Canada Gazette, Part I, Volume 158, Number 23: Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements)

June 8, 2024

Statutory authorities
Cannabis Act
Food and Drugs Act

Sponsoring department
Department of Health

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 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 cannabis. In legalizing and strictly regulating cannabis, the Government of Canada took a precautionary approach. Over time, stakeholders, particularly licence holders under the Regulations, 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 the administrative burden.

In addition, the cannabis industry is facing economic difficulties that threaten the objective of legal production of cannabis displacing the illegal cannabis market. A healthy, well-regulated, diverse and competitive legal industry is a key element of the cannabis framework. Reducing the administrative and regulatory burden would 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 key objectives of the Act are to protect public health and public safety, and in particular to

• Protect the health of young persons (i.e. individuals under 18 years of age) by restricting their access to cannabis;
• Protect young persons and others from inducements to use cannabis;
• Provide for the legal production of cannabis to reduce illegal activities in relation to cannabis;
• Deter illegal activities in relation to cannabis through appropriate sanctions and enforcement measures;
• Reduce the burden on the criminal justice system in relation to cannabis;
• Provide access to a quality-controlled supply of cannabis; and
• Enhance public awareness of the health risks associated with cannabis use.

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

• Requiring licences in order to conduct research with cannabis or to process cannabis, among other things;
• Subjecting licence holders to strict physical and personnel security requirements;
• The production of cannabis products by licence holders being subject to strict rules and standards; and
• Plain packaging and labelling being required for cannabis products.

Cannabis Tracking System Order

To help prevent inversion of illegal 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, inventories, distribution, and sales) from reporting parties. The Order works in an integrated way with other regulatory measures such as compliance and enforcement regimes, physical and personnel security, record-keeping, and other requirements set out in federal, provincial, and territorial legislation. Note that unlike the other regulatory instruments covered by this regulatory impact analysis statement, which are Governor in Council regulations, the Order would be made under a ministerial authority.

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. It also permitted the production of derivatives by processing hemp grains (e.g. hempseed oil) for the purpose of exporting and selling for wholesale. With the legalization and regulation of cannabis in 2018, the IHR 1998 was 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 legal cannabis producers licensed under the Regulations.

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, including any part of a cannabis plant. 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; and roots. These parts of the plant do not pose a risk to public health or public safety.

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 ingredients must not contain more than 10 parts per million delta-9-tetrahydrocannabinol (THC), phytocannabinoids that have been isolated or concentrated, or their synthetic duplicates.

Objective

The primary objectives of the cannabis regulatory framework are to protect public health and public safety; this regulatory proposal continues to support these objectives. 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 proposed regulatory amendments without impacting the comprehensive public health and public safety approach to the regulation of cannabis. This proposal aims to encourage diversity and competition in the legal cannabis market by reducing regulatory and administrative burden faced by licence holders. This proposal would also amend the framework to clarify potential inconsistencies that have been identified since legalization. Several of these proposed regulatory amendments align with the findings and recommendations from the Panel’s final report on the Legislative Review of the Act.

Description

Health Canada is proposing amendments to the Regulations, the Order, the IHR, the CER, the NHPR and Schedule 2 to the Act under five priority areas: licensing; personnel and physical security measures; production requirements; packaging and labelling requirements and record-keeping and reporting.

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) and subclass (e.g. standard and micro). The licensing framework in the Regulations provides for the legal production of cannabis and industrial hemp while mitigating public health and public safety risks and reducing the risk of cannabis diversion to, or inversion from the illicit market.

Health Canada recognizes that researchers continue to find the research application process cumbersome when conducting research with small amounts of cannabis. Therefore, Health Canada is proposing to amend the Regulations so that organizations or individual researchers would be exempt from requiring a research licence when conducting non-human research (e.g. research on bacteria) while possessing no more than 30 g of dried cannabis or its equivalent at any given time. The individual or organization would be permitted to produce cannabis for research purposes, and the use of organic solvents would be permitted; however, it would be prohibited for any research activities to take place in a dwelling house or at a site that is authorized for personal or designated medical production to mitigate the risks posed from using organic solvents. The non-licensed researchers would not be authorized to import, export or sell cannabis; should they wish to conduct these additional activities, they may apply for the appropriate licence or permit.

Feedback from existing licence holders and potential new applicants cite 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, Health Canada is proposing to increase the amount of cannabis that could be cultivated or processed by micro-class licences and nursery licences by a factor of four. This change would increase the growing area threshold for micro-cultivation licences to 800 m² and the processing threshold for micro-processing licences to 2 400 kg of dried cannabis or its equivalent. As well, the canopy size for nurseries would increase to 200 m² and nurseries would be permitted to harvest up to 20 kg of flowering heads. Increasing the limits for cultivating and processing cannabis could allow for increased economies of scale and more capacity for product development. Increased thresholds may facilitate product diversification for individual micro-class licence holders. Noting that physical security, and record-keeping and reporting requirements would continue to apply, there is a low risk to public health and public safety with the proposed increased threshold limits. This proposed amendment would support one of the key policy objectives of the Act, which is to support a diverse cannabis industry that includes smaller entities. Health Canada’s ongoing enforcement and compliance activities would continue to address risks of non-compliance with the regulations.

Health Canada is proposing an increase in the number of permitted alternate Quality Assurance Persons (QAPs) to “one or more” from the current allowance of “up to two”; and expressly permitting the QAP to delegate activities (e.g. taking measures to mitigate any risks), while maintaining accountability and overall responsibility. These proposed changes would provide licence holders with flexibility to manage QAP workloads and address bottlenecks created by the current regulations. As the QAP and ultimately the licence holder would remain responsible for ensuring compliance with all applicable requirements, there would be no risks anticipated with this proposed 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. Health Canada is proposing amendments that would expand 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 would not pose any additional risks compared to the existing authorization of intra-industry sale and distribution of other cannabis.

To further reduce burden, Health Canada is proposing that licensed processors would 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 would 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). Health Canada is proposing that this COVID-19 flexibility be formalized, and the requirement to list the ports of entry and exit on import and export permits be removed. This proposed change would apply to import and export permits for both cannabis and industrial hemp.

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. Health Canada is proposing to add grounds for suspension of any licences held by the same licence holder, should they have unpaid fees or have failed to submit a required statement of cannabis revenue for a licence as required under the Cannabis Fees Order. This proposed change would provide a timely and temporary enforcement action, with predictability for licence holders who find themselves in non-compliance. Health Canada would have the ability to reinstate licences once the fees have been paid or the statement of cannabis revenue has been submitted. The option to progress to other measures, such as the more permanent option of licence revocation, remains available, if necessary.

Schedule 2 to the Act

Health Canada is proposing an amendment to Schedule 2 to the Act that would 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. The exempted plant parts do not contain significant levels of phytocannabinoids. Thus, the processing of exempted plant parts listed in that Schedule would not require a cannabis processing licence under the Regulations, provided the derivative or product does not contain an isolated or concentrated phytocannabinoid. These changes would allow derivatives of non-viable cannabis and industrial hemp seeds, roots, and stalks to be imported, exported, sold, and processed without a licence under the Act. This aligns the regulatory controls with the level of risk and would remove regulatory burden from industry, including costs of testing and fees related to cannabis import and export permits. The processing, possession, and other regulated activities with cannabis, including viable cannabis and industrial hemp seeds or grain, would 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 would need to 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, Health Canada is proposing to amend the IHR to remove the maximum THC concentration of 10 parts per million for industrial hemp grain derivatives; the testing requirement; labelling for wholesale; and import and export requirements. This would 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 from industry, including costs of testing. Industrial hemp import and export permits would be required for other forms of industrial hemp but would no longer require details about the ports of entry and exit into and out of Canada. Other activities may require a licence. For example, the processing of exempt plant parts, including non-viable industrial hemp grain to obtain derivatives or products from those derivatives that contain isolated or concentrated phytocannabinoids, would require a processing licence under the Regulations. Possession of viable industrial hemp seeds or grain would still require a licence under the IHR.

