regulations to directly seek stakeholder input on streamlining regulatory requirements on March 25, 2023, in the Canada Gazette, Part I for a 60-day public consultation period. Interested parties had the opportunity to comment on five priority areas including licensing, personnel and physical security, production, packaging and labelling, and record-keeping and reporting, and questions were posed for stakeholder consideration and feedback.

In general, responses from both consultations were highly supportive of formalizing the existing flexibilities that were extended during the COVID-19 pandemic, reducing requirements pertaining to licensing, including increasing the thresholds for micro-class and nursery licences, personnel and physical security, and packaging and labelling. Moreover, the NOI from March 2023 received suggestions to review record-keeping and reporting requirements that could be reduced or eliminated.

Prepublication in Canada Gazette, Part I

Health Canada published the proposed amendments in the Canada Gazette, Part I, on June 8, 2024. During the 30-day public comment period, Health Canada received 147 responses from cannabis licence holders, cannabis industry associations, health care groups, researchers and universities, law enforcement, provinces and territories, and individual Canadians. The comments received on the proposed amendments were generally well received. Many comments included suggestions, but the most common feedback to the proposed amendments was that Health Canada could have ‘gone further’ with the proposals. In many cases, respondents provided suggestions for changes that were more extensive than those proposed. While some of these suggestions were incorporated into the regulatory amendments, others were deemed to be out of scope (e.g. they could have an impact on public health or public safety). Key highlights of the feedback received are summarized thematically below.

Licensing

Overall, the proposed licensing amendments were received positively, although many industry and individual respondents recommended additional changes to the licensing framework, such as removing the approval process for QAPs.

Researchers were in favour of the proposal to exempt them from requiring a licence while conducting non-human or non-animal research with no more than 30 g of dried cannabis or its equivalent. Several respondents questioned whether researchers would have access to cannabis outside of authorized commercial retailers, as well as whether organizations such as universities would be limited to 30 g. To clarify, non-licensed researchers will not have access to cannabis directly from licence holders, and organizations possessing more than 30 g of dried cannabis or its equivalent will continue to be required to have a cannabis research licence. Concerns were also raised about the possibility of conducting cannabis-related research on animals without a licence. The Regulations were amended to specify that this is not a permitted activity.

There were few alternative proposals in the comments received regarding increases to micro-thresholds. Some respondents, citing financial and structural constraints, questioned whether there was an overall value for licence holders other than outdoor cultivators. No changes were made to the Regulations in response to these comments.

There was a high level of support for increasing the number of permitted alternate QAPs. Some proposed changes included extending the same change to the roles of Master Grower and Head of Security, formalizing training requirements for QAPs such as through an online course, and removing the need for Health Canada to approve QAP qualifications. However, it is Health Canada’s position that existing requirements for these specialized positions should be maintained to protect public health and public safety, given their core roles in the cannabis industry.

Very few changes were suggested for the amendments relating to the intra-industry sale of pollen, repealing the requirement to provide printed consumer information documents, or removing ports of entry or exit from import and export permits. These proposals were well supported by stakeholders.

A few comments received in response to the proposal to add grounds for licence suspension suggested making the suspension process publicly available, with published guidelines to improve industry understanding and compliance. It was suggested that the reasons for suspensions and revocations be posted online to increase transparency and provide predictability. A few comments were in strong opposition to any fee collection, or requirements to submit a statement of cannabis revenue, stating that revenue should be solely the responsibility of the Canada Revenue Agency. These comments do not relate to regulatory requirements or were outside the scope of the regulatory amendments, and therefore did not result in changes.

Comments received in response to the proposed amendment to Schedule 2 were generally positive. Several respondents were concerned with how Health Canada would monitor and enforce the presence of isolated or concentrated phytocannabinoids in Schedule 2 derivatives, and as a result, further changes were made to clarify the scope of the exempted Schedule 2 derivatives. Concerns raised by industrial hemp stakeholders centred on the distinction between viable and non-viable seed, which has been clarified in this document.

One of the two public health units that commented, and all three of the law enforcement agencies, were opposed to any streamlining of licensing requirements, citing concerns about the potential implications on public health or public safety. In considering these concerns, Health Canada concluded that the amendments streamline the regulatory framework without significantly increasing risk to public health and public safety.

Personnel and physical security

The majority of submissions supported the proposed changes to the current regulatory requirements for personnel and physical security.

The proposed amendment to no longer require an individual with a security clearance to be on-site when activities with cannabis are conducted was met with strong support, with examples provided of how this change would ease staffing pressures due to limited security-cleared individuals at the site. A suggestion was received to repeal the requirement for a security-cleared individual to accompany cannabis during off-site antimicrobial treatments, as these individuals are not permitted to enter the facilities of these service providers and as such cannot guarantee the security of the cannabis or prevent its diversion. The approach is consistent with that taken for other activities involving the transportation of cannabis, such as for retail sale. This suggestion has been included in the regulatory amendments. Other suggestions that were not implemented included removing the requirement for directors and officers to hold a security clearance. These requirements were maintained because requiring security clearances for individuals who have direct control and management over an organization’s business operations is an important measure to deter illicit activities in relation to cannabis.

The proposed amendments relating to physical security measures received strong support. A majority of respondents supported the removal of intrusion detection requirements at the site perimeter, the “room within a room” requirement for storage areas, and the requirement to record and retain a list of individuals entering or exiting the storage area. Similarly, respondents approved of the changes being proposed to the operation of visual recording devices and intrusion detection systems in operations areas with no cannabis, as well as the retention of visual recording showing movement. Overall, respondents supported the use of a risk-based approach that is paired with technological adaptation, while maintaining robust protection against unauthorized access and cannabis diversion.

Additional suggestions included removing the approval requirement of storage area-related site plan changes, reducing the retention period of visual recordings from 12 to 6 months, and removing the distinction between operations areas and storage areas. Given the importance of physical security integrity in the cannabis framework, the regulatory text has not been amended to address these suggestions.

Production requirements

Respondents generally supported the proposal to expand the use of ethyl alcohol in additional product types. Nearly all industry respondents were supportive of the proposal, with some stating that this change will allow for product innovation such as metered-dose inhalers.

Some respondents, including health care groups, were opposed to the proposed changes to allow for minimum amounts of ethyl alcohol in inhaled extracts and denatured ethyl alcohol in topicals, stating that these changes may introduce new populations to such products, increase their appeal to youth, or that they may increase adverse affects and potential health risks associated with inhalation or co-consumption of cannabis and ethyl alcohol. Health care groups also stated that there was insufficient data to support these proposals from the perspective of public health, pointing to limited information that is available on non-cannabis vaping products and ethyl alcohol. No changes were made to the Regulations in response to these comments; the limited allowance for ethyl alcohol in additional product types is consistent with other relevant control frameworks, including those for drugs, vaping products, and cosmetics. The safety profile of ethyl alcohol is better understood compared to alternative substances with unknown or higher-risk profiles, such as medium chain triglycerides, which has been proposed for use in cannabis metered-dose inhalers. Moreover, licence holders would continue to be prohibited from making any representations on the package, label, or in promotions that associate the product with an alcoholic beverage.

Responses to the proposal to remove the maximum size of one gram for dried cannabis products in discrete units intended for inhalation was very positively received. However, three public health respondents were opposed to the proposal with concerns that it may create new cannabis users, lead to overconsumption, and increase risk for youth as surveys indicate that youth prefer smoking cannabis. No changes were made to the Regulations in response to these comments. Health Canada continues to maintain plain packaging and labelling rules and promotion restrictions to protect youth from inducements to use cannabis. The change provides adult consumers with a broader range of choice and better aligns the rules on dried cannabis products with those of cannabis extracts where no weight limits exist.

Packaging and labelling

The proposed packaging and labelling amendments were the topics that received the most comments. Innovation and flexibility in packaging and labelling were commonly listed as positive likely outcomes, with respondents suggesting that the changes would reduce administrative burden, time, and costs for industry. In addition, respondents noted these changes would result in consumers having more information on cannabis products and could help them transition from the illicit market to the legal market. Those opposed either provided reasons a specific change would not meet industry and consumer needs or felt the proposed amendments prioritized industry demands and posed risk to public health and public safety objectives. For example, some respondents felt that there should be no restrictions on the types of symbols that should be permitted on wrappers, while others were of the opinion that the restrictions on wrapper labelling should be maintained to protect minors. There were also several respondents who were either in favour of or opposed to the packaging and labelling changes overall without providing any specifics.

Comments on co-packing covered a wide range of opinions, with suggested changes including the type of information required on immediate versus outermost labels and when packaging should be child-resistant. Some concern was raised about the potential risk to public health in permitting an outermost container to contain immediate containers with different properties (e.g. an outermost container containing a baked good, gummies, and a beverage). A few stakeholders expressed concern about the potential for “co-packaging to influence purchase and consumption behaviors,” or “enhance product appeal by offering different variations of products in one purchase.” Some health care units also shared that consumers currently demonstrate low cannabis literacy when reading product labels, and that co-packing may cause confusion leading to accidental overconsumption. In an effort to address these concerns, Health Canada is adding a restriction requiring all immediate containers within an outermost container have all of the same properties. In addition, co-packs will need to include the THC or CBD quantity per discrete unit on the label of the outermost container.

Stakeholders made suggestions in relation to transparent packaging and cut-outs, such as extending the amendment to include cannabis extract or edible cannabis products. A few respondents recommended that industry be allowed to label “other cannabinoids” in products similarly to total THC and CBD (i.e. in bold type and with font as large as the health warning message) to provide additional transparency for consumers on product composition. However, feedback received in previous consultations indicated that the implementation of such suggestions could serve as an inducement or enhance the product’s appeal, particularly for edible cannabis products. As such, these suggestions were not included in the regulatory text.

Record-keeping and reporting

Respondents generally supported the proposed record-keeping and reporting amendments, with many including suggestions for additional changes. In addition to the proposal to repeal the requirement to report a notice for new dried and fresh cannabis products, suggestions were received to reduce the notice period, as well as multiple other non-regulatory changes. The reporting period for new cannabis products provides time for the regulator to examine notices and ask questions, or take follow-up measures, as appropriate. As such, no amendments were made in response to these comments. With respect to key investor reporting, some recommended further reducing the requirement by exempting licence holders who are wholly owned by a publicly traded company to from key investor reporting requirements. They explained that public corporations must comply with extensive financial reporting and compliance obligations imposed by other regulatory bodies and are subject to frequent audits for their financial controls and statements. This suggestion has been incorporated into the amended regulatory text.

Most respondents supported the proposal to remove the requirement for licence holders to provide an annual report to the Minister outlining the amount of money spent on promotion. However, several stakeholders also recommended removing the requirement to retain a document detailing money spent on consumer-directed promotions as this information does not assist Health Canada in determining whether the company’s promotional practices are compliant with the Act and its regulations. They suggested that the requirements should be limited to only keeping a sample or copy of the promotional materials. This suggestion has been included in the amendments.

Most respondents were in favour of the proposals to remove record-keeping of substances applied to cannabis, and in relation to destruction. A few respondents recommended further changes to cannabis destruction requirements, including allowing cultivation waste to be stored in the operations areas if it is not collected and destroyed on the day it is created. This comment does not relate to regulatory requirements, and therefore did not result in amendments. A limited number of submissions, including from one law enforcement agency, were opposed to the proposed change and specified that these requirements should be increased or maintained to mitigate the risk of cannabis diversion to the illicit market. In considering these concerns, Health Canada concluded that the amendments streamline the regulatory framework without significantly increasing risk to public health and public safety.

Cannabis Tracking System Order

Comments regarding the proposed amendments to the Order were generally positive. Several respondents noted that changes to the way in which seeds are reported could add additional administrative burden for licence holders with a larger, uncountable quantity of seeds, and suggested that flexibility should be added. As licence holders are already required to report the number of seeds to the Canada Revenue Agency, this amendment is not anticipated to create additional burden. Feedback about cultivation waste reporting indicated the change represents a significant time savings, or that it improves the accuracy of reporting. However, it was also noted that alignment with the Canada Revenue Agency is necessary to truly reduce administrative burden as reporting on cultivation waste will remain a requirement under the Excise Act, 2001.

