Canada unveils 400-page rulebook for legal marijuana industry

Canadians with past criminal convictions for cannabis won’t be summarily barred from the new marijuana industry — but anyone who wants to produce it legally will have to play by a lengthy regulatory rulebook.

Those new regulations, which will take effect when recreational marijuana is legalized Oct. 17, were released to media Wednesday morning. They will be officially published on July 11.

The nearly 400-page document will guide Canada’s existing medical cannabis industry as it races to supply the provinces and territories with enough marijuana to meet future demand. (There are already 111 licensed growers across the country, although only some of them are authorized to sell their crops to consumers.)

But the regulations also open the door to new entrants of different shapes and sizes.

That includes “micro-cultivation” licences for companies seeking to grow legal pot on a relatively small scale. Cannabis processing licences, offered in two different size categories, will allow firms to transform cultivated marijuana into value-added products such as oils or — after more regulations are developed over the year following legalization — edibles such as candies and baked goods.

In this Jan. 1, 2018 file photo, various types of marijuana are on display at Harborside marijuana dispensary in Oakland, Calif. On the day Canadians can legally buy and use recreational marijuana the clock will start ticking on the future of cannabis dispensaries already open across the country, say politicians and pot industry insiders. THE CANADIAN PRESS/ AP/Mathew Sumner, File

Licences will also be issued for analytical testing, research and development, and cannabis nurseries that will produce and sell plant cuttings and seeds.

“The goal is to exclude all those who may have ties to organized crime, or have histories of serious criminality,” said a senior Health Canada official. “With this in mind, the regulations do not automatically exclude individuals who have a record related to past illicit activities with cannabis, and histories of violent crime.”

Each security clearance application will be considered on its own merits, the official said.

The new regulations provide a long-awaited road map for the industry, said Deepak Anand, vice-president of government relations with cannabis industry consultancy Cannabis Compliance Inc.

“I think we’re going to see a flurry of people that have been holding out so far” from participating in the sector, he said.

The government’s message that it won’t automatically exclude people with convictions for cannabis-related crimes from the industry is important, added Anand.

“I think that this really encourages people that have been either denied security clearances, be it under (previous regulatory regimes), or people that have been waiting on the sidelines saying, ‘Hey, I’ve been charged with trafficking, I’ve been charged with a possession-related offence,’ from holding out from being part of the legal industry.”

Even after receiving security clearances and licences, approved businesses will face ongoing regulatory scrutiny. In order to stay in the health regulator’s good graces, those companies will have to keep close tabs on their products.

“(A) cannabis tracking and licensing system will enable Health Canada to monitor the high-level movement of cannabis through the entire supply chain, in order to prevent diversion of cannabis into, or out of, the legal market,” said Health Canada official.

In a departure from the existing system of indoor-only commercial cannabis production, licensed cannabis firms will be permitted to grow weed indoors and outside. But large outdoor cultivators would still be subject to expensive security requirements, including perimeter barriers, video monitoring and intrusion detection.

The final say on where commercial-scale outdoor marijuana cultivation could take place will come down to zoning bylaws at the municipal level, said a Justice Department official.

The ins and outs of recreational cannabis stores in Canada are the responsibility of provincial and territorial governments, but the products carried on store shelves will be shaped by the new federal regulations.

Perhaps most important to retail customers, Ottawa won’t set any limit on the amount of psychoactive THC contained in dried marijuana.

“There are a number of safeguards and control measures that would look to inform consumers as to the potency of cannabis, so they would have an understanding of what it is they’re consuming,” the Health Canada official said.

The decision was made, he said, “as a means to move to a regulated, diverse marketplace that can compete with the illegal marketplace and successfully achieve the government’s objectives.”

However, THC limits will apply to ingestible cannabis oils and “discrete unit” products such as capsules or suppositories for rectal or vaginal use.

The regulations also allow for the production and sale of pre-rolled joints, but limit the contents to one gram of marijuana.

Under the new rules, legal cannabis packaging must be child-resistant and use a single, uniform colour with no metallic lustre. Flourescent colours will be banned, as will textured packaging and any containers “capable of emitting a scent or sound.”

But consumers can expect their legal cannabis purchases to include plenty of government-mandated information: weight, the proportion of the chemical compounds THC and CBD, storage recommendations and packaging and expiry dates.

Every cannabis package will also display the government’s standardized cannabis symbol — a white cannabis leaf and the letters “THC” contained within a red, octagonal stop sign logo — along with a “Keep out of reach of children” warning. Packages must also show one of a series of health warning messages, such as “Cannabis smoke is harmful” or, “Adolescents are at greater risk of harms from cannabis.”

In line with the federal government’s 30-gram limit on public possession by adults, legal recreational cannabis won’t be offered in packages larger than 30 grams.

The relative lack of brand information permitted on legal packaging will warrant some amount of consumer education, said Jenn Larry, president of cannabis industry marketing firm CBD Strategy Group.

“While all of these restrictions are certainly noteworthy, and challenge (consumers’) traditional understanding of how they navigate brands, they should rest assured of one thing: the most important thing inside that box is the ingredients,” said Larry.

“So what consumers need to become, is more familiar with what THC, CBD, terpenes, concentrations and dosages are, so that, while (the package information seems limiting), they can actually get more from it because they actually understand more about the ingredients.”

Asked whether the legal cannabis industry will have enough product to satisfy initial demand for recreational use at the outset of legalization, government officials said they’d been working hard with the industry and provincial governments.

“There are limits, of course, to which we can go to declaring, with absolute certainty, what the supply will be on opening day,” said the senior Health Canada official.

“I can just indicate that all levels of government, working with the industry, have been making every effort to ensure that when opening day occurs there will be products.”