Cannabis Exemption (Food and Drugs Act) Regulations

Health Canada is proposing consequential amendments to repeal the reference to industrial hemp grain derivatives in the CER. This would align with the proposed exclusion of industrial hemp grain derivatives from the definition of cannabis and the proposed changes under the IHR. This proposed amendment would 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

Health Canada is proposing a consequential amendment to Schedule 2 of the NHPR, which excludes certain substances from the definition of natural health products. Cannabis as defined in the Act would remain an excluded natural health substance. The exception for industrial grain derivatives would be repealed as the referenced exemption under the IHR is proposed to be repealed. Exempted cannabis plant parts under Schedule 2 of the Act, their derivatives, or any product made from those derivatives, which contain a THC concentration greater than 10 parts per million, an isolated or concentrated phytocannabinoid, or a synthetic duplicate of that phytocannabinoid would remain excluded from inclusion in natural health products.

Personnel and physical security measures

To prevent unauthorized access to licensed sites and diversion of cannabis to the illicit market, the Regulations set out personnel security measures and physical security measures to ensure that licensed sites are secured and safeguarded. Health Canada recognizes that certain requirements are causing financial, operational or administrative burden to licence holders and is proposing changes to requirements where overall controls would continue to mitigate against cannabis inversion or diversion.

An individual who holds a valid security clearance is required to be on-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. Aside from persons with direct control (such as directors) that are in a position to directly influence the company’s operations, there are a limited number of key personnel positions requiring a security clearance. Licence holders have stated that staffing and scheduling of security-cleared individuals are impeding business operations. Therefore, Health Canada is proposing to remove the requirement for the on-site presence of a security-cleared individual. However, the licence holder must ensure the controls arising from physical security requirements, record-keeping and reporting are maintained.

Health Canada is proposing several changes to the physical security requirements of standard-class licensed sites. Health Canada is proposing that operations areas (indoor and outdoor) where cannabis is not present and where no activities with cannabis are occurring would not require visual recording devices and intrusion detection systems to continually operate and be monitored. Health Canada is proposing that 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 be removed. Visual monitoring and an intrusion detection system would continue to be required for operations and storage areas and access to all operations and storage areas would continue to be restricted to only people whose presence is required. Finally, Health Canada is proposing that licence holders 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. Health Canada is proposing that if the visual recording devices do not have the capability to only capture motion-activated visual recordings, all visual recordings would need to be retained for one year. Standard-class licensed sites would continue to have physical barriers to prevent unauthorized access, restricted access, intrusion detection, and visual monitoring and recording. Removing these targeted requirements would reduce the regulatory burden while the overall framework of physical security requirements would continue addressing risks of diversion and unauthorized access, with no increased risks anticipated from these proposed changes.

Production requirements

The production of cannabis products by licence holders is subject to strict rules and standards. Health Canada is proposing two amendments specific to production requirements to allow product innovation without impacting public health and public safety controls.

Health Canada is proposing to remove the requirement for 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). Adults can possess in public up to 30 g of dried cannabis and this would be maintained. There is no weight limit for cannabis extract products, including pre-rolled cannabis infused with cannabis extracts. The proposed change would provide greater flexibility for the size of dried cannabis products intended for inhalation in discrete units.

Health Canada is proposing to permit the use of ethyl alcohol as an ingredient in certain cannabis products, subject to limits to mitigate the public health and public safety 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 proposed amendment would 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 would not be permitted to contain more than 10 mg of ethyl alcohol. If the cannabis product is not in discrete units, each unit would 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 proposed amendment would 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. Health Canada is proposing that the use of denatured ethyl alcohol as an ingredient in cannabis topicals would be permitted with no concentration limit or maximum net weight. This is similar to the requirements for cosmetics. Health Canada is proposing that ethyl alcohol be 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 would be similar to that of the current ethyl alcohol allowance for edible cannabis products. To continue to mitigate the risks of co-intoxication with cannabis and alcohol, it would remain prohibited for a cannabis package, label, or promotion to make an express or implied representation that associates the cannabis product, 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.

Health Canada is proposing to simplify packaging requirements (1) to allow for differentiation in colour between the lid or cap of a container and the container itself; (2) to 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 (3) to 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 proposed changes would 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.

Health Canada is also proposing to 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. Health Canada is proposing removing 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 the immediate containers do not have more than 10 mg of THC each. Applicable child-resistant packaging requirements for immediate containers would remain. Consumers can purchase multiple packages up to the public possession limit at a single time, but currently, licence holders cannot pack them together.

Cumulatively, these proposed changes to packaging requirements would enable product packaging flexibility for licence holders and would be an additional way for licence holders to share product information without compromising public health objectives. It is expected that the simplified requirements would allow for a greater variety of packaging available for a lower price and improved recyclability.

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, some of the information is of limited value to the consumer and there is additional information that may be useful for adults to make informed decisions about cannabis products. The following amendments to the labelling requirements are proposed.

As the current plain labelling requirements offer limited space for industry to convey product details directly on labels, Health Canada is proposing amendments to expand labelling options by permitting the use of quick response (QR) codes on any container used to package a cannabis product, permitting information inserts to be included with cannabis products, and by expanding the allowance for accordion or peel-back labels to all sizes of packages. The proposed changes would expressly authorize the use of QR codes on cannabis products for any purpose, such as inventory and tracking purposes or to provide consumers access to websites or other information. At the time of purchase, this information would be available to adult consumers, or in the case of cannabis for medical purposes, those individuals authorized to access cannabis for medical purposes.

To improve the legibility of key information for consumers, Health Canada is proposing to allow the font size of cannabinoid and potency information be as large as the Health Warning Message. No changes are being proposed 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 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. Evidence suggests that consumers struggle to understand the potency labelling. Health Canada is proposing that the potency labelling would only be required for total THC and total CBD for all products. Health Canada is proposing removing 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 proposed changes would simplify information for consumers and would 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.

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. Health Canada is proposing that the Regulations be amended to permit a window of plus or minus seven days of the printed packaging date on the label. The licence holder would continue to keep records indicating the actual packaging date. This change would serve to formalize an existing flexibility that was introduced during the COVID-19 pandemic, as reprinting labels with new dates is time-consuming and costly when delays with production are encountered.

Health Canada is proposing an amendment to permit images and information to be displayed on wrappers if such information is required by another federal or provincial act. This proposed change would align the allowances provided for packages and 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. Health Canada is proposing changes to the record-keeping and reporting requirements.

Health Canada is proposing that licence holders would 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 would still need to be recorded and retained for two years. Health Canada is proposing that licence holders would no longer be required to submit a notice of new cannabis product (NNCP) to Health Canada 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 with the regulations.

Health Canada is proposing changes to the witnessing and record-keeping requirements regarding the destruction of cannabis. The proposed amendments to the Regulations would remove all record-keeping requirements for cannabis cultivation waste (leaves, shoots and branches collected during propagation, cultivation and harvesting of cannabis) and the requirement to have qualified individuals witnessing and attesting to the on-site and off-site destruction of this material.