Legislative review of the Cannabis Act

Beginning in September 2022, an independent Expert Panel (the Panel) conducted a legislative review of the Act, as required pursuant to section 151.1. In March 2024, the Minister of Health tabled the Legislative Review of the Cannabis Act: Final Report of the Expert Panel in Parliament.

This report identified 54 recommendations and 11 observations to strengthen and improve the administration of the Act. Although these regulatory amendments do not comprise the entirety of the Government of Canada’s response to the legislative review, the available feedback contained in the Panel’s final report was reviewed and considered in the development of these amendments. The regulatory changes will directly implement several of the recommendations made in the final report and address a number of issues identified by the Panel, such as:

Additionally, the legislative review concluded that more could be done to facilitate cannabis research and there remain numerous challenges to the financial sustainability of companies, particularly smaller-sized licensed cultivators and processors. These findings support amendments to exempt certain research from requiring a licence, and changes to the limits for micro-class licences.

Additional research and analysis are necessary to address the remaining recommendations made by the Panel, therefore they are not addressed in these amendments.

Modern treaty obligations and Indigenous engagement and consultation

An Assessment of Modern Treaty Implications has been conducted and concluded that these amendments do not trigger a duty to consult with Indigenous peoples. Most of the changes respond to stakeholder feedback to reduce regulatory and administrative burden, and, as they reflect current industry practices, they will not specifically target Indigenous peoples.

Two public consultations have been conducted through publication in the Canada Gazette, Part I: an NOI on March 25, 2023, and the proposed amendments on June 8, 2024. As part of Health Canada’s commitment to engaging with Indigenous partners in the implementation of the Act and its regulations, both public consultations were published in the First Nations Gazette targeting notification to Indigenous peoples, groups and regulated parties, and stakeholders. These efforts were done in a way to further implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act. There was also a direct email sent to Indigenous partners, organizations (National Indigenous Organizations) and regional associations for both consultations. There were two responses received from Indigenous peoples to the NOI publication and one response to the consultation on the proposed regulatory amendments. There were no submissions received in direct response to the publication in the First Nations Gazette for either consultation. Responses among this group did not significantly differ from the responses of those who did not self-identify.

These regulatory amendments are not expected to impact the rights of Indigenous peoples recognized and affirmed under section 25 of the Constitution Act, 1982 and are not expected to impact modern treaties with the Indigenous peoples of Canada.

Instrument choice

Health Canada considered several options prior to developing these regulatory amendments, including maintaining the status quo, implementing comprehensive regulatory amendments stemming from the Panel’s recommendations as part of the Legislative Review of the Cannabis Act, or streamlining regulatory obligations. Health Canada continues to hear from licence holders that they are struggling with profitability and regulatory burden; therefore, proceeding with regulatory amendments that reduce the burden on industry without fundamental changes to the public health and public safety controls was deemed to be in the best interest of Canadians and the industry.

If the regulatory framework were to remain as is, regulated parties would continue to experience challenges identified with regulatory requirements and related burden, including extensive operational and production restrictions, and packaging and labelling restrictions that make it difficult for federally licensed businesses to compete with the illicit market. The status quo would not provide the means needed to address the regulatory burden that licence holders have indicated is hampering their ability to operate. Alternatively, undergoing comprehensive regulatory amendments was not deemed to be in the best interest of an immediate remedy to reducing regulatory and administrative burden.

As such, proceeding with targeted amendments to the regulatory framework to reduce regulatory and administrative burden is the chosen approach. These changes allow Health Canada to respond to stakeholder and industry feedback and implement several specific recommendations made by the Panel, including the recommendation to prioritize and accelerate work on regulatory streamlining. The regulatory changes were supported by stakeholders and industry throughout public consultations. These amendments offer a responsive and efficient approach to supporting the effective operation of the cannabis industry while maintaining public health and public safety objectives.

Regulatory analysis

The costs and benefits of the amendments have been assessed in accordance with the Treasury Board Secretariat Canadian Cost-Benefit Analysis Guide: Regulatory Proposals.

Monetized values are reported in present values (PV) over 10 periods of 12 months (2025–2034), discounted at 7% and expressed in 2023 constant dollars unless otherwise noted.

Benefits and costs

The Cabinet Directive on Regulation requires departments to analyze the costs and benefits of federal regulations. This Cost-Benefit Analysis (CBA) evaluates incremental regulatory impacts on the cannabis industry and affected licence holders and licence applicants, the public, and government. To measure these impacts, the benefits and costs have been estimated by comparing the incremental change from the current regulatory framework (i.e. the “baseline scenario”) to what is anticipated to occur under the regulatory changes (i.e. the “regulatory scenario”). A CBA survey was not conducted; however, for regulatory requirements that had costs estimated in past analyses,footnote 6 the approach adopted in the previous analyses was followed. Information received in the Notice of Intent — Consultation on potential amendments to the Cannabis Regulations and input from the Canada Gazette, Part I: Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements) consultation were also used. The CBA report is available upon request from the departmental contact listed at the end of this document.

The licences issued under the Regulations and the IHR set out the activities a holder is authorized to do, and each licence is associated with a site where the authorized activities may be performed. A licence holder or licence applicant may be an individual or an organization, and may hold one or more licences, or may be applying to one or more licence classes, respectively. The analysis of benefits considered the number of affected licence holders and licence applicants based on the types of activities they are, or may be, authorized to conduct under their licences, and the number of sites, where appropriate. Unless otherwise noted, the number of licence holders and licence applicants used in this analysis is based on values as of December 31, 2023. The licence classes and subclasses under the Regulations and the IHR that are described in the analysis below are presented in Table 1.

Table 1: Licence classes
Regulation Licence class Subclass

Cannabis Regulations

(Cannabis licence holders)

 Cultivation Standard, micro, Nursery
Processing Standard, micro
Sale For medical purposes authorizing possession, for medical purposes without possession
Analytical testing N/A
Research N/A
Cannabis drug N/A
Industrial Hemp Regulations
(Industrial hemp licence holders)		 Industrial hemp N/A

Overarching assumptions:

CBA changes following Canada Gazette, Part I

While the amendments pertain to both the regulations and the Order, the regulations fall under the Governor in Council Submissions (GIC) process and the Order is a Ministerial Order. Therefore, the CBA has been divided into two parts: one for the Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements) and another for the Order Amending the Cannabis Tracking System Order (Cultivation Waste). Other minor adjustments to the analysis were also made and are described in greater detail below.

Changes made to the Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements)

Certain values used in the Canada Gazette, Part I CBA were adjusted

As a result of amendments made post-Canada Gazette, Part I, the following analyses were added:

After these adjustments were made, there were no changes to the total incremental costs to Health Canada, which remains at $13,412 PV over 10 periods (or $1,910 in annualized value).

The total incremental benefits for regulated parties, in terms of administrative and compliance cost savings, increased by $7.5 million PV over 10 periods (or $1.1 million in annualized value) to $295.5 million PV over 10 periods (or $42.1 million annualized value).

The net benefit of these amendments increased by $7.5 million PV over 10 periods (or $1.1 million in annualized value) to $295.5 million PV over 10 periods (or $42.1 million annualized value).

For the small business lens, the total cost savings increased by $6.7 million PV over 10 periods (or $949,964 in annualized value) to $263.0 million PV over 10 periods (or $37.4 million in annualized value).

For the one-for-one rule, the administrative burden was further reduced by $2.7 million PV over 10 periods (or $378,550 in annualized value) to $54.5 million PV over 10 periods (or $7.8 million in annualized value).

Change made to the Order Amending the Cannabis Tracking System Order (Cultivation Waste)

A minor change was made to the quantitative analysis for the amendment to change the monthly reported unit of measurement of unpackaged cannabis plant seeds. The number of affected licence holders was overstated - 916 licence holders were assumed in Canada Gazette, Part I. This has been revised to 909 licence holders. This change was made because the original number included licence holders holding a licence for sale for medical purposes, who would not be affected by this amendment and were therefore removed. After this adjustment, there was a reduction in industry cost savings by $421 PV over 10 periods (or $60 in annualized value).

There were no changes to the total incremental costs to Health Canada, which remains at $716 PV over 10 periods (or $102 in annualized value).

The total incremental benefits for regulated parties, in terms of administrative and compliance cost savings, decreased $421 PV over 10 periods (or $60 in annualized value) to $506,076 PV over 10 periods (or $72,054 in annualized value).

The net benefit of these amendments decreased by $421 PV over 10 periods (or $60 in annualized value) to $505,361 PV over 10 periods (or $71,952 in annualized value).

For the small business lens, the total cost savings decreased by $375 PV over 10 periods (or $53 in annualized value) to $450,408 PV over 10 periods (or $64,128 in annualized value).

For the one-for-one rule, the administrative burden increased by $135 PV over 10 periods (or $19 in annualized value) to $162,683 PV over 10 periods (or $23,162 in annualized value).

Sum of total costs and benefits post-Canada Gazette, Part I

After all the adjustments were made separately to the regulations and the Order, there were no changes to the total incremental costs to Health Canada. Costs remain at $14,128 PV over 10 periods (or $2,011 in annualized value).

The total incremental benefits for regulated parties, in terms of administrative and compliance cost savings, increased by $7.5 million PV over 10 periods (or $1.1 million in annualized value), amounting to $296.0 million PV over 10 periods (or $42.1 million in annualized value).

The net benefit of these amendments also increased by $7.5 million PV over 10 periods (or $1.1 million in annualized value), amounting to $296.0 million PV over 10 periods (or $42.1 million in annualized value).

For the small business lens, the total cost savings increased by $6.7 million PV over 10 periods (or $1.0 million in annualized value), amounting to $263.5 million PV over 10 periods (or $37.5 million in annualized value).

For the one-for-one rule, the administrative burden was further reduced by $2.7 million PV over 10 periods (or $378,531 in annualized value), amounting to $54.7 million PV over 10 periods (or $7.8 million in annualized value).

1. Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements)

Baseline versus regulatory scenario

Table 2 summarizes the baseline scenario and the regulatory scenario requirements, the incremental changes of the amendments, and which stakeholders could be affected by the changes.

Table 2a: Baseline versus regulatory scenario — Licensing

Baseline scenario

Regulatory scenario

Estimated benefits/costs

Licensed processors must provide paper copies of the consumer information document with every package delivered to a provincial or territorial retailer or directly to a consumer.

Licensed processors will no longer need to provide printed copies. Information will remain available on Health Canada’s website.

Cost savings for licensed processors who will no longer be required to print consumer information documents.

Policy flexibility adopted in 2020 to accept alternate ports of entry/exit for import/export permits, provided that all other requirements of the permit are respected.

Will formalize the import/export COVID-19 flexibility that has been in place for 4 years. Will remove the requirement to list the customs office address on import permits. All other requirements of the permit will be maintained.

While there will be benefits to cannabis and hemp licence holders from continued flexibility, there will be no incremental benefits as interim measures are already in place.

There will be benefit to Health Canada as less resources will be required to review and renew the interim measures.

One-time cost to government to update guidance materials, website, Cannabis Tracking and Licensing System (CTLS), and standard operating procedures (SOPs).

Licensed processors are permitted to staff up to two alternate Quality Assurance Persons (QAPs).

The QAP has sole responsibility for signing off the quality assurance on each lot/batch; however, published guidance permits QAPs to delegate this responsibility to qualified individuals.

Will increase the number of alternate QAPs to "one or more" (number to be determined by licence holder based on operational requirements), similar to requirement for head of laboratory. Will allow the QAP to delegate activities, while maintaining accountability and overall responsibility.

There will be benefit to licensed processors by allowing for more QAPs to help mitigate production bottlenecks.

One-time cost to government to update CTLS and SOPs.

Cultivation, research, and industrial hemp licence holders cannot sell pollen to other licence holders.

Will enable intra-industry sale of pollen.

Cultivation, research, and industrial hemp licence holders will benefit from the new authority to diversify their research and business activities.

One-time cost to government to update guidance materials and SOPs.

The grounds for suspension at the level of the Act relate to protection of public health and public safety, and there are prescribed circumstances set out in the Regulations, which are more limited than the grounds to refuse or revoke a licence.

Will add prescribed grounds to suspend any licence held by the same licence holder if there are unpaid fees or they fail to submit a required statement of cannabis revenue for one licence.

There will be benefits to holders of a licence for cultivation, processing, sale for medical purposes, analytical testing, research, or a cannabis drug licence as suspensions are a temporary compliance measure and will cause less disruption to operations than licence revocations; once unpaid fees are paid, the licence will be resumed, and the holder will not need to apply for a new licence with payment of an additional application fee. If the licence were revoked, a licence holder would incur time and resources to prepare a new licence application and pay related fees.

Micro-cultivators must not exceed 200 m2 canopy size, micro-processors must not possess over 600 kg of dried cannabis (or equivalent) per year, and nurseries must not have a canopy size of more than 50 m2, nor over 5 kg of harvested flowering heads.

Will increase the thresholds of micro-class licences, based on changes to distributor cannabis prices, by a factor of four.

Micro-cultivation: Canopy size: 200 m2 to 800 m2

Micro-processing: Yearly possession (dried cannabis): 600 kg to 2 400 kg

Nursery: Canopy size: 50 m2 to 200 m2; Harvested flowering heads: 5 kg to 20 kg

There will be benefits to existing micro-class licence holders from being able to operate at higher capacity without changing or applying for a new licence. There may be more applicants who opt for micro-class licences. Holders of a standard licence that are eligible may choose to switch their licence to micro-class and benefit from reduced fees and physical security measures.

Items listed in Schedule 2 to the Act are exempt from the application of the Act, but processing these items may result in their derivatives being considered as cannabis and subject to controls under the Act. As such, Health Canada may require a processing licence under the Regulations for processing exempted parts.

The IHR exempts non-viable industrial hemp grain derivatives from the Act if the THC concentration is less than 10 parts per million.

Will allow for the production of derivatives with exempted plant parts listed under Schedule 2 without a processing licence. Derivatives made from processing mature stalks may not contain an isolated or concentrated phytocannabinoid.

Will repeal the related THC testing for hemp grain derivatives and remove requirements for wholesale labelling, importing, and exporting.

These changes will allow the derivatives of non-viable cannabis and non-viable industrial hemp seeds, and roots to be imported, exported, sold, and processed without a licence under the Act. Derivatives of mature stalks can also be imported, exported, sold, and processed without a licence but may not contain isolated or concentrated phytocannabinoids. This will remove regulatory burden from cannabis and industrial hemp licence holders if they choose to conduct activities with these parts. These benefits could include saving on the costs of testing and of import/export permits, where applicable.

There will be a benefit to Health Canada as fewer resources will be required to review licence applications for processors and import and export permits.

All research, including non-human research, requires a licence for research regardless of the quantity of cannabis that a person (individual or organization) will possess.

The Act prohibits organizations from possessing cannabis.

Organizations and adults conducting research that does not involve human or animal participants and does not use more than 30 g of dried cannabis or its equivalent will no longer be required to apply for a research licence.

However, the research will not be allowed to be conducted within a dwelling house, nor will it be allowed at a site found in a registration with the Minister that is issued under subsection 313(1) of the Regulations.

Some cannabis researchers may no longer require a cannabis research licence. Therefore, they will benefit from administrative cost savings.
Table 2b: Baseline versus regulatory scenario — Personnel and physical security measures

Baseline scenario

Regulatory scenario

Estimated benefits/costs

Holders of a licence for cultivation, processing, sale for medical purposes authorizing possession, or a cannabis drug licence must have security-cleared personnel on-site whenever activities with cannabis are being conducted.

It will no longer be required to have security-cleared personnel on-site when activities with cannabis are being conducted.

Other requirements that reduce the risk of diversion will be maintained, such as physical security and record-keeping.

Holders of a licence for cultivation, processing, sale for medical purposes authorizing possession, or a cannabis drug licence will benefit from cost savings associated with not requiring a security-cleared individual to be on site. For example, they may save on overtime costs or from not having multiple security-cleared individuals on staff to cover all operating times.

Holders of a licence for cultivation, processing, and sale for medical purposes authorizing possession must have a security-cleared person accompany cannabis off-site for antimicrobial treatment. Holders of a research licence or a cannabis drug licence need to have a qualified person accompany cannabis off-site for antimicrobial treatment.

It will no longer be required to have a security-cleared person or a qualified person accompany cannabis for off-site antimicrobial treatment.

Holders of a licence for cultivation, processing, sale for medical purposes authorizing possession, research, or cannabis drug licence will benefit from cost savings associated with not requiring security-cleared or qualified persons to accompany cannabis during off-site antimicrobial treatment. For example, they may save on travel, meals and accommodation costs.

Strict physical security measures apply to standard-class, sale for medical purposes authorizing possession, and cannabis drug licence holders.

Some physical security measures will be reduced for standard-class, sale for medical purposes authorizing possession, and cannabis drug licence holders:

  • Remove intrusion detection requirements from the site perimeter;
  • Repeal continuous visual recordings;
  • Remove "room within a room" storage requirements;
  • Remove recording and retaining a list of individuals entering or exiting storage areas;
  • Exempt operations areas from maintaining some requirements when they do not have activities with cannabis occurring and when cannabis is not present.

Standard-class, sale for medical purposes authorizing possession, cannabis drug licence holders, and new licence applicants at licensed sites will benefit from cost savings.

Health Canada will incur costs to update guidance documents and SOPs.
Table 2c: Baseline versus regulatory scenario — Production requirements

Baseline scenario

Regulatory scenario

Estimated benefits/costs

Pre-rolled dried cannabis size is limited to one gram.

The one gram limit on pre-rolled cannabis will be repealed.

Removing the weight restriction will benefit licensed processors as the alignment with other cannabis products will encourage innovation of new cannabis products (i.e. different size formats).

If licensed processors wish to produce larger sized inhalable products, this amendment will be a benefit to cannabis consumers as they will have the choice to purchase larger sized products, should they wish to.

The Act broadly prohibits the use of ethyl alcohol in cannabis products, unless authorized.

Ethyl alcohol is only permitted in cannabis extracts for ingestion and edible cannabis, subject to restrictions.

Will enable the limited use (up to 10 mg per activation) of ethyl alcohol in cannabis extracts intended for inhalation and in cannabis topicals to allow for innovative product development and align with other regulatory frameworks.

Licensed processors will benefit as the change will allow product innovation. Therefore, they will be able to offer a broader range of products in response to market demand.

Consumers will benefit from a wider range of product selection.
Table 2d: Baseline versus regulatory scenario — Packaging and labelling requirements

Baseline scenario

Regulatory scenario

Estimated benefits/costs

With the exception of cannabis plants and cannabis seeds, all product packaging must be opaque or translucent. All product packaging must be of the same colour. Cut-out windows are prohibited.

The cap and container will be permitted to be different colours for all cannabis packaging. Cut-out windows or transparent packaging will be permitted for dried cannabis, in addition to fresh cannabis and seeds.

Licensed processors will have an increased range of suppliers and materials with likely a lower competitive price which may yield some cost savings. They will also be able to source more environmentally sustainable packaging.

Both licensed processors and consumers will benefit from an additional way to share product information; consumers will see the product before purchasing to assess quality and inform their purchasing choice.

Wrappers are prohibited from having any image or information, other than the standardized cannabis symbol.

Images and information on wrappers will be permitted if required by another statute, such as the chasing arrows recycling icon.

This change will enable compliance with other statutes, if required.

Cannabis products require labelling of both the quantity of THC and CBD and the total quantity of THC and CBD taking into account the potential to convert the acid forms into THC or CBD. They are also required to have a font size smaller than the health warning message.

Potency labelling will be simplified by only requiring total THC and total CBD on the label and allowing the font size to be as large as the health warning message.

Twelve-month transition period for licence holders to continue using labels with actual THC and CBD in bold type, which would not be permitted after coming into force as this information is considered voluntary. Authorized sellers will be permitted to sell products that are labelled with actual THC and CBD quantities in bold font indefinitely.

There will be a benefit to consumers and point of sale representatives by reducing confusion from two measures of THC and CBD on the label (total and actual) and allowing this key information for consumers to be in a font size as large as the health warning message.

There will be benefits to licensed processors from more label space to include additional voluntary information on the product label.

The transitional provision will benefit licence holders because they can deplete their existing inventory of labels with the actual THC and CBD in bold type during the 12-month period. Authorized sellers of cannabis products will be able to sell existing inventory labelled with actual THC and CBD quantities in bold font indefinitely.

Bar codes are prohibited to be on product labels or packages. Informational inserts and leaflets are prohibited. Accordion or peel-back labels are only permitted on small packages.

Will expand the use of bar codes (e.g. QR codes) on product packages or labels and permit informational inserts and leaflets to be included in cannabis products to allow additional information to be provided to consumers. Accordion or peel-back labels will be permitted on any sized package.

There will be benefits to licensed processors to provide more information on their products to consumers including additional voluntary health and safety information.

There will be benefits to consumers from having more information to make better informed purchasing decisions.

Equivalency statements are required for all products and a statement that no expiry date has been determined is required for dried or fresh cannabis, cannabis extracts, and cannabis topicals.

Requirements for equivalency statements on cannabis product labels (i.e. "Contains the equivalent of ## g of dried cannabis") and requirement to include "no expiry date has been determined" will be repealed.

There will be benefits to licensed processors from having more label space to provide additional information on their products to consumers.

It is prohibited to package several immediate containers inside one exterior container, except for edible cannabis, provided the amount of THC in all containers does not exceed 10 mg and the properties of each immediate container are consistent.

Will allow co-packing of cannabis up to the public possession limit of 30 g of dried cannabis or its equivalent.

Individual packaging and labelling requirements (e.g. limit of 10 mg of THC per immediate container and child-resistant packaging) will remain.

All properties of all immediate containers within an outermost container must be consistent.

Packaging date will not be required on outermost containers that include more than one immediate container.

Licensed processors will be able to pack multiple packages together which may allow them to sell larger quantities.

Consumers may benefit from co-pack purchases if the price point is reduced.

COVID-19 flexibility adopted in 2020 allowed a packaging date that is plus/minus 7 days of the printed packaging date on the label.

Will formalize the flexibility to allow a packaging date that is plus/minus 7 days of the printed packaging date on the label.

This will be a continued benefit to licensed processors from an existing flexibility. As it is already in place, there will be no further benefits for licensed processors.

Licence holders and authorized sellers are not permitted to sell cannabis products labelled with the former health warning messages once the warning messages that are incorporated by reference are amended.

Should the health warning messages be updated, licence holders would be provided a 12-month transition period to update their labels and sell existing inventory.

Authorized sellers of cannabis products will be able to sell cannabis products with old health warning messages in perpetuity.

Licence holders will benefit because they can deplete their existing inventory of labels with the previous health warning messages during the 12-month transition period.

Authorized sellers of cannabis products will be able to sell any existing inventory labelled with the previous health warning messages.
Table 2e: Baseline versus regulatory scenario — Record-keeping and reporting for cannabis licence holders

Baseline scenario

Regulatory scenario

Estimated benefits/costs

Licence holders, other than a cannabis drug licence holder, must record and retain the name and quantity of substance used, the method and date of application, and the rationale for use for any substance that is applied directly or indirectly to cannabis, other than water.

Will remove some of the record-keeping requirements, namely the quantity, method of application, and rationale for use. The name of substance and date of application will still be recorded.

Licence holders, other than a cannabis drug licence, will benefit from a reduction of administrative costs associated with some record-keeping requirements.

Licence holders must retain a document listing the ingredients for cannabis extracts, cannabis topicals, or edible cannabis when they have sold, distributed, or exported those cannabis products.

Licence holders will no longer need to retain a document listing the ingredients for cannabis extracts, cannabis topicals, or edible cannabis when the licence holder sells, distributes, or exports those cannabis products.

There will be cost savings associated with no longer requiring licence holders to create and retain this document.

Licence holders must create and provide an annual report on promotion to the Minister that includes any promotional expenses and a description of the promotion.