Health Canada is proposing to repeal the requirements for recording the address of the location at which the cannabis is destroyed and the description of the destruction method. Health Canada is proposing changes to the record-keeping of cannabis plant destruction. Instead of recording plant pre-destruction net weight or volume, Health Canada is proposing to only record the number of whole cannabis plants destroyed, regardless of the growth stage. Overall, these proposed changes would remove the operational burden of pre-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). Health Canada is proposing to only require the presence of, and attestation by, one individual who is an employee of the licence holder for on-site and off-site destruction instead of the current requirement of two individuals, one of which requires a security clearance. The individual would not need to hold a security clearance.

Health Canada is proposing to remove the requirement for licence holders to provide an annual report to the Minister outlining the amount of money they have spent on promotion. Licence holders would still be required to retain information related to promotion expenditures for two years.

Health Canada is proposing to remove the requirement for certain information that licence holders must provide to the Minister related to key investor reporting. The proposed amendment would remove the requirement to submit information indicating whether any ownership interest or rights 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 redundant as similar information is submitted in the updated organization security plan provided during licence applications and renewals and in other parts of a key investor report.

Health Canada is proposing an amendment to the unit of measurement of cannabis plant seeds from kilograms to the number of plant seeds. This information is provided as part of the reporting requirements on unpackaged seed. Reporting the number of seeds would align with the reporting requirements for cannabis seeds that are packaged as cannabis products and with the CRA reporting requirements.

Cannabis Tracking System Order

Health Canada is proposing changes to the Order to amend 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.

Health Canada is proposing exempting certain requirements for monthly reporting of the weight of cannabis cultivation waste. This information would 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 survey 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 proposed 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).

More recently, Health Canada published a Notice of Intent — Consultation on potential amendments to the Cannabis Regulations to directly seek stakeholder input on streamlining regulatory amendments on March 25, 2023, in the Canada Gazette, Part I for a 60-day public consultation period. Stakeholders and all Canadians had the opportunity to comment on proposed changes to streamline the Regulations and reduce the regulatory burden. Five priority areas for potential changes were identified including licensing, personnel and physical security, production, packaging and labelling, record-keeping and reporting, and questions were posed for stakeholder consideration and feedback.

In general, responses from both NOIs were highly supportive of formalizing the existing flexibilities that were extended during the COVID-19 pandemic, reducing requirements pertaining to licensing, packaging and labelling, personnel and physical security and increasing the thresholds for micro-class and nursery licences. Moreover, the more recent NOI received suggestions to review record-keeping and reporting requirements that could be reduced or eliminated. Stakeholders also provided feedback on increasing or removing the federal adult possession limit, reducing, or removing the annual regulatory fee, changing the excise tax and the access to cannabis for medical purposes program. These issues were not considered in the current proposed regulatory amendments as they were deemed to be outside of the scope of amendments proposed to streamline and reduce the administrative and regulatory burden without impacting the overall public health and public safety objectives of the existing framework. The excise tax is administered by the CRA and is not under the purview of Health Canada.

Key highlights of the feedback Health Canada received through the NOIs is summarized thematically below.

Licensing

The main licensing issues raised for consideration included increasing production limits for micro-licence holders, formalizing COVID-19 flexibilities, reducing the burden on QAPs, and permitting certain research activities to be conducted without a cannabis licence.

In addition to the NOI feedback, there has been ongoing federal engagement with regulated parties including the hemp industry. While the NOI published in 2023 did not include potential amendments related to industrial hemp, frequent communications and ongoing engagement with these parties have informed Health Canada of industry challenges and regulatory priorities. One of these priorities, the removal of industrial hemp derivatives from the cannabis regulatory framework, has been considered in developing these regulatory amendments. Other concerns that have been raised over the years include changing the definition of industrial hemp and transferring hemp oversight from Health Canada to Agriculture and Agri-Food Canada to distinguish it from cannabis as an agricultural commodity. While Health Canada is proposing amendments that would clarify derivatives of exempted parts do not require a processing licence under the Act, fundamental changes to the regulation of hemp are outside the scope of this regulatory package.

Personnel and physical security measures

The majority of NOI respondents strongly supported removing the requirement to have a security-cleared individual present on-site when activities with cannabis are being conducted, citing that the presence of a security-cleared individual does not provide additional security or oversight to the site and that there are no specific responsibilities for this individual. Micro-class licence holders or licence holders with limited resources and availability of security-cleared individuals cited operational constraints and the administrative burden in meeting this requirement. There was also strong support for removing or reducing physical security requirements using a risk-based approach and considering factors such as the size and location of the facility, the level of risk associated with the facility, and security measures already in place.

Numerous stakeholders strongly supported reducing the retention time for visual recordings due to the high costs of installing and maintaining servers required for this purpose. While a six-month retention period was suggested, Health Canada considered the inspection planning cycle and time frames for addressing potential non-compliance when proposing a one-year retention period.

Many respondents proposed an exemption to maintaining physical security measures when there are no activities with cannabis occurring or when no cannabis is present in operations areas (e.g. seasonal or outdoor grow operations). Some responses suggested only requiring outdoor monitoring when cannabis was mature and flowering; however, Health Canada considers the risk of diversion a key factor to maintain these monitoring requirements when cannabis plants, regardless of their growth stage, are grown outdoors.

Production requirements

There were many NOI submissions received from stakeholders, the majority from regulated parties, recommending changes to current regulatory requirements. Submissions suggested that production requirements surrounding cannabis should be less prohibitive and allow for more flexibility. Health Canada has also heard from regulated parties that there is a need to allow ethyl alcohol as an ingredient in additional cannabis products, such as metered inhalers. Comments were received regarding reducing good production practice requirements; however, Health Canada determined these requirements were outside the scope for proposed regulatory amendments intended to reduce the burden without impacting public health and safety. Feedback was received suggesting an increase in requirements related to validation and standardization of testing methodologies. This was also deemed out of scope for consideration in this proposed regulatory package, as this change would increase the regulatory burden.

Packaging and labelling requirements for cannabis products

NOI submission highlights included concerns about how current packaging and labelling requirements for cannabis products contributes to excessive waste, support for simplifying packaging and labelling requirements for improved consumer uptake of product information and increasing flexibility for packaging options.

Several submissions raised the issue of uniform packaging colour requirements with the majority in favour of changing regulatory requirements. The main issues raised were that some packaging and labelling restrictions have no clear connection to public health and safety and loosening packaging requirements including uniform colour would enable sourcing of more environmentally friendly packaging.

Many stakeholders and regulated parties have voiced their support for allowing transparent packaging and “cut-out windows” in product packaging. Some stakeholders questioned whether enabling consumers to view the product serves as an inducement or enhances the product’s appeal, such as for edible cannabis products that may resemble food.

Many stakeholders shared their opinions regarding the labelling of THC and CBD on cannabis products. According to these comments, consumers base their purchase of dried flowers on the total THC percentage listed on the label (i.e. the total THC potency content once the product has been heated to at least 150°C). Further, identifying the potential for conversion to THC is not relevant for edible cannabis products, including beverages.

Several submissions were received suggesting that the use of QR codes on labels would provide consumers with quick access to additional information about cannabis products, although QR codes are currently not permitted. Stakeholders and regulated parties have suggested that QR codes should be permitted on labels, similar to barcodes. Although currently prohibited, a number of stakeholders and regulated parties proposed permitting inserts or leaflets inside cannabis product packaging as a means to offer consumers additional information. Several suggested that the information provided on the insert should comply with all of the promotion requirements of the Act and the Regulations.