Licence holders must retain a document for two years detailing the total amount of money spent on promotion directed at consumers, along with a description of the types of promotion.

Licence holders will no longer be required to create and provide an annual report on promotion to the Minister.

Licence holders will no longer be required to retain a document for two years detailing the total amount of money spent on promotion directed at consumers, along with a description of the types of promotion.

Licence holders will still retain a sample or copy of any promotional material for at least two years.

There will be cost savings for licence holders related to preparing the annual report on promotion and submitting it to the Minister.

There will be a reduction in administrative costs for licence holders, as they will no longer be required to create a document describing their promotion expenses.

Licence holders, other than a cannabis drug licence holder, are required to keep destruction records, including a description of the cannabis, the date of destruction, its pre-destruction net weight, the address where it was destroyed, a description of the method of destruction, and the names of the individuals who witness the destruction. On-site destruction must be witnessed by two employees, one who holds a security clearance, and off-site by at least one individual with a security clearance.

For cannabis cultivation waste, changes will include:

  • (a) Removal of the witness and attestation requirements
  • (b) Removal of the record-keeping requirements

For whole cannabis plants, changes will only require recording the number of cannabis plants destroyed, as opposed to recording the pre-destruction net weight or volume of cannabis plants.

For destruction of other plant parts and whole cannabis plants, only one employee will be required to witness and attest to the destruction event and they will not require a security clearance.

There are administrative cost savings to licence holders, other than a cannabis drug licence holder.

There are also qualitative benefits to licence holders, other than cannabis drug licence holders, associated with time savings, only requiring one employee to witness destruction, and not being restricted to only using employees with a security clearance to witness the destruction.

Licensed processors must notify the Minister of their intent to sell a cannabis product, other than cannabis plants or seeds. This notice of new cannabis product (NNCP) must be provided to the Minister at least 60 days before making the new cannabis product available for sale and must contain the class of cannabis of the product, a description of the cannabis product, including its brand name, and the date the cannabis product is expected to be made available for sale. This information must be retained for two years.

Will remove the need to submit an NNCP to the Minister for dried and fresh cannabis products.

There will be benefits from administrative cost savings to licensed processors.

There are qualitative benefits to Health Canada associated with an estimated 45% reduction in the number of NNCPs to review.

Holders of a licence for cultivation, processing, or sale for medical purposes need to identify and report about their key investors on an annual basis.

Will remove the requirement to submit information indicating whether any ownership interest or right held by a key investor was assigned or otherwise provided to any other person and other related details.

There will be administrative cost savings to holders of a licence for cultivation, processing, or sale for medical purposes.

Holders of a licence for cultivation, processing, or sale for medical purposes that are wholly owned by a publicly traded company need to submit a key investor report annually.

Will remove the requirement for licence holders that are wholly owned by a publicly traded company to submit a key investor report annually.

There will be administrative cost savings to holders of a licence for cultivation, processing, or sale for medical purposes that are wholly owned by a publicly traded company.
Summary of costs and benefits — Streamlining of requirements

The total benefits over 10 periods to the cannabis industry are estimated at $295.5 million PV (or $42.1 million in annualized value). The costs to government are one-time costs estimated at $13,412 PV over 10 periods (or $1,910 in annualized value) for updating permit forms, application forms, guidance documents, web pages, CTLS, and internal processes (e.g. SOPs). It is anticipated that the amendments will not result in costs to the cannabis industry.

As there is no transition period, the impacts start when the final regulations come into force. The net benefit is estimated at $295.5 million PV over 10 periods (or $42.1 million in annualized value).

Costs of the streamlining requirements
Costs to Health Canada

To implement and administer the amendments, Health Canada may incur costs associated with updating permit forms, licence application forms, SOPs, templates, guidance material, and web pages. The one-time cost occurs in period 1 and is estimated at $13,412 PV over 10 periods (or $1,910 in annualized value). Health Canada may incur ongoing costs to:

Health Canada will absorb these ongoing costs through existing program funding.

Benefits of the streamlining requirements

The amendments will provide incremental benefits to regulated parties and Health Canada. These benefits will result from removing or reducing some regulatory requirements and in providing more operational flexibility to licence holders. The benefits of these regulatory amendments have been estimated using two approaches — quantitative analysis where possible, and qualitative analysis. Where applicable, some data was obtained from the CBA analysis related to the Cannabis Regulations and the Industrial Hemp Regulations (2018). Moreover, input from the Notice of Intent — Consultation on potential amendments to the Cannabis Regulations and Canada Gazette, Part I: Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements) consultation were used.

1.1 Quantitative benefit analysis – Streamlining requirements

1.1.1 Administrative cost savings

1.1.1.1 Licensing

Remove licence requirements and record-keeping requirements for certain research licence holders

The amendment will allow a researcher or organization who is conducting research projects with non-human and non-animal participants using less than 30 g of dried cannabis or its equivalent, to do so without a research licence. The affected licensed sites for research will benefit from the change in terms of reduced administrative costs associated with compiling the required information to apply for a research licence and submit it in the CTLS. This application process would have involved an employee, assisted by an external consultant, with an average combined wage of $82.19 per hour over approximately 9 hours. Research licence holders will also no longer need to comply with the record-keeping requirements for a research licence, which is estimated to take 26 hours by a researcher (employee wage of $38/hr) annually.

It is estimated that each of the 38 licensed research sites will each save $740 by not applying for a research licence, and $988 by not maintaining records. Overall, it is anticipated that the regulatory change will result in cost savings of $65,652 per period or $493,393 PV over 10 periods.

1.1.1.2 Personnel and physical security

Remove requirement to record and retain a list of individuals entering or exiting storage areas

Under the regulatory scenario, the recording and retaining of a list of individuals entering or exiting storage areas will no longer be required. Depending on how holders of a licence for standard cultivation, standard processing, sale for medical purposes that authorizes possession, or a cannabis drug licence (with more than 600 kg of dried cannabis sold or distributed to them in accordance with section 21 of the Regulations) set up their system, it could be either part of their intrusion detection system or a physical paper log outside the storage area for all individuals entering and exiting to complete.

The access control device (e.g. door contacts), as part of the intrusion detection system, restricts access to individuals who are allowed in the storage area, and when they enter or exit the storage area, the device records this information. It is assumed that 90% of affected licensed sites (483 sites) have this type of system. Removing the recording and retention of individuals entering or exiting storage areas will not reduce a significant amount of server space. The remaining 10% of licensed sites (48 sites) will benefit from ongoing cost savings from no longer requiring staff to physically complete the log (i.e. recording the name, date, and time of entry and exit). Assuming 10 individuals enter and exit the storage area twice a day, each entry and exit requiring 5 minutes to complete the log, sites being operational 365 days per year, and an employee wage of $19.79/hr, the estimated cost saving for each affected licensed site is $12,039 per period. Overall, it is anticipated that the regulatory change will result in a cost savings of $4,370,864 PV over 10 periods for licensed sites.

Out of 51 new licence applicants, 10% of applicants (5 sites) are anticipated to benefit from administrative cost savings as they will not require staff to physically complete a log of entries and exits to storage areas. Using the same scenario as above, the cost saving for each affected applicant is estimated to be $12,039 per period. Overall, it is anticipated that the regulatory change will result in a cost savings of $461,520 PV over 10 periods for licence applicants.

In general, it is anticipated that the regulatory change will result in a total cost savings for affected licence holders and applicants of $643,012 per period or $4,832,384 PV over 10 periods.

1.1.1.3 Record-keeping and reporting requirements

Remove some record-keeping requirements for substances applied to cannabis

The amendment will require a holder of a licence, other than a cannabis drug licence, to only retain the name of the substance used and the date of application. They would no longer be required to record the quantity of the substance used, the method of application, nor the rationale for the use of the substance, which will result in administrative cost savings. It is expected that this regulatory change would reduce the record-keeping time required by 85% for licence holders conducting cultivation activities.

Therefore, it is estimated that 354 standard cultivation licence holders will each save $437 per year (22.10 hours saved with an employee wage of $19.79/hr), 396 nursery or micro-cultivation licence holders will each save $336 per year (17 hours saved with an employee wage of $19.79/hr), and 25% of all research licence holders (i.e. 125 holders) will each save $95 per year (2.5 hours saved with an employee wage of $38/hr). Overall, it is anticipated that the regulatory change will result in a total cost savings for affected licence holders of $300,237 per period or $2,256,347 PV over 10 periods.

Remove requirement to keep a document listing the ingredients for cannabis extracts, cannabis topicals or edible cannabis when they are sold, distributed or exported

It is anticipated that licensed processors will benefit from this amendment as they will no longer need to keep a record of the list of ingredients when cannabis extract, cannabis topical or edible cannabis products are sold, distributed, or exported to the non-medical market.

There were 105 441 448 packages of cannabis extracts, cannabis topicals and edible cannabis sold in the legal cannabis market in the 2023 calendar year. It is estimated that each shipment will contain 350 packages resulting in 301 261 shipments per year, and that each shipment will be accompanied by one shipping document. Furthermore, it is estimated that there will be 6 924 shipments per year of cannabis products between licence holders. This task is estimated to take 10 minutes per document by an administrative employee earning $19.79/hr. Consequently, the cost benefit is $3.30 per document.

In this scenario, it is estimated that there will be a cost savings of $1,016,497 for all licensed processors per period or $7,639,210 PV over 10 periods.

Remove requirements to submit annual promotion report and keep a document detailing promotion spending

Licence holders who incur expenditures related to promotion in a given calendar year will benefit from administrative cost savings associated with the removal of the requirement to keep a document detailing spending on promotion and complying with the annual reporting requirement.

There are 1 448 holders of a licence for cultivation, processing, sale for medical purposes, research, and analytical testing that will be affected, and it is estimated that 30% of them incur promotion-related expenditures.

The Canada Gazette, Part I, CBA analysis previously assumed that it would take 6.5 hours to submit an annual promotion report to the Minister. However, this estimation has been decreased to 2 hours following the data review related to the amendment removing the requirement to keep a document detailing yearly spending on promotion, which is estimated to take 10 hours.

Consequently, the CBA assumes that, based on an employee wage of $31.43/hr, 434 licence holders will each save $314 in time to comply with the record-keeping requirement, and $63 in time to submit an annual promotion report to the Minister. It is anticipated that the regulatory change will result in a total cost savings of $163,849 per period or $1,231,363 PV over 10 periods for affected licence holders.

Reduce the record-keeping requirements for the destruction of cannabis

The benefit analysis for the destruction amendments has two parts: cannabis cultivation waste and other cannabis (i.e. all other cannabis such as cannabis flowers or finished product). Overall, it is anticipated that the regulatory changes will result in cost savings for affected licensed sites of $20,259,997 per period or $152,258,586 PV over 10 periods.

For cannabis cultivation waste, although this amendment impacts all holders of a licence for cultivation, processing, sale for medical purposes, research, or analytical testing, the activity of obtaining and destroying cultivation waste only affects holders of a licence for cultivation or research. Therefore, 1 253 licensed sites with a licence for cultivation or research will each save $515 annually (26 hours saved with an employee wage of $19.79/hr) in not doing record-keeping tasks, and save $7,961 (156 hours saved with an employee wage of $51.03/hr) in not requiring a security-cleared individual to witness and attest to the destruction event on an annual basis. In this scenario, it is estimated that each licensed site will save $8,475 per period.

For other cannabis (i.e. any other cannabis besides cannabis cultivation waste), 1 574 sites licensed for cultivation, processing, sale for medical purposes that authorizes possession, research, or analytical testing will save $154 (30% time savings of 26 hours with an employee wage of $19.79/hr) in not doing two record-keeping tasks, and save $5,971 (117 hours saved with an employee wage of $51.03/hr) in not requiring a security-cleared individual to witness and attest to the destruction event. In this scenario, it is estimated that each licensed site will save $6,125 per period.

Remove the notice of new cannabis products reporting requirement for fresh and dried cannabis products

The amendment will result in a reduction in the administrative burden associated with the preparation and submission of NNCPs to the Minister. Therefore, it is estimated that 577 holders of a licence for processing will each save $127 per year (4.05 hours saved with an employee rate of $31.43/hr). Overall, this will result in a total cost savings of $73,477 per period or $551,973 PV over 10 periods for all affected licence holders.

Remove certain record-keeping requirements for key investor reports

Upon the coming into force of the amendments, holders of cultivation, processing, or sale for medical purposes licences will benefit from the repeal of three information requirements. These changes may benefit licence holders by reducing administrative burden, eliminating duplication, and increasing operational efficiency.

The record-keeping cost was based on the 2018 CBA where 4 hours per year was estimated as the time needed to prepare the key investor report. The time savings from this regulatory change is estimated as $29.89 per licence holder per period, calculated as 24 minutes of savings at a wage of $74.73/hour. The benefit from the administrative cost savings to the 900 affected licence holders is estimated at $26,903 per period or $202,183 PV over 10 periods.

Remove requirement for licence holders that are wholly owned by a publicly traded company to submit a key investor report

The amendment will exempt the holder of a cultivation, processing, or medical sale licence that is wholly owned by a publicly traded company from submitting a key investor report. This will reduce the administrative burden associated with the preparation and submission of the key investor report to the Minister. It is estimated that 30 licence holders are wholly owned by a publicly traded company. They will each save $299 per year (4 hours saved with an employee rate of $74.73/hr). Overall, this will result in cost savings of $8,968 per period or $67,394 PV over 10 periods for all affected licence holders.

1.1.2 Compliance cost savings

1.1.2.1 Licensing

Remove requirement to print hard copies of consumer information documents

The change will result in benefits to licensed processors by no longer requiring them to print paper copies of the consumer information document. It is assumed that 100% of affected licensed processors will choose to stop printing hard copies of the consumer information document. It is also assumed that each package (excluding plants and seeds) sold by federal licence holders to provincial distributors and retailers will be accompanied by one consumer information document, which costs $0.02/sheet (rounded down) to print. Furthermore, it is assumed that for each period the number of packages sold remains constant at the 2022 level. As there were 197,783,656 packages sold in the 2022 calendar year, it is estimated that there will be cost savings of $4,818,010 per period or $36,208,463 PV over 10 periods.

1.1.2.2 Personnel and physical security

Remove intrusion detection system requirements from the site perimeter

Under the regulatory scenario, licence holders for standard cultivation, standard processing, sale for medical purposes that authorizes possession, or a cannabis drug licence (with more than 600 kg of dried cannabis sold or distributed to them in accordance with section 21 of the Regulations) will not be required to comply with intrusion detection system requirements for the site perimeter (i.e. detect unauthorized access to the site and detect any tampering with the intrusion system). The intrusion detection system used at the site perimeter is generally made up of fence intrusion detection sensors.

For the regulatory scenario, the cost savings are based on an estimated proportion of the intrusion detection system against the entire facility, and a direct correlation is assumed between the size and cost. The intrusion detection system proportion of the facility attributable to the site perimeter is 20%, and the ongoing cost of maintaining the intrusion detection system for the entire facility is $12,245. It is assumed that there will be insignificant cost savings for the security guard’s salary as the visual monitoring requirements remain. It has been estimated that the one-time cost of purchasing and installing the intrusion detection system for the entire facility is $122,445.

483 licensed sites will each save $2,449 per year (20% of $12,245) from no longer having to maintain the intrusion detection system and its equipment for the site perimeter. The benefit is estimated at $8,889,297 PV over 10 periods for all licensed sites.

51 applicants of the affected licence types will similarly save $2,449 per year (20% of $12,245) from no longer having to maintain the intrusion detection system and its equipment for the site perimeter. Moreover, they will each save on the upfront intrusion detection system set-up cost of $24,489 (20% of $122,445). The benefit is estimated at $2,187,563 PV over 10 periods for all licence applicants.

It is anticipated that the regulatory change will result in a total cost savings for affected licence holders and applicants of $11,076,859 PV over 10 periods.

Change the requirement to retain continuous visual recordings to retaining motion-activated recordings

Under the regulatory scenario, licence holders for standard cultivation, standard processing, sale for medical purposes that authorizes possession, or a cannabis drug licence (with more than 600 kg of dried cannabis sold or distributed to them in accordance with section 21 of the Regulations) will be required to retain visual recordings only if there are movements occurring. If there are no movements (e.g. no activities are occurring or during off hours), the recordings will not need to be retained. The retention period will continue to remain as a minimum of one year.

It is assumed that out of 483 affected licensed sites, 434 sites (90%) will have visual monitoring devices that can capture and retain motion-activated visual recordings. They will have an 8-hour shift per day, with no operations or activities occurring for the rest of the day (16 hours). Compared to retaining visual recording at all times, this will result in a 67% reduction in server storage capacity. The server storage size savings will be dependent on the licence holder’s facility size. However, more savings will be associated with larger licensed sites, as more visual recording devices will be proportionally required. For this scenario, the server storage maintenance cost has been estimated to be $4,217 annually. Therefore, assuming a direct correlation between the cost of server storage capacity and maintenance cost, it is estimated that each affected licensed site will save $2,825 per period (67% of $4,217). Overall, 434 licensed sites will save $9,183,483 PV over 10 periods.

Out of 483 affected licensed sites, it is anticipated that 48 sites (10%) will not have visual monitoring devices that can capture and retain only motion-activated visual recordings. In this case, they will need to retain all the visual recordings (with and without motion) at all times. There will be no incremental cost or benefit impacts to them.

All 51 applicants applying for the affected licence types are assumed to install visual recording devices that can capture and retain only motion-activated visual recordings. Therefore, similar to the scenario above, it is estimated that with an 8-hour shift per day resulting in a 67% reduction in server storage capacity, each applicant will save $2,825 per period (67% of $4,217). Overall, 51 applicants will save $1,077,427 PV over 10 periods.

It is anticipated that the regulatory change will result in a total cost savings for affected licence holders and applicants of $10,260,910 PV over 10 periods.

Removal of “room within a room” storage requirements

Under the regulatory scenario, licence holders for standard cultivation, standard processing, sale for medical purposes that authorizes possession, or a cannabis drug licence (with more than 600 kg of dried cannabis sold or distributed to them in accordance with section 21 of the Regulations) will not be required to implement physical security measures in the area surrounding the storage area (i.e. “room within a room” storage requirements).

In general, it is anticipated that the regulatory change will result in a total cost savings of $48,965,864 PV over 10 periods for all affected licence holders and licence applicants. All affected licence holders will save $42,750,371 PV over 10 periods, and all affected applicants will save $6,215,493 PV over 10 periods. The breakdown of the cost savings is described in more detail below.

(a) Restricted access

It is assumed that each licensed site will have one “room within a room” storage area with one entry point leading into the storage area, therefore only requiring one access control device. It is estimated that the maintenance cost of one access control device is $486 per year. Consequently, 483 affected licensed sites will each save $486 per period or $1,764,111 PV over 10 periods for all licensed sites.

Applicants for the affected licence types will benefit from the amendments as they will no longer be required to purchase, install, and maintain their access control devices in these areas. It is estimated that the cost of purchasing and installing one access control devices is $1,755, and the maintenance cost is $486 per year for each device. Therefore, 51 affected applicants will save $275,778 PV over 10 periods in no longer being required to comply with this requirement.

It is anticipated that this regulatory change, related to restricted access, will result in a total cost savings for affected licence holders and applicants of $2,039,888 PV over 10 periods.

(b) Physical barriers

Affected licence holders will not benefit from cost savings as they would have already built the physical barrier to comply with the current Regulations. However, applicants for the affected licence types will benefit from not needing to build a physical barrier.

The Canada Gazette, Part I, CBA analysis previously assumed that the cost of building the physical barrier will cost $22,680 per applicant. However, this estimation has been decreased to $7,500 per applicant as a result of more relevant and recent data collection. Therefore, 51 affected applicants will each save $7,500 in period 1 as a one-time cost. Overall, all applicants will save $382,500 PV over 10 periods.

(c) Visual monitoring and visual recording devices

Affected licence holders will benefit from a cost reduction as they will no longer be required to maintain and monitor their visual recording devices and retain visual recordings captured in the “room within a room” storage areas.

It is assumed that the proportion of the “room within a room” storage area against the entire facility, in terms of visual monitoring, is 5%. The annual maintenance costs of the entire facility are estimated to be $11,481 for the visual monitoring and visual recording devices, and $4,217 for the server storage to retain visual recordings. The annual salary of security guards for monitoring the visual recordings and intrusion detection systems at all times is $173,396. The security guard cost will only be factored once and will not be included in the intrusion detection system section. The one-time cost to purchase and install the visual monitoring system and devices for the entire facility is $114,811.

For this scenario, it is estimated that each of the 483 affected licensed sites will save $574 annually (5% of $11,481) for the maintenance cost of the visual recording devices and the system, $211 (5% of $4,217) for the maintenance cost of the server storage to retain visual recordings, and $8,670 (5% of $173,396) for no longer needing to provide security guard resources to monitoring the visual recordings. Overall, it is anticipated that the regulatory change will save $9,455 per period for each licensed site or $34,319,288 PV over 10 periods for all licensed sites.

Applicants of the affected licence types will benefit from the amendment as they will no longer be required to purchase, install, maintain, and monitor visual monitoring devices and the system, as well as retain visual recordings in the “room within a room” storage areas. For this scenario, it is estimated that each of the 51 affected applicants will save on a one-time cost of $5,741 (5% of $114,811) from not purchasing and installing the visual monitoring devices and the system within this area. Furthermore, they will save $574 annually (5% of $11,481) for the maintenance cost of the visual recording devices and the system, $211 (5% of $4,217) for the maintenance cost of the server storage to retain visual recordings, and $8,670 (5% of $173,396) for no longer needing to provide security guard resources to monitor the visual recordings. Overall, the cost savings for all applicants are estimated at $3,916,543 PV over 10 periods.

It is anticipated that this regulatory change, related to visual monitoring and visual recording devices, will result in a total cost savings for affected licence holders and applicants of $38,235,831 PV over 10 periods.

(d) Intrusion detection — monitoring and response

The affected licence holders will benefit from cost savings as they will no longer be required to maintain and monitor the intrusion detection system and equipment for the “room within a room” storage areas.

It is assumed that the proportion of the “room within a room” storage area against the entire facility, in terms of the intrusion detection system, is 15%. The annual maintenance costs of the entire facility are estimated to be $12,245 for the intrusion detection system and devices. The one-time cost to purchase and install the visual monitoring system and devices for the entire facility is $122,445.

For this scenario, it is estimated that each of the 483 affected licensed sites will save $1,837 annually (15% of $12,245) for the maintenance cost of the intrusion detection system and equipment. As the security guard resources were factored in the visual monitoring and visual recording devices section, they will not be included again for the monitoring cost savings. The benefit is estimated at $6,666,972 PV over 10 periods for all licensed sites.

Applicants for the affected licence types will benefit from the amendments as they will no longer need to purchase, install, maintain, and monitor the intrusion detection system and equipment for the “room within a room” storage areas. For this scenario, it is estimated that 51 affected applicants will save on a one-time cost of $18,367 (15% of $122,445) from not purchasing and installing the intrusion detection system and equipment within this area. Furthermore, they will save $1,837 annually (15% of $12,245) for the maintenance costs of the intrusion detection system and equipment. As the security guard resources were factored in the visual monitoring and visual recording devices section, they will not be included again for the monitoring cost savings. Overall, it is anticipated that the regulatory change will result in cost savings of $1,640,672 PV over 10 periods for all applicants.

It is anticipated that this regulatory change, related to intrusion detection system devices, will result in a total cost savings for affected licence holders and applicants of $8,307,645 PV over 10 periods.

Exempt operations areas from maintaining certain requirements when no activities with cannabis are occurring and when cannabis is not present

Under the regulatory scenario, licence holders for standard cultivation, standard processing, sale for medical purposes that authorizes possession, or a cannabis drug licence (with more than 600 kg of dried cannabis sold or distributed to them in accordance with section 21 of the Regulations) will not be required to monitor and maintain their intrusion detection system and visual monitoring devices in operations areas when no activities with cannabis are occurring and when cannabis is not present.