Some stakeholders expressed concerns about possible negative impacts of loosening packaging and labelling requirements and advocated for maintaining or increasing existing restrictions on plain packaging. For example, prohibiting certain words like “candy” and including additional health warning messages on the risks of using cannabis products were supported by submissions received from public health entities. Some stakeholders felt that any potential changes to packaging and labelling requirements could be costly for smaller licence holders. Health Canada considers the proposed amendments to packaging and labelling an incremental measure that would provide adult consumers with increased information about the cannabis they are purchasing, without impacting the public health and public safety objectives. Increasing requirements were outside the scope of this proposed regulatory package intended to reduce the burden.

Record-keeping and reporting requirements for cannabis licence holders

Suggestions received from the NOIs included reducing requirements for micro-class licence holders including streamlining the level of detail that is required for reporting (i.e. tracking weight versus number of seeds) and that any changes for micro-class licence holders should be extended to all licence holders. Comments were received for improvements to the efficiency of the reporting requirements for the NNCPs. These included reducing the notice period from 60 to 30 days, removing or reducing the requirements for certain classes of cannabis (e.g. dried cannabis), and allowing licence holders to revise certain non-critical aspects of the product (e.g. date of expected sale, net weight/volume, number of units per container, ingredients, sensory attributes) without the need to re-submit an NNCP. At this time, Health Canada is not considering changes to the notice period or allowing revisions of existing notices due to operational constraints.

Submissions also suggested reducing the Cannabis Tracking and Licensing System (CTLS) reporting from monthly to quarterly and proposals to simplify and reduce the number of categories and fields, leveraging intergovernmental reporting data and implementing a single window for reporting all mandatory information to Health Canada and the CRA. Changes to frequency of reporting and a single window for reporting to both Health Canada and the CRA were determined to be out of scope of this proposed regulatory package due to the significant IT changes that would be required and the different mandates of the two departments.

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 October 2023, the panel published their Legislative Review of the Cannabis Act: What We Heard Report (WWH Report) which summarized the evidence they considered in their review, along with the input shared by stakeholders through nearly 140 engagement sessions and over 250 written submissions. In March 2024, the Legislative Review of the Cannabis Act: Final Report of the Expert Panel was tabled in Parliament by the Minister of Health.

The final report of the panel identified 54 recommendations and 11 observations to strengthen and improve the administration of the Act. Although this regulatory proposal does not comprise the entirety of Health Canada’s response to the legislative review, the available feedback contained in the WWH Report and the panel’s final report was reviewed and considered in the development of these proposed amendments.

The panel acknowledged several areas that could be improved and made the following recommendations that are relevant to this proposed regulatory package:

• Prioritize and accelerate work to streamline regulations and reduce the administrative burden.
• Ensure the cannabis industry is provided with clear guidance on the promotion restrictions and packaging and labelling requirements, including correcting misperceptions about what information is, and is not, allowed on product labels (or in cannabis promotions).
• Revise the packaging and labelling rules that apply to all cannabis products to more clearly convey information on THC and CBD quantity or concentration to adult consumers, by simplifying product labels and allowing the display of only “total THC” and “total CBD” for each unit and for the package, and by requiring larger font sizes to display THC and CBD quantity (or concentration).
• Allow some portion of a cannabis package (for dried cannabis and fresh cannabis only) to be transparent, without undermining the intent of plain packaging requirements and other labelling rules to protect children.
• Revise the packaging and labelling rules to allow for the display of certain symbols that convey useful information to the consumer (for example symbols related to organic certification or recycling), ensuring that permitted symbols do not serve as an inducement to youth or non-consumers.
• Revise packaging and labelling rules to allow the use of QR codes on product labels to convey factual information to consumers, within the constraints of what is currently permitted on labels or in cannabis promotions.
• Maintain the current limit of 10 mg of THC per package in edible cannabis products and continue to develop the research in this area to determine whether there are conditions under which the limit could be raised without unduly impacting public health.
• Maintain key measures that protect children and youth such as child-resistant packaging and restrictions on product characteristics that are appealing to youth, among others.
• Review current personnel security requirements which might not be needed for some types of employees and some controls related to physical security (such as visual monitoring of areas not in use).
• Streamline record-keeping and reporting requirements (such as harmonizing reporting between Health Canada and the CRA to avoid duplication, reducing the reporting burden for some lower-risk activities such as waste and destruction, and reducing the length of time required to store certain records, especially visual records).
• Exercise vigilance in the review of new cannabis product notifications to ensure the current rules are being followed. The proposed amendment to remove the requirement to notify for dried and fresh cannabis products should result in an increased capacity for Health Canada to review higher risk notices, which aligns with the Panel’s advice.

This proposed regulatory package would directly implement several of the recommendations made in the final report and address a number of issues identified by the Panel.

This regulatory proposal would maintain the public health and public safety objectives of the Act and proposed changes would not impact core controls intended to protect young persons. The Act prohibits promotion, packaging and labelling that could be appealing to young persons, including testimonials or endorsements and depictions of persons, characters or animals, among other restrictions. These controls are all maintained. As well, the Act generally prohibits the promotion of cannabis, cannabis accessories and services related to cannabis, except in limited circumstances. These limited circumstances help adult consumers make informed decisions about cannabis, by allowing for information as well as brand-preference promotion. Proposed regulatory changes would permit additional information to be shared by licensed cannabis processors to purchasers of cannabis products through accordion labels, QR codes, inserts and leaflets, subject to existing rules. This information would be available to adults purchasing cannabis products at provincially and territorially (PT) authorized retailers, or to individuals authorized to access cannabis for medical purposes by their health care practitioner.

The regulations set out requirements for how cannabis products must be packaged and labelled prior to sale at the retail level. This includes requiring plain packaging and labelling for all cannabis products with restrictions on logos, colours and branding, and requiring child-resistant packaging for products other than cannabis plants and cannabis seeds. These measures aim to reduce the risks of accidental consumption and overconsumption as well as reduce the appeal of cannabis products to young persons while providing consumers with the information they need to make informed decisions before using cannabis. While the proposed regulatory changes would permit the cap and container to be different colours and allow transparent packaging or cut-out windows for dried and fresh cannabis products, these proposed changes do not fundamentally change the overall controls in place to protect young persons. Existing requirements related to, among other things, health warning messages and the standardized cannabis symbol would be maintained, as would the requirement for child-resistant packaging. Overall, none of the proposed regulatory amendments are expected to result in increased upward pressure on rates of use among youth.

Additionally, the legislative review found that the legalization of cannabis did not substantially facilitate research, and there remain challenges for sustainability of companies, particularly smaller-sized licensed cultivators and processors. These findings support proposed amendments for authorizing certain research without requiring a licence, and proposed changes to the limits for micro-class licences.

At this time, Health Canada is not proposing mandatory label requirements related to a standard dose, as recommended by the panel. Additional research and analysis are necessary to determine what a standard dose may be for various cannabis classes and products. Nor is Health Canada proposing to allow cultivators to sell packaged and labelled dried or fresh cannabis directly to distributors, although this was recommended by the panel. Health Canada would need to further examine the implications, including any necessary quality assurance and testing requirements.

Modern treaty obligations and Indigenous engagement and consultation

A preliminary Assessment of Modern Treaty Implications has been conducted and concluded the regulatory proposal would not trigger any modern treaty obligations. Most of the proposed changes are in response to stakeholder feedback to reduce regulatory and administrative burden, and, as they reflect current practice by businesses, they would not specifically target Indigenous Peoples.

The NOI was published in the Canada Gazette, Part I, with a 60-day public consultation; it was concurrently published in the First Nations Gazette providing targeted notification to Indigenous peoples, groups and regulated parties, and stakeholders. There was a direct email to Indigenous partners, organizations (National Indigenous Organizations [NIOs]) and regional associations and representative entities. There were two responses received from Indigenous Peoples to the NOI publication. There were no submissions received in direct response to the publication in the First Nations Gazette.

Instrument choice

Health Canada considered several options prior to developing this regulatory proposal. Health Canada continues to hear from licence holders that they are struggling with profitability and the regulatory burden; therefore, proceeding with a regulatory proposal that reduces the burden on industry without fundamental changes to the public health and public safety controls was deemed to be in the best interest of Health Canada, Canadians, and the industry.

Option 1: Status quo

The proposed regulatory amendments were developed based on consultations and identification of issues with the status quo. 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.

Option 2: Comprehensive regulatory amendments

A legislative review of the Act was undertaken by an independent Expert Panel. The Legislative Review of the Cannabis Act: What We Heard Report was published in October 2023 and the Final Report of the Panel was delivered to Health Canada on February 27, 2024. The Panel made recommendations touching on several aspects of the Regulations, including access to cannabis for medical purposes, fees, and Indigenous authorities. While Health Canada continues to review the Expert Panel’s recommendations and consider potential legislative and additional regulatory amendments to the Canadian cannabis framework, this undertaking will require comprehensive analysis and extensive engagement beyond the 2023 NOI to fully address all recommendations. As such proceeding with this option was not deemed in the best interest of an immediate remedy to reducing regulatory and administrative burden.

Option 3: (Recommended) Streamlining regulatory obligations

Proceeding with targeted amendments to the regulatory framework at this time is the recommended approach as this would respond to stakeholder and industry feedback with timely changes to reduce regulatory and administrative burden. It would also implement several specific recommendations made by the Expert Panel, including the recommendation to prioritize and accelerate work on regulatory streamlining. Proposed regulatory change has been supported by stakeholders and industry throughout public consultation. The proposed 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 proposed 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 1} the approach adopted in the previous analyses was followed. Information received in the Notice of Intent — Consultation on potential amendments to the Cannabis Regulations was also used. The CBA report is available upon request to the Departmental contact listed below.

Baseline versus regulatory scenario

The following tables summarize the baseline scenario and the regulatory scenario requirements, the incremental changes of the proposed amendments and which stakeholders could be affected by the proposed changes.

Table 1a: Baseline versus regulatory scenario — Licensing

Baseline scenario	Regulatory scenario	Estimated Benefits/Costs
Licensed processors must provide paper copies of the consumer information sheet with every package delivered to a PT retailer, or directly to a consumer.	Licensed processors would no longer need to provide printed copies. Information would remain available on Health Canada’s website.	Cost savings for licensed processors who would no longer be required to print consumer information sheets.
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.	Would formalize the import/export COVID-19 flexibility that has been in place for 3 years. All other requirements of the permit would be respected.	While there would be benefits to cannabis and hemp licence holders from continued flexibility, there would be no incremental benefits as interim measures are already in place. There would be benefit to Health Canada as less resources would be required to review and renew the interim measures. One-time cost to government to update guidance, website, IT system and SOPs.
Licensed processors are permitted to staff up to 2 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.	Would 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. Would allow the QAP to delegate activities, while maintaining accountability and overall responsibility.	There would be benefit to licensed processors by allowing for more QAPs to help mitigate production bottlenecks. One-time cost to government to update IT system and SOPs.
Cultivation, research and industrial hemp licence holders cannot sell pollen to other licence holders.	Would enable intra-industry sale of pollen.	Cultivation, research and industrial hemp licence holders would benefit from the new authority to diversify their research and business activities. One-time cost to government to update public facing guidance, 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.	Would add prescribed grounds to suspend any licence held by the same licence holder if there are unpaid fees or failure to submit a required statement of cannabis revenue for one licence.	There would 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 would cause less disruption to operations than licence revocations; once unpaid fees are paid, the licence would be resumed, and the holder would 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.	Would increase the thresholds of micro-class licences, based on changes to wholesale 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 would be benefits to existing micro-class licence holders from being able to operate at higher capacity without changing or applying for a new licence. New entrants may be attracted by the opportunity to have more room for expansion. 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.	Would allow for the production of derivatives with exempted plant parts listed under Schedule 2 without a processing licence under the Regulations, as long as the derivative does not contain an isolated or concentrated phytocannabinoid. Would repeal the related THC testing for hemp grain derivatives and remove requirements for wholesale labelling, import and export.	These changes would allow the derivatives of non-viable cannabis and industrial hemp seeds, roots and stalks to be imported, exported, sold and processed without a licence under the Act. This would 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 costs of testing and of import/export permits, where applicable. There would be a benefit to Health Canada as fewer resources would be required to review processing licence applications 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 or conducting research with cannabis without an authorization.	Organizations and individuals who use 30 gram or less of dried cannabis or its equivalent in their studies that do not involve human participants would no longer be required to apply for a research licence. However, the research would not be allowed to be conducted within a dwelling house nor would it be allowed at a site found in a Registration with the Minister that is issued under subsection 313(1) of the Regulations.	As holders of a licence for research, and cannabis researchers would no longer be required to obtain a research licence and benefit from administrative cost savings.

Table 1b: 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 would no longer be required to have security-cleared personnel on-site when activities with cannabis are being conducted. Other requirements that reduce risk of diversion would 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 would 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.
Strict physical security measures apply to standard-class licence holders, sale for medical purposes with possession licence holders, and cannabis drug licence holders.	Some physical security measures would be reduced for standard-class licence holders, sale for medical purposes with possession licence holders 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 licence holders, sale for medical purposes with possession licence holders, cannabis drug licence holders and new licence applicants at licensed sites would benefit from cost savings. Health Canada would incur minor costs to update guidance documents and SOPs as per existing program activities, inspection, and compliance and enforcement activities.

Table 1c: Baseline versus regulatory scenario — Production Requirements

Baseline scenario	Regulatory scenario	Estimated Benefits/Costs
Pre-rolled dried cannabis size is limited to 1 g.	The 1 g limit on pre-rolled cannabis would be repealed.	Removing the weight limitation would benefit licensed processors by aligning this requirement with other cannabis products and would encourage innovation of new cannabis products (i.e. different size formats). If licensed processors wish to produce larger sized inhalable products, this amendment would be a benefit to cannabis consumers as they would 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.	Would 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 would benefit as the change would allow product innovation. Therefore, they would be able to offer a broader range of products in response to market demand. Consumers would benefit from a wider range of product selections.