The cost-benefit analyses relied on specific key assumptions. It is assumed that all 483 of the affected licensed sites and 51 affected licence applicants will have indoor operation areas, and that 20% of them (96 sites and 10 applicants) will not use their indoor operation areas (grow areas, non-grow areas) for an average of two months (16.7%) each year. It is also assumed that all 91 licensed sites and 13 applicants for standard cultivation with outdoor grow areas will use these areas to grow their cannabis plants between April to October, and that they will not use these areas for the remaining five months (42.7%) of the year.

The compliance cost savings related to this regulatory change has two elements: visual monitoring and visual recording devices and intrusion detection system monitoring and response. Overall, these calculations take into account the number of licensed sites with outdoor grow areas, the number of licensed sites with indoor operation areas, and different time periods of the year when these outdoor and indoor operations areas are not in use. Moreover, the cost savings are calculated based on the estimated proportions (indoor non-grow areas, indoor grow areas, and outdoor grow areas) of visual monitoring and visual recording devices, intrusion detection system or security guard wages against the entire facility, and a direct correlation is assumed.

In general, it is anticipated that the regulatory change will result in a total cost savings of $2,591,272 per period or $19,474,005 PV over 10 periods for licence holders and licence applicants.

(a) Savings from removing visual monitoring and visual recording devices in operations areas when no activities with cannabis are occurring and when cannabis is not present in operations areas

The assumption of the facility proportion, in terms of visual monitoring, is as follows: 50% is attributed to indoor non-grow areas, 10% to indoor grow areas, and 5% to outdoor grow areas, which excludes areas in the facility that are not operations areas. The annual maintenance costs are estimated to be $4,217 for the server storage to retain visual recordings, and $11,481 for the visual monitoring and visual recording devices. The annual salary of security guards for monitoring the visual recordings and intrusion detection system at all times is $173,396. The security guard cost will only be factored once, and will not be included in the intrusion detection system section.

Affected licence holders and licence applicants will benefit from cost savings as they will no longer be required to maintain and monitor their visual recording devices and retain visual recordings captured when no activities with cannabis are occurring and when cannabis is not present in operations areas. It is estimated that 483 affected licensed sites and 51 applicants, including those who are applying for a standard cultivation licence with outdoor grow areas, will each save $7,463 annually for the maintenance cost of the visual recording devices and the system, $2,741 for the maintenance cost of the server storage to retain visual recordings, and $112,708 for no longer needing to provide security guard resources to monitor the visual recordings. Overall, it is anticipated that the regulatory change will result in cost savings of $122,911 per period for each licence holder or licence applicant.

It is anticipated that this regulatory change, related to visual monitoring and visual recording devices, will result in a total cost savings for affected licence holders and applicants of $2,429,233 per period or $18,256,251 PV over the 10 periods.

(b) Savings from removing the intrusion detection system and its monitoring/response in operations area when no activities with cannabis are occurring and when cannabis is not present in operations areas

The assumption of the facility proportion, in terms of the intrusion detection system, is as follows: 35% is attributed to indoor non-grow areas, 15% to indoor grow areas, and 10% to outdoor grow areas, which excludes areas in the facility that are not operations areas. The ongoing cost of the intrusion detection system per licensed site is $12,245.

Affected licence holders and licence applicants will benefit from cost savings as they will no longer be required to maintain and monitor intrusion detection systems and equipment when no activities with cannabis are occurring and when cannabis is not present in operation areas. It is estimated that 483 affected licensed sites and 51 applicants, including those with a standard cultivation licence with outdoor grow areas or who are applying for this licence class, will save $300 annually for the maintenance cost of the intrusion detection system. As the security guard cost was already factored in the visual monitoring and visual recording section, it is not included in the intrusion detection system section.

It is anticipated that this regulatory change related to intrusion detection systems will result in a total cost savings for affected licence holders and applicants of $162,039 per period or $1,217,754 PV over 10 periods.

1.2. Qualitative benefit analysis — Streamlining requirements

1.2.1 Licensing

Increase the number of quality assurance persons (QAP) and certain duties

Allowing the delegation of QAP responsibilities and having more than one alternate QAP will ease the burden from having a single person oversee the entire quality assurance process and complete investigations related to quality complaints. Processing licence holders will be able to build a quality management team that reports to the QAP with the intention of moderating the QAP’s workload. The amendment will also align the regulatory requirements with existing guidelines, thus providing greater clarity to licensed processors.

Enable the intra-industry sale of pollen

The amendment to enable intra-industry sale of pollen will benefit cultivation licence holders who require pollen for plant breeding. Cultivation and cannabis research licence holders will benefit from being permitted to sell cannabis pollen to other licence holders.

Formalize COVID-19 flexibilities — port of entry/exit and customs office requirements and packaging date of cannabis products

Health Canada will benefit from the regulatory changes that formalize existing flexibilities provided during the COVID-19 pandemic as the Department will not need to use resources to review and renew the interim measures on an ongoing basis.

Clarify requirements for derivatives of Schedule 2 parts

Cannabis and industrial hemp licence holders will benefit from these amendments as they will be allowed to conduct activities with derivatives of Schedule 2 parts without obtaining a licence under the Act. In addition, they will save on the costs of testing and import/export permits, where applicable.

Increase micro-cultivation, micro-processing, and nursery thresholds

All micro-cultivation, micro-processing, and nursery licence holders will benefit from increased thresholds as they will be able to operate at a higher capacity and thus, they could potentially increase the supply of their products in the legal market. Should they choose to do so, micro-processors, for example, will be able to purchase or receive additional cannabis under the new micro-processing threshold without changing their facilities and operations.

These changes may attract new micro-class licence holders to enter the market. Some of the new entrants may find it convenient to have space for expansion without incurring the standard class rate of the annual regulatory fee.

Some standard licence holders may be eligible to change to a micro-class licence. Currently, there are approximately 135 standard licence holders that operate within the existing thresholds for micro-class licences and choose to do so for their own business reasons. A direct impact of this change from standard licence holder to micro-class is the possibility to reduce their minimum annual regulatory fee from $23,000 to $2,500.

Overall, the changes to the micro thresholds are expected to provide existing and new micro-class licence holders with the opportunity to cultivate and process cannabis in a more economically viable manner.

Add prescribed grounds for licence suspension

Under the amendment, Health Canada will benefit from the authority to suspend a licence based on an unpaid fee or missing Statement of Cannabis Revenue if this contravention relates to a different licence held by the same person or entity. This change will address a current regulatory discrepancy and advance the policy objective of recovering cannabis program costs.

Expanding Health Canada’s ability to suspend a licence addresses questions of procedural fairness by adding a less permanent compliance action than licence revocation by Health Canada.

1.2.2 Personnel and physical security

Remove requirement to have a security-cleared individual be on site at all times when activities with cannabis are occurring

It is anticipated that holders of a licence for cultivation, processing, sale for medical purposes that authorize possession, and cannabis drug licence holders will benefit from potential cost savings associated with not requiring a security-cleared individual to be on site at all times when activities with cannabis are occurring. For example, they will not incur overtime costs or require multiple security-cleared individuals on staff to cover all operating times.

Removal of the requirement to have a security-cleared person accompany cannabis for off-site antimicrobial treatment

It is expected that the holder of a cultivation, processing, sale for medical purposes, research, and cannabis drug licence will benefit from cost savings as an employee will no longer be required to accompany cannabis during off-site antimicrobial treatment. For example, this would include cost savings associated with travel, accommodation, and potential overtime costs.

1.2.3 Production requirements

Remove the one gram net weight limit on inhalable dried cannabis products

Processing licence holders will have greater flexibility to produce different sized dried cannabis products intended for inhalation in discrete units (i.e. pre-rolls). This will allow them to diversify their product offerings and in turn, may further displace the illicit market.

Allow ethyl alcohol in certain product classes

Processing licence holders will benefit from the regulatory amendment to allow the use of ethyl alcohol in additional classes of cannabis products, subject to certain limits. They will be able to expand their market offerings and product innovation. Consumers will benefit from a wider range of product selection.

1.2.4 Packaging and labelling

Permit packing multiple immediate containers within an outermost container (co-packing)

Processing licence holders will benefit from the amendments in various ways. Allowing processing licence holders to co-pack their products, provided they all have the same properties, may reduce unit price and will improve efficiencies for distributors and product suppliers in managing their logistics and warehousing facilities. By selling products in a co-packed form, these licence holders have the opportunity to increase their total sales compared to selling these products in single packages.

Processing licence holders will not be required to include the packaging date on the outermost container of a co-pack, which may streamline their labelling process. Furthermore, they will benefit from this amendment as it will remove the 10 mg THC limit per outermost container on a co-pack of edible cannabis. This change will allow licence holders to sell larger quantities of edible cannabis per outermost package, potentially displacing more product on the illicit market.

Allow extended labels and panels (peel-back and accordion) on any size container

Processing licence holders will be given the option to use expanded label panels, such as peel-back and accordion labels, for any immediate containers, not just small immediate containers. Allowing these types of labels will increase a licensed processor’s ability to present product information to consumers. It will be easier to fulfil labelling requirements and provide information to consumers without having to consider changing the size of the containers.

Permit informational inserts/leaflets to be included with a cannabis product

Processing licence holders and medical sales licence holders will be allowed to include inserts/leaflets in or alongside any container in which a cannabis product is packaged, if they chose to do so as an additional means of providing information to consumers. Due to limited space available on cannabis product labels, incorporating inserts or leaflets offers an opportunity to provide additional product information to consumers. This could help consumers make better informed purchasing decisions, and further allow licence holders to inform consumers and differentiate their products from others, which may aid in displacing the illicit market.

Simplify THC and CBD labelling requirements and provide a transition period

The regulatory amendment will remove the actual THC and actual CBD amount from product labels and only require total THC and total CBD to be labelled. Licensed processors will benefit in terms of increased space on the product label to include other information that may differentiate their product or otherwise inform adult consumers.

Cannabis consumers are expected to benefit. The actual THC and CBD values lack practical significance for consumers who are consuming certain products that have either completely decarboxylated during the production process or are consumed by heating or combustion. Eliminating these figures reduces confusion both for consumers and retail point-of-sale representatives.

Licence holders will benefit from a 12-month transition period where they will be permitted to use old labels with both sets of potency information in bold type. In addition, those who are authorized to sell cannabis products (e.g. provincial and territorial retailers) can continue to sell these products indefinitely, to allow them to deplete any existing inventory. It is anticipated that these provisions will allow for a smooth transition to new labels, without posing any risk to public health.

Expand bar code allowances on cannabis product labels

The amendment will expand the use of bar codes (e.g. QR codes) on cannabis products for inventory and tracking purposes, as well as for providing additional information to consumers. Licensed processors will benefit from this regulatory change as they will be allowed to provide more information on the products they are selling to consumers and may provide additional health and safety information. Enabling QR codes on cannabis products could also lead consumers to websites hosting materials in compliance with the requirements of the Act, its regulations, and any other applicable legislation.

Simplify packaging requirements

Licensed processors will benefit from reduced regulatory burden and increased operational flexibility and capacity resulting from these packaging amendments.

Licensed processors who use packaging with caps as immediate containers for cannabis products will have an increased range of suppliers of caps and containers to choose from, rather than being restricted to specific manufacturers and suppliers who can provide uniform colour of caps and containers. They will also increase their capacity to source more environmentally sustainable packaging composed of compostable, biodegradable, and recycled materials.

The amendments will allow cut-out windows and transparent packaging for dried or fresh cannabis products and cannabis seeds. The advantages of allowing transparent packaging include providing more packaging choices for industry and allowing adult cannabis consumers to visually assess cannabis quality, particularly dried cannabis, before making a purchase.

Simplify product labels

Licensed processors will benefit from these amendments as the removal of the “equivalency” and “no expiry date has been determined” statements will free up already scarce space on product labels. Eliminating these statements will create room for other valuable information on the label, making it easier to see and understand, thereby further enabling consumers to make informed decisions.