Table 1d: Baseline versus regulatory scenario — Packaging and Labelling Requirements

Baseline scenario	Regulatory scenario	Estimated Benefits/Costs
All product packaging must be opaque or translucent and of the same colour. Cut-out windows are prohibited.	The cap and container would be permitted to be different colours for all cannabis packaging. Cut-out windows or transparent packaging would be permitted for dried cannabis, fresh cannabis and seeds.	Licensed processors would have an increased range of suppliers and materials with likely a lower competitive price which may yield some cost savings. They would also be able to source more environmentally sustainable packaging. Both licensed processors and consumers would benefit from an additional way to share product information; consumers would see the product before purchasing to assess quality and inform their purchase choice.
Wrappers are prohibited from having any image or information, other than the standardized cannabis symbol.	Images and information on wrappers would be permitted if required by another statute, such as the chasing arrows recycling icon.	This change would 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 would 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.	There would 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 would be benefits to licensed processors from more label space to include additional voluntary information on the product label.
QR 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.	Would enable the use of 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 would be permitted on any sized package.	There would be benefits to licensed processors to provide more information on their products to consumers including additional voluntary health and safety information. There would be benefits to consumers from having more information that enables better informed purchase decisions.
Equivalency statements are required for all products and a statement that no expiry date has been determined are required for dried or fresh cannabis, cannabis extracts and cannabis topicals.	Requirements for equivalency statements on cannabis product labels ("Contains the equivalent of ##g of dried cannabis") and requirement to include "no expiry date has been determined" would be repealed.	There would 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 as long as the amount of THC in all containers does not exceed 10 mg and the properties of each immediate container are consistent.	Would allow co-packing of all classes 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 package and child-resistant packaging) would remain.	There would be benefits to licensed processors to co-pack products as it may improve efficiencies for wholesalers and product suppliers and may increase sales. Licensed processors would 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 and may be able to obtain different variations of products in a single purchase.
COVID-19 flexibility adopted in 2020 allowed a packaging date that is plus/minus 7 days of the printed packaging date on the label.	Would formalize the flexibility to allow a packaging date that is plus/minus 7 days of the printed packaging date on the label.	This would be a continued benefit to licensed processors from an existing flexibility. As it is already in place, there would be no further benefits for licensed processors.

Table 1e: 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.	Would remove some of the recording requirements, namely the quantity, method of application, and rationale for use. The name of substance and date of application would still be recorded.	Holders of a licence, other than a cannabis drug licence, would benefit from a reduction of administrative costs associated with some record-keeping requirements.
Licence holders must create and provide an annual report on promotion to Health Canada that includes any promotional expenses and a description of the promotion.	Licence holders would no longer need to provide an annual report on promotion to the Minister. All licence holders would still retain a sample or copy of any promotional material for at least two years.	There would be cost savings for licence holders related to preparing the annual report on promotion.
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 would include: a) Remove witness and attestation requirements b) Remove record-keeping requirements For whole cannabis plants, changes would 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, changes would only require one employee of the licence holder who does not require a security clearance to witness and attest to the destruction event.	There are benefits from 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 and requiring one employee who would not require a security clearance to witness destruction.
Licensed processors must notify Health Canada 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 Health Canada 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.	Would remove the need to submit an NNCP to Health Canada for dried and fresh cannabis products.	There would 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 for review.
Holders of a licence for cultivation, processing, or sale for medical purposes that authorizes possession must report unpackaged cannabis seeds in kilograms and cannabis seed products measured as number of seeds.	Holders of a licence for cultivation, processing, or sale for medical purposes that authorizes possession would report the number of seeds instead of weight under the Order and the Regulations.	There would be benefits from administrative cost savings to holders of a licence for cultivation, processing, or sale for medical purposes that authorizes possession.
Holders of a licence for cultivation, processing, or sales for medical purposes that authorizes possession must report the weight of cannabis lost due to drying or other business activities, such as plant trimming under the Order.	Holders of a licence for cultivation, processing, or sales for medical purposes that authorizes possession would no longer need to report monthly on cultivation waste.	The reduced reporting requirement would provide administrative cost savings to holders of a licence for cultivation, processing, or sales for medical purposes that authorizes possession for inventory of cannabis.
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.	Would remove the requirement to submit information indicating whether any ownership interest or rights held by a key investor was assigned or otherwise provided to any other person and other related details.	There would be administrative cost savings to holders of a licence for cultivation, processing, or sale for medical purposes.

Summary of costs and benefits

The total benefits over 10 periods to the cannabis industry are estimated at $288.5 million PV (or $41.1 million in annualized value). The costs to government are one-time costs estimated at $14,128 PV over 10 periods (or $2,011 in annualized value) for updating public facing licensing guidance (website), the Cannabis Tracking Licence System (CTLS), and internal processes. It is anticipated that the proposed amendments would 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 $288.5 million PV over 10 periods (or $41.1 million in annualized value).

Costs of the proposed regulations

To implement and administer the proposed amendments, Health Canada may incur costs associated with updating permit forms, licence application forms, Standard Operating Procedures (SOPs), templates and guidance materials including public facing guidance (e.g. Health Canada’s website). The one-time cost occurs in period 1 and is estimated at $14,128 PV over 10 periods (or $2,011 in annualized value). Health Canada may incur ongoing costs to

• process new applications for micro-class cultivation, processing or nursery licences, or requests for a change in licence class from licence holders that wish to change from a standard licence to a micro-licence;
• process additional security clearances for QAPs and alternatives resulting from an anticipated increase in the number of alternate QAPs; and
• integrate inspection activities related to the information provided from QR codes, inserts and leaflets into the scope of packaging and labelling inspections, promotion compliance monitoring, or other activities.

However, it is anticipated that Health Canada would be able to absorb these ongoing costs through existing program funding.

Benefits of the proposed regulations

The proposed amendments would provide incremental benefits to regulated parties and Health Canada. These benefits would result from removing or reducing some regulatory requirements and in providing more operational flexibility to licence holders. The benefits of the regulatory proposal 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 was used.

1. Quantitative benefit analysis

1.1 Administrative cost savings

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, licence holder and licence applicant numbers were determined as of December 31, 2023. The licence classes and sub-classes under the Regulations and the IHR that are described in the analysis below are presented in Table 2.

Table 2: Licence classes

Regulation	Licence class	Sub-class
Cannabis Regulations (Cannabis licence holders)	table c1 note a Cultivation	Standard, micro Nursery (associated as micro)
	Nursery (associated as micro)	Associated as micro
	Processing	Standard, micro
	Sale	For medical purposes with 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
Table c1 note(s) Table c1 note a A cultivation licence refers to standard cultivation, micro-cultivation, and nursery licence. Return to table c1 note a referrer

Overarching assumptions:

• The number of affected licence holders and new licence applicants as of December 31, 2023, was used in the calculations. It is assumed that those numbers would hold constant for the 10-year analytical period. While the number of applicants and licence holders entering the legal cannabis industry has increased since the legalization of cannabis in 2018, there has also been an increase in the number of licence holders leaving the market.
• Due to data constraints, it is assumed that consumers would purchase newly available cannabis products in place of existing products and this regulatory proposal would not result in increased cannabis product sales overall. Therefore, the number of cannabis products sold in 2023 was used in the calculations and it is assumed those numbers would hold constant for the 10-year analytical period.
• There would be no transition period thus the incremental impacts would start in period 1 once the final regulatory proposal comes into force.

1.1.1 Licensing

Removal of licence requirements and record-keeping requirements for certain research licence holders

The proposed amendment would allow a researcher or organization to conduct research projects with non-human participants using less than 30 grams of dried cannabis or its equivalent without a research licence. The affected licensed sites for research would benefit from the proposed 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. The application process would be completed by an employee, assisted by an external consultant, resulting in an average wage of $82.19 per hour over a span of 9 hours. They would 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.

Therefore, it is estimated that the 38 licensed sites for research would each save $740 in not applying for a research licence, and $988 in not having to keep records. Overall, it is anticipated that the proposed regulatory change would result in a total cost savings of $65,652 per period or $493,393 PV over 10 periods.