Licensed processors will also benefit from the amendment to allow the font size for cannabinoid and potency information to be as large as the health warning message on product labels. They will be able to present this essential information in a more comprehensive and legible way to consumers.

Transition period for health warning messages

When the Cannabis health warning messages document is updated, licence holders will have 12 months to use their existing labels with the previous health warning messages. Licence holders will benefit from operational flexibility as they could determine the appropriate time (within that one year) to start using the new labels. Authorized sellers of cannabis products will also benefit from operational flexibility as they can continue to sell any existing inventory labelled with the old health warning messages.

1.2.5 Record-keeping and reporting

Removal of the notice of new cannabis products reporting requirements for fresh and dried cannabis products

Health Canada will benefit from this amendment in terms of the time and full-time employee (FTE) savings associated with no longer reviewing NNCPs for dried and fresh cannabis products. In 2022, Health Canada received approximately 2 000 NNCPs per month, with dried cannabis products representing approximately 45% of the notices. The number of NNCPs for fresh cannabis products is minimal. Therefore, it is anticipated that Health Canada will realize an incremental benefit in terms of the time and FTE savings associated with reviewing 10 800 fewer NNCPs in one year.

1.2.6 Other qualitative benefits to government

When the amendments come into force, Health Canada will realize incremental savings in existing program resources resulting from removing the requirements for cannabis licence holders to provide an annual report on promotion for cannabis products, cannabis accessories, and cannabis services to Health Canada; not having to review submitted annual reports will save Health Canada time and resources that could be used for other tasks. The amendments to allow certain activities to be conducted without a licence (e.g. non-human, non-animal cannabis research involving less than 30 g of dried cannabis and processing of exempted plant parts) will reduce the burden on Health Canada’s licence application review and compliance processes. The repealing of some reporting requirements in the key investor report will decrease both time and resources required by Health Canada to review this information.

As the amendments will improve the clarity and consistency of regulatory requirements, eliminate certain duplicative or redundant provisions, and will align regulatory requirements under the Act, they will contribute to improved administration of the cannabis regulatory framework by Health Canada and will result in some time savings for the department.

Cost-benefit statement — Streamlining requirements
Table 3: Monetized costs
Impacted stakeholder Description of cost Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Costs to government One-time cost of updating permit and licence applications, guidance material, webpages, and internal processes (SOPs) $13,412 $0 $0 $13,412 $1,910
Costs to industry Not applicable $0 $0 $0 $0 $0
All stakeholders Total costs to all stakeholders $13,412 $0 $0 $13,412 $1,910
Table 4a: Monetized benefits — Administrative cost savings for licence holders
Description of benefit Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Remove licence requirements and record-keeping requirements for certain cannabis research licence holders $65,652 $65,652 $65,652 $493,393 $70,248
Remove recording and retaining a list of individuals entering or exiting storage areas $643,012 $643,012 $643,012 $4,832,384 $688,023
Remove some record-keeping requirements for substances applied to cannabis $300,237 $300,237 $300,237 $2,256,347 $321,253
Remove requirement to keep a document listing the ingredients for cannabis extracts, cannabis topicals, or edible cannabis when they are sold, distributed, or exported $1,016,497 $1,016,497 $1,016,497 $7,639,210 $1,087,652
Remove the requirements to submit annual report and retain a document with promotional information $163,849 $163,849 $163,849 $1,231,363 $175,318
Reduce the record-keeping requirements for the destruction of cannabis $20,259,997 $20,259,997 $20,259,997 $152,258,586 $21,678,197
Remove the notice of new cannabis products reporting requirements for fresh and dried cannabis products $73,447 $73,447 $73,447 $551,973 $78,588
Remove some record-keeping requirements for key investor reports $26,903 $26,903 $26,903 $202,183 $28,786
Remove requirement for licence holders that are wholly owned by a publicly traded company to submit a key investor report $8,968 $8,968 $8,968 $67,394 $9,595
Total administrative cost savings for licence holders $22,558,562 $22,558,562 $22,558,562 $169,532,834 $24,137,662
Table 4b: Monetized benefits — Compliance cost savings for licence holders
Description of benefit Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Remove the need to print hard copies of the consumer information document $4,818,010 $4,818,010 $4,818,010 $36,208,463 $5,155,271
Remove intrusion detection system from the site perimeter $2,556,674 $1,307,733 $1,307,733 $11,076,859 $1,577,096
Change the retention of continuous visual recordings to retaining motion-activated recordings $1,365,348 $1,365,348 $1,365,348 $10,260,910 $1,460,923
Remove "room within a room" storage requirements $7,990,623 $6,289,145 $6,289,145 $48,965,864 $6,971,637
Exempt operations areas from maintaining certain requirements when no activities with cannabis are occurring and when cannabis is not present $2,591,271 $2,591,271 $2,591,271 $19,474,005 $2,772,660
Total compliance cost savings for licence holders $19,321,927 $16,371,508 $16,371,508 $125,986,101 $17,937,586
Table 5: Summary of monetized costs and benefits — Streamlining requirements
Impact Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Total costs $13,412 $0 $0 $13,412 $1,910
Total benefits $41,880,490 $38,930,070 $38,930,070 $295,518,936 $42,075,248
Net benefits $41,867,077 $38,930,070 $38,930,070 $295,505,523 $42,073,338
Negative impacts — Streamlining requirements

As noted in the “Description” section above, Health Canada has considered the level of regulatory oversight compared to the risk posed by various activities and determined that incremental burden reduction can be achieved through the regulatory amendments without impacting the comprehensive public health and public safety approach to the regulation of cannabis. No negative impacts are expected from the regulatory amendments.

Changes to physical and personnel security measures will not result in negative impacts as other elements of control remain in place, including security clearance obligations, record-keeping and reporting requirements, as well as oversight from Health Canada through inspection, and compliance and enforcement actions. The overall physical security requirements remaining are significant, including perimeters designed to prevent unauthorized access, visual monitoring devices, physical barriers in operation areas to prevent unauthorized access, and having access restricted to people whose presence is required, among others.

Changes to packaging and labelling measures will not result in negative impacts, as core controls intended to protect young persons remain, including the prohibition of promotion; and packaging and labelling elements that could be appealing to young persons, such testimonials or endorsements, and depictions of persons, characters or animals, among other restrictions. Regulatory changes will permit additional information to be shared by licensed processors to purchasers of cannabis products through accordion labels, bar codes, inserts, and leaflets, subject to existing rules. This information will be available to adults purchasing cannabis products at provincially and territorially authorized retailers, or to individuals authorized to access cannabis for medical purposes by their health care practitioner. While the regulatory changes will permit the cap and container to be different colours and allow transparent packaging or cut-out windows for dried and fresh cannabis products, these changes do not fundamentally change the overall controls in place to protect young persons.

Positive impacts — Streamlining requirements

The qualitative positive impacts of the regulatory amendments will include aligning regulatory requirements with existing guidelines to provide greater clarity to industry; cost savings for the cannabis industry resulting from reduced regulatory requirements; assisting businesses with improving efficiency; changing regulatory requirements for cannabis products that allow new cannabis products, which may displace more products on the illicit market; and revised packaging and labelling requirements that will allow businesses to increase their ability to present product information to consumers, which may help consumers make better informed purchasing decisions. These changes will allow further innovation for cannabis products to help displace the illicit market and expand the range of available packaging options that may be more environmentally friendly.

Small business lens — Streamlining requirements

The amendments will impact small businesses positively, as it is expected that they will benefit from the reduced regulatory burden. About 89% of the affected businesses are small businesses. Some of the small businesses will benefit from the changes associated with compliance cost savings and administrative cost savings. It is anticipated that they will also benefit from the improved clarity and consistency of the regulatory requirements. Finally, changes are expected to provide existing and new micro-class licence holders with the opportunity to cultivate and process cannabis in a more economically viable manner.

The total benefits are estimated at $263,011,853 PV over 10 periods (or $37,446,971 in annualized value). The benefit per impacted small business is estimated at $198,601 PV over 10 periods (or $28,276 in annualized value).

No specific or additional flexibility will be provided to small businesses, as they are already expected to experience incremental benefits.

Small business lens summary
Table 6: Benefit — Administrative cost savings
Activity Present value Annualized value
Remove licence requirements and record-keeping requirements for certain research licence holders $439,120 $62,521
Remove recording and retaining a list of individuals entering or exiting storage areas $4,300,822 $612,340
Remove some record-keeping requirements for substances applied to cannabis $2,008,149 $285,915
Remove requirement to keep a document listing the ingredients for cannabis extracts, cannabis topicals, or edible cannabis when they are sold, distributed, or exported $6,798,897 $968,010
Remove the requirements to submit annual report and retain a document with promotional information $1,095,913 $156,033
Reduce the record-keeping requirements for destruction of cannabis $135,510,142 $19,293,596
Remove the notice of new cannabis products reporting requirements for fresh and dried cannabis products $491,256 $69,944
Remove some record-keeping requirements for key investor reports $179,943 $25,620
Remove requirement for licence holders that are wholly owned by a publicly traded company to submit a key investor report $59,981 $8,540
Total administrative cost savings $150,884,223 $21,482,519
Table 7: Benefit — Compliance cost savings
Activity Present value Annualized value
Remove the need to print hard copies of consumer information documents $32,225,532 $4,588,191
Remove intrusion detection system requirements from the site perimeter $9,858,405 $1,403,615
Change the retention of continuous visual recordings to retaining motion-activated recordings $9,132,210 $1,300,221
Remove "room within a room" storage requirements $43,579,619 $6,204,757
Exempt operations areas from maintaining certain requirements when no activities with cannabis occurring and when cannabis is not present $17,331,864 $2,467,668
Total compliance cost savings $112,127,630 $15,964,452
Table 8: Total administrative and compliance cost savings
Description Present value Annualized value
Total benefits (all impacted small businesses) $263,011,853 $37,446,971
Benefits per impacted small business $198,601 $28,276

One-for-one rule — Streamlining requirements

The amendments are to existing regulatory titles, with no new regulatory titles being created or repealed. The one-for-one rule will apply, and the regulation will be considered an “out” under the rule as the amendments are expected to result in a decrease in the administrative burden on business. It is estimated that the administrative burden reduction on business will be $54,497,817 PV (or $7,759,263 in annualized value) in 2012 dollars and discounted to year 2012 using a 7% discount rate.

Table 9: One-for-one rule results — “OUT” under the rule
Totals One-for-one rule results
Present value of administrative cost savings $54,497,817
Annualized administrative cost savings $7,759,263

All values are expressed in and discounted to 2012 dollars.

2. Ministerial Order Amending the Cannabis Tracking System Order (Cultivation Waste)

Baseline versus regulatory scenario

Table 10 summarizes the baseline scenario and the regulatory scenario requirements, the incremental changes of the amendments and which stakeholders could be affected by the changes to the Order.

Table 10: Baseline versus regulatory scenario — Record-keeping and reporting for cannabis licence holders
Baseline scenario Regulatory scenario Estimated benefits/costs
Holders of a licence for cultivation or processing must report unpackaged cannabis seeds in kilograms and cannabis seed products measured as number of seeds. Holders of a licence for cultivation or processing will report the number of seeds instead of weight. There will be benefits from administrative cost savings to holders of a licence for cultivation, or processing.
Holders of a licence for cultivation must report the weight of cannabis lost due to drying or other business activities, such as plant trimming. Holders of a licence for cultivation will no longer need to report monthly on cultivation waste. The reduced reporting requirement will provide administrative cost savings to holders of a licence for cultivation.
Summary of costs and benefits — Amending the Order

The total benefits over 10 periods to the cannabis industry are estimated at $506,076 PV (or $72,054 in annualized value). The costs to government are one-time costs estimated at $716 PV over 10 periods (or $102 in annualized value) for updating guidance documents, webpages, the CTLS, and SOPs. It is anticipated that the amendments will not result in costs to the cannabis industry.

As there is no transition period, the impacts start when the final regulations come into force. The net benefit is estimated at $505,361 PV over 10 periods (or $71,952 in annualized value).

Costs of amending the Order
Costs to Health Canada

To implement and administer the amendments, Health Canada may incur costs associated with updating the CTLS, SOPs, templates, and guidance materials. The one-time cost occurs in period 1 and is estimated at $716 PV over 10 periods (or $102 in annualized value).

Benefits of amending the Order

The amendments to the Order will provide incremental benefits to regulated parties and Health Canada. These benefits will result from removing some regulatory requirements for licence holders. The benefits of these regulatory amendments have been estimated using quantitative analysis. Where applicable, some data was obtained from the CBA analysis related to the Cannabis Regulations and the Cannabis Tracking System Ministerial Order (2018). Moreover, input from the Notice of Intent — Consultation on potential amendments to the Cannabis Regulations and Canada Gazette, Part I: Order Amending the Cannabis Tracking System Order (Cultivation Waste) consultation was used.

Quantitative benefit analysis of amending the Order

Administrative cost savings of record-keeping and reporting requirements

Change the measurement unit for monthly reporting of cannabis plant seeds from weight to number of seeds

The amendment aligns the reporting requirement for cannabis seeds under the Order with the Regulations. Holders of a licence for cultivation or processing will report the number of seeds instead of the weight under the Order. Affected stakeholders will potentially benefit from reduced regulatory reporting burden and the complexities associated with record-keeping and reporting. For example, currently, a licence holder needs to conduct both measurements (count and weight) of seeds, which has been cited as burdensome and labour intensive.

The Canada Gazette, Part I, CBA analysis previously assumed that the number of affected stakeholders would be 916 licence holders. However, this estimation has been decreased to 909 licence holders because the original number included licence holders holding a licence for sale for medical purposes, which would not be affected by this amendment and were therefore removed.

Overall, it is estimated that licence holders will each save $8 per year (12 minutes saved with an employee wage of $40.04/hr). Thus, for the 909 affected licence holders, it is estimated that the total cost saving will be $7,279 per period or $54,706 PV over 10 periods.

Remove the monthly reporting requirement for certain cannabis cultivation waste

Holders of a licence for cultivation are currently required to report the weight of cannabis lost due to drying or other business activities, such as plant trimming. The amendment will remove the need to report on cultivation waste under the Order. Affected licence holders will benefit from administrative cost savings as the time and resources expended on the preparation and submission of the required information will be reduced significantly. It is estimated that 750 licence holders will save $80 per year (2 hours saved with an employee wage of $40.04/hr). Overall, this results in a total cost savings of $60,061 per period or $451,370 PV over 10 periods for all impacted holders.

Cost-benefit statement — Amending the Order
Table 11: Monetized costs
Impacted stakeholder Description of cost Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total
annualized value
Costs to Government One-time cost of updating CTLS, guidance material, webpages and SOPs $716 $0 $0 $716 $102
Costs to industry Not applicable $0 $0 $0 $0 $0
All stakeholders Total costs to all stakeholders $716 $0 $0 $716 $102
Table 12: Monetized benefits — Administrative cost savings for licence holders
Description of benefit Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Change the measurement unit for monthly reporting for cannabis plant seeds from weight to number $7,279 $7,279 $7,279 $54,706 $7,789
Remove the monthly reporting requirement for certain cannabis cultivation waste $60,061 $60,061 $60,061 $451,370 $64,265
Total administrative cost savings for licence holders $67,340 $67,340 $67,340 $506,076 $72,054
Table 13: Summary of monetized costs and benefits — Amending the Order
  Period 1
(2025–2026)		 Period 5
(2029–2030)		 Final period
(2034–2035)		 Total present value Total annualized value
Total costs $716 $0 $0 $716 $102
Total benefits $67,340 $67,340 $67,340 $506,076 $72,054
Net benefits $66,624 $67,340 $67,340 $505,361 $71,952
Negative impacts — Amending the Order

As noted in the Description section above, Health Canada has considered the level of regulatory oversight compared to the risk posed by various activities and determined that incremental burden reduction can be achieved through these amendments without impacting the comprehensive public health and public safety approach of the regulatory framework. No negative impacts are expected from the regulatory amendments.

Positive impacts — Amending the Order

Licence holders will benefit from administrative cost savings resulting from reduced regulatory requirements and the complexities associated with record-keeping and reporting. These changes may assist businesses in improving operational efficiencies.

Small business lens — Amending the Order

The amendments will impact small businesses positively, as it is expected that small businesses will benefit from the reduced regulatory burden. About 89% of the affected businesses are small businesses. Some of the small businesses will benefit from the changes associated with administrative cost savings.

The total benefits are estimated at $450,408 PV over 10 periods (or $64,128 in annualized value). The benefit per impacted small business is estimated at $557 PV over 10 periods (or $79 in annualized value). No specific or additional flexibility will be provided to small businesses as they are already expected to experience incremental benefits from these changes.

Small business lens summary
Table 14: Benefit — Administrative cost savings
Activity Present value Annualized value
Change the measurement unit for monthly reporting for cannabis plant seeds from weight to number $48,688 $6,932
Remove the monthly reporting requirement for certain cannabis cultivation waste $401,720 $57,196
Total administrative cost savings or total benefits (all impacted small businesses) $450,408 $64,128
Benefits per impacted small business $557 $79
One-for-one rule — Amending the Order

The amendments are to existing regulatory titles, with no new regulatory titles being created or repealed. The one-for-one rule will apply, and the regulation will be considered an “out” under the rule as the amendments are expected to result in a decrease in the administrative burden on business. It is estimated that the administrative burden reduction on business will be $162,683 PV (or $23,162 in annualized value) in 2012 dollars and discounted to year 2012 using a 7% discount rate.

Table 15: One-for-one rule results — “OUT” under the rule
Present value of administrative cost savings $162,683
Annualized administrative cost savings $23,162

All values are expressed in and discounted to 2012 dollars.

Regulatory cooperation and alignment

Canada was the first major industrialized country to provide legal and regulated access to cannabis for non-medical purposes. Other countries have legalized non-medical cannabis use, including Uruguay, South Africa, and Mexico. Cannabis remains illegal federally in the United States; however, a number of states have legalized cannabis and have medical, non-medical, or both programs giving many Americans access to licit cannabis products. Cannabis continues to be illegal for non-medical use in the vast majority of countries.

These changes will not affect Canada’s compliance with international drug control conventions, including the 1961 Single Convention on Narcotic Drugs, the 1971 Convention on Psychotropic Substances, and the 1988 Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. While these regulatory amendments include minor changes to import and export permit requirements (i.e. listing port of entry and exit, and the address of the importing customs office), there are still necessary controls in place that will respect the international drug control treaties.

These regulatory amendments have been developed taking into consideration existing regulatory frameworks for food, nicotine vaping products, cosmetics, and health products including natural health products. Health Canada continues to consider opportunities to align with requirements under other frameworks, as appropriate.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus impacts have been identified for these regulatory amendments as the primary audience is the cannabis industry (i.e. those regulated by the Government of Canada). These regulatory amendments apply equally to different subgroups of the population. No identity factors (such as sex, gender, race, language, religion, etc.) have been indicated for these changes.

As the changes will remove the regulatory and administrative burden without introducing any new significant provisions or amendments, or impacting any new segments of industry or stakeholders, a full analysis was not conducted.

No adverse outcomes to Canadians are anticipated from these changes.

Implementation, compliance and enforcement, and service standards

Implementation

The amendments will be made pursuant to the authorities of the Act and the FDA. Unless otherwise stated, the final regulations will come into force upon publication in the Canada Gazette, Part II.

Information and system updates

Necessary changes to guidance documents and the CTLS resulting from amendments to the regulations and the Order, respectively, will be implemented. Health Canada is committed to providing regulated parties with a smooth transition, including modifications to the online reporting system that incorporate amended reporting requirements. Other non-imperative updates will be implemented in a timely fashion.

Licence changes

Should existing standard-class licence holders wish to amend their licence to a micro-class, they will need to apply for a licence amendment.

Those licence holders who have an existing cannabis research licence and are conducting non-human or non-animal research involving the possession of 30 g or less of dried cannabis (or equivalent) will have the option to let their licence expire, or to voluntarily request its revocation. Similarly, licence holders who will no longer need a processing licence for activities conducted with exempted plant parts may choose to let their licence expire or to request it be revoked. A cannabis processing licence will continue to be required if a stakeholder intends to isolate or concentrate phytocannabinoids, including the extraction of CBD from flowering heads or any other part of industrial hemp. Health Canada will continue to collaborate with the Canada Border Services Agency to ensure necessary updates to import and export processes.

Product changes

Licensed processors who wish to sell products that have ethyl alcohol as an ingredient in cannabis topicals or inhaled cannabis extracts will only be able to do so 60 days following the submission of a NNCP to the Minister. Removing the requirement to provide NNCPs for fresh and dried cannabis products will enable licensed processors to sell these products, including those in a discrete unit greater than one g, upon the coming into force date.

Transitional provision

A 12-month transition period will be provided for labelling the actual THC and CBD in bold type, which will not be permitted now that this information is considered voluntary. During this transition period, licence holders can continue to use labels that have the actual THC and CBD quantities in bold type to allow them to use up old labels. This amendment is further to feedback received during the Canada Gazette, Part I, consultation. Authorized sellers will be permitted to sell products that are labelled with actual THC and CBD quantities in bold font indefinitely.

Cannabis Tracking System Order (Cultivation Waste)

The coming into force date of the Cannabis Tracking System Order (Cultivation Waste) will occur on the first day of the month following the coming into force of the Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements). The delayed coming into force date for the Order will eliminate the potential of having both the weight and number of unpackaged seeds being reported in a single reporting period, as well as the potential of having cultivation waste both captured and uncaptured in the same reporting period.

Communications and guidance

In addition to the current publication in the Canada Gazette, Part II, Health Canada will notify stakeholders of the amendments via email and publication in the First Nations Gazette, and through the Consultation and Stakeholder Information Management System.

Health Canada is committed to continuing to provide industry, the provinces and territories, and other stakeholders with relevant and timely information. Guidance documents will be updated to increase awareness of any changing measures, to assist parties in achieving compliance, and to support any regulatory changes. Compliance promotion and outreach activities (including notices) will take place to inform licence holders, researchers, importers/exporters, distributors, and retailers of cannabis of regulatory amendments.

Compliance and enforcement

The amendments include additional prescribed grounds to suspend any licences held by the same licence holder if there are unpaid fees or a failure to submit a statement of cannabis revenue, if required. These suspension provisions will clarify regulatory authorities, enable a more consistent enforcement approach, and will introduce a less permanent compliance action available to Health Canada. The changes are consistent with Health Canada’s broader approach to compliance and enforcement for cannabis, which includes compliance promotion, compliance monitoring, and enforcement actions to address a risk to public health or public safety.

The enforcement measures under the Act and regulations will continue to be available to Health Canada. These measures will maintain the same delivery approach, ranging from activities intended to educate and prevent non-compliance through compliance promotion, to measures intended to bring a regulated party back into compliance or address a risk to public health or public safety.

In alignment with the Health Canada compliance and enforcement policy framework and the Compliance and enforcement policy for the Cannabis Act, and informed by the circumstances of each case, Health Canada takes a risk-based approach to its enforcement actions and will choose the most appropriate tool to achieve compliance and mitigate risks as circumstances warrant.

Depending on the circumstances, compliance and enforcement measures may include but are not limited to, warnings, amending licences issued under the Act, suspending, or revoking licences issued under the Act, issuing administrative monetary penalties of up to $1 million, and issuing ministerial orders. In certain circumstances, Health Canada may also disclose relevant information obtained under the Act, for example, when it considers that the disclosure is necessary to protect public health or public safety.

To support its compliance objectives, Health Canada’s Controlled Substances and Cannabis Branch and the Regulatory Operations and Enforcement Branch, which are responsible for all inspections, will continue their regular enforcement and compliance activities. Health Canada will also continue to collaborate with other partners, including law enforcement and the provinces and territories.

Contact

John Clare
Director General
Strategic Policy, Cannabis
Controlled Substances and Cannabis Branch
Health Canada
Address locator: 302I
Ottawa, Ontario
K1A 0K9
Email: cannabis.consultation@hc-sc.gc.ca