1.1.2 Personnel and physical security

Removal of recording and retaining 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 would 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 of recording and retaining a list of individuals entering or exiting storage areas, 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, it would record this information. It is assumed that 90% of affected licensed sites (483 sites) have this type of system. With the removal of this function from the system, it would not reduce a significant amount of server space. The remaining 10% of licensed sites (48 sites) would 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 proposed regulatory change would result in a cost savings of $4,370,864 PV over 10 periods for licensed sites.

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

In general, it is anticipated that the proposed regulatory change would 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.

1.1.3 Record-keeping and reporting requirements

Removal of requirement to provide information related to promotion

Licence holders who incur expenditures related to promotion in a given calendar year would benefit from administrative cost savings associated with the removal of the annual reporting requirement. There are 1 448 holders of a licence for cultivation, processing, sale for medical purposes, research and analytical testing that would be affected, and it is estimated that 30% of them incur promotional-related expenditures.

The analysis assumes that 434 licence holders would each save $204 in time (6.5 hours saved with an employee wage of $31.43/hr) to comply, maintain and report on promotional information. Therefore, it is anticipated that the proposed regulatory change would result in a cost savings of $88,752 per period or $666,988 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 proposed regulatory changes would result in a total 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 proposed 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 would each annually save $515 (26 hours saved with an employee wage of $19.79/hr) in not doing record-keeping tasks, and save $7,960 (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 would 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 would 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 would save $6,125 per period.

Removal of certain record-keeping requirements for key investor reports (KIR)

Upon the coming into force of the proposed amendments, holders of cultivation, processing or sale licences would benefit from the proposed repeal of three information requirements. It is anticipated that these affected licence holders would benefit from this change in terms of reduced administrative burden, eliminated duplication and increased operational efficiencies.

The record-keeping cost was estimated using the 2018 CBA where 4 hours/yr was estimated as the time needed to prepare the KIR. Time savings from this proposed regulatory change is estimated as $1,794 per licence holder, calculated as 24 minutes of savings at a wage of $74.73/hour. The benefit from administrative cost savings to the 900 affected licence holders is estimated at $26,903 per period or $202,183 PV over 10 periods.

Removal of some record-keeping requirements for substances applied to cannabis

The proposed amendment would require a holder of a licence other than a cannabis drug licence to retain solely 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 resulting in administrative cost savings. It is expected that this proposed 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 would each save $437 per year (22.10 hours saved with an employee wage of $19.79/hr), 396 nursery or micro-cultivation licence holders would 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) would save $95 per year (2.5 hours saved with an employee wage of $38/hr). Overall, it is anticipated that the proposed regulatory change would result in a total cost savings for affected licence holders of $300,236 per period or $2,256,347 PV over 10 periods.

Removal of the notice of new cannabis products (NNCP) reporting requirement for fresh and dried cannabis products

The proposed amendment would exclude fresh cannabis and dried cannabis products from the NNCP reporting requirements. This would result in a reduction in the administrative burden associated with the preparation and submission of NNCPs to the Minister before making a product available for sale in Canada under the Regulations. Therefore, it is estimated that 577 holders of a licence for processing would each save $127 per year (4.05 hours saved with an employee rate of $31.43/hr). Overall, this would result in a total cost savings of $73,477 per period or $551,973 PV over 10 periods for all affected licence holders.

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

The proposed amendment aligns the reporting requirement for cannabis seeds under the Order and the Regulations. Holders of a licence for cultivation, processing, or sale for medical purposes that authorizes possession would report the number of seeds instead of the weight under the Order and the Regulations. Affected stakeholders would 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. Overall, it is estimated that licence holders would each save $8 per year (12 minutes saved with an employee wage of $40.04/hr). Thus, for the 916 holders, it is estimated that the total cost saving would be $7,335 per period or $55,127 PV over 10 periods.

Remove the monthly reporting requirement for certain cannabis cultivation waste

A holder of a licence for cultivation, processing or sale for medical purpose that authorizes possession is currently required to report the weight of cannabis lost due to drying or other business activities, such as plant trimming. The proposed amendment would remove the need to report on cultivation waste under the Order. Affected licence holders would benefit from administrative cost savings as the time and resources expended on the preparation and submission of the required information would be reduced significantly. It is estimated that 750 licence holders would save $80 per year (2 hours saved with an employee wage of $40.04/hr). Overall, this results in a total cost savings of $60,060 per period or $451,370 PV over 10 periods for all impacted holders.

2.1 Compliance cost savings

2.1.1 Licensing

Removal of the need to print hard copies of consumer information sheets

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

2.1.2 Personnel and physical security

Removal of 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) would not be required to comply with intrusion detection system (IDS) requirements for the site perimeter (i.e. detect unauthorized access to the site and detect any tampering with the intrusion system). The IDS 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 IDS against the entire facility, and a direct correlation is assumed between the size and cost. The IDS proportion of the facility attributable to the site perimeter is 20%, and the ongoing cost of maintaining the IDS for the entire facility is $12,245. It is assumed that there would 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 IDS for the entire facility is $122,445.

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

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

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

Change the retention of 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) would be allowed to retain visual recordings only if there are movements occurring. If there are no movements (e.g. no activities are occurring or outside working hours), the recordings would not need to be retained. The retention period would continue to remain as a minimum of one year.

It is assumed that out of 483 affected licensed sites, 434 sites (90%) would have visual monitoring devices that can capture and retain motion-activated visual recordings. They would 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 would result in a 67% reduction in server storage capacity. The server storage size savings would be dependent on the licence holder’s facility size. However, more savings would be associated with larger licensed sites, as more visual recording devices would 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 impacted licensed site would save $2,825 per period (67% of $4,217). Overall, 434 licensed sites would save $9,183,483 PV over 10 periods.

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

All 51 new 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 new applicant would save $2,825 per period (67% of $4,217). Overall, 51 new applicants would save $1,077,427 PV over 10 periods.

It is anticipated that the proposed regulatory change would 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) would not be required to implement physical security measures in the area surrounding the storage area (i.e. “room within a room” storage requirements). The breakdown of four elements is described in more detail below.

In general, it is anticipated that the proposed regulatory change would result in a total cost savings of $49,740,044 PV over 10 periods for all affected licence holders and licence applicants. All affected licence holders would save $42,750,371 PV over 10 periods, and all affected applicants would save $6,989,673 PV over 10 periods.

(a) Restricted access

It is assumed that each licensed site would 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 would each save $486 per period or $1,764,111 PV over 10 periods for all licensed sites.

New applicants for the affected licence types would benefit from the proposed amendments as they would 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 new applicants would save $275,778 PV over 10 periods in no longer requiring to comply with this requirement.

It is anticipated that this proposed regulatory change, related to restricted access, would 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 would not have cost reduction benefits as they would have already built the physical barrier to comply with the current Regulations. However, new applicants for the affected licence types would benefit from not needing to build a physical barrier, which is estimated to cost $22,680. Therefore, 51 affected new applicants would each save $22,680. Overall, all new applicants would have a total cost savings of $1,156,680 PV over 10 periods.

(c) Visual monitoring and visual recording devices

Affected licence holders would have cost reduction benefits as they would 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.

The proportional assumption 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 IDS at all times is $173,396. The security guard cost would only be factored once and would not be included in the IDS 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 affec-ted licensed sites would annually save $574 (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 proposed regulatory change would result in a total cost savings of $9,455 per period for each licensed site or $34,319,288 PV over 10 periods for all licensed sites.

New applicants applying for the affected licence types would benefit from the proposed amendment as they would 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 would 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 would annually save $574 (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 proposed regulatory change would result in a total cost savings of $3,916,543 PV over 10 periods for all applicants.

It is anticipated that this proposed regulatory change, related to visual monitoring and visual recording devices, would 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

Affected licence holders would benefit from cost savings as they would no longer be required to maintain and monitor the intrusion detection system (IDS) and equipment for the “room within a room” storage areas.

The proportional assumption of the “room within a room” storage area against the entire facility, in terms of IDS, is 15%. The annual maintenance costs of the entire facility are estimated to be $12,245 for the IDS 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 would annually save $1,837 (15% of $12,245) for the maintenance cost of the IDS and equipment. As the security guard resources were factored in the visual monitoring and visual recording devices section, they would 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.

New applicants for the affected licence types would benefit from the proposed amendments as they would 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 would save on a one-time cost of $18,367 (15% of $122,445) from not purchasing and installing the IDS and equipment within this area. Furthermore, they would annually save $1,837 (15% of $12,245) for the maintenance costs of the IDS and equipment. As the security guard resources were factored in the visual monitoring and visual recording devices section, they would not be included again for the monitoring cost savings. Overall, it is anticipated that the proposed regulatory change would result in a total cost savings of $1,640,672 PV over 10 periods for all applicants.

It is anticipated that this proposed regulatory change, related to IDS devices, would 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 the following 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) would not be required to monitor and maintain their intrusion detection system (IDS) 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 would have indoor operations areas, and that 20% of them (96 sites and 10 applicants) would 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 would use these areas to grow their cannabis plants between April to October, and that they would not use these areas for the remaining five months (42.7%) of the year.

The compliance cost savings related to this proposed regulatory change has two sections: visual monitoring and visual recording devices and IDS 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, IDS or security guard wages against the entire facility, and a direct correlation is assumed.

In general, it is anticipated that the proposed regulatory change would 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. 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 IDS at all times is $173,396. The security guard cost would only be factored once, and would not be included in the IDS section.

Affected licence holders and licence applicants would benefit from cost savings as they would 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 new applicants, including those with a standard cultivation licence with outdoor grow areas or are applying for this licence class, would annually each save $275 for the maintenance cost of the visual recording devices and the system, $101 for the maintenance cost of the server storage to retain visual recordings, and $4,149 for no longer needing to provide security guard resources to monitoring the visual recordings. Overall, it is anticipated that the proposed regulatory change would result in a total cost savings of $4,524 per period for each licence holder or licence applicant.

It is anticipated that this proposed regulatory change, related to visual monitoring and visual recording devices, would 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 IDS, is as follows: 35% is attributed to indoor non-grow areas, 15% to indoor grow areas, and 10% to outdoor grow areas. The ongoing cost of the IDS per licensed site is $12,245.

Affected licence holders and licence applicants would benefit from cost savings as they would no longer be required to maintain and monitor IDS and equipment 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 new applicants, including those with a standard cultivation licence with outdoor grow areas or are applying for this licence class, would annually save $300 for the maintenance cost of the IDS. As the security guard cost was already factored in the visual monitoring and visual recording section, it would not be included in the IDS section.

It is anticipated that this proposed regulatory change, related to IDS, would 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.

2. Qualitative benefit analysis

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

Enable the intra-industry sale of pollen

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

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

Health Canada would benefit from the proposed regulatory changes that formalize existing flexibilities provided during the COVID-19 pandemic as the department would 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 would benefit from these proposed amendments as they would be allowed to conduct activities with derivatives of Schedule 2 parts without obtaining a licence under the Act. In addition, they would 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 would benefit from increased thresholds as they would 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, would be able to purchase or receive additional cannabis under the proposed new micro-processing threshold without taking any additional action or changing their facilities and operations.

These proposed 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 proposed 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 proposed amendment, Health Canada would benefit from the authority to suspend a licence, other than an industrial hemp licence, based on an unpaid fee or missing Statement of Cannabis Revenue (SCR) if this contravention relates to a different licence held by the same person or entity. This proposed change would address a current regulatory discrepancy and advance the policy objective of achieving cost recovery in cases where the holder of a licence has failed to pay a fee in relation to any licence held by the same licence holder or failure to submit a SCR, if required, in relation to any licence.

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.

2.2 Personnel and physical security

Remove requirement to have a security-cleared individual to 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, or cannabis drug licence holders would 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 wouldn’t incur overtime costs or require multiple security-cleared individuals on staff to cover all operating times.

2.3 Production requirements

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

Processing licence holders would have greater flexibility producing different sizes of dried cannabis products intended for inhalation in discrete units (i.e. pre-rolls). This would 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 would benefit from the regulatory amendment to allow ethyl alcohol in additional classes of cannabis products, subject to some limits. They would be able to expand their market offerings and product innovation. Consumers would benefit from a wider range of product selections.

2.4 Packaging and labelling

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

Processing licence holders would benefit from the proposed amendments in various ways. Allowing processing licence holders to co-pack their products may reduce unit price and would improve efficiencies for wholesalers and product suppliers in managing their logistics and warehousing facilities. By selling products in a co-packed form, these licence holders would increase their total sales compared to selling these products in single packages.

Processing licence holders would also benefit from this proposed amendment as it would remove the 10 mg THC limit per outermost container of edible cannabis. This proposed change would allow licence holders to sell larger quantities of edible cannabis per outermost package, potentially displacing more product on the illicit market.

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

Cannabis processing licence holders would be given the option to use expanded label panels on containers such as peel-back and accordion labels for any immediate containers, not just small immediate containers. Allowing a label that extends beyond the exterior display surface or a peel-back or accordion panel applied to any immediate container would increase their ability to present product information to consumers. It would be easier to fulfil labelling requirements and provide information to consumers without having to consider changing the size of their containers.

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

Cannabis processing licence holders and federal medical sales licence holders would 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 purchase decisions, and further allow licence holders to inform consumers and differentiate their products from others, which furthers aids in displacing the illegal market.

Simplify THC & CBD labelling requirements

The proposed regulatory amendment would remove the actual THC and actual CBD amount from product labels and only require total THC and total CBD to be labelled. Licensed processors would 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.

Permit a QR code on cannabis product labels

The proposed amendment would authorize the use of QR codes on cannabis products for inventory and tracking purposes, as well as for providing additional information to consumers. Licensed processors would benefit from this regulatory change as they would 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 would benefit from reduced regulatory burden and increased operational flexibility and capacity resulting from these proposed packaging amendments.

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

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

Licensed processors would also benefit from the proposed amendment to allow the font-size for cannabinoid and potency information to be as large as the Health Warning Message on product labels. They would be able to present essential information in a more comprehensive and legible way to consumers.

2.5 Record-keeping and reporting

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

Health Canada would benefit from this proposed 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%. The number of NNCPs for fresh cannabis products is minimal. Therefore, it is anticipated that Health Canada would realize an incremental benefit in terms of the time and FTE savings associated with reviewing 10 800 less NNCPs in one year.

2.6 Other qualitative benefits to government

When the proposed amendments come into force, Health Canada would 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 would save Health Canada time and resources that could be used for other tasks. The proposed amendment to allow non-human cannabis research involving less than 30 g of dried cannabis and processing of exempted plant parts to be conducted without a licence would reduce burden on Health Canada’s licence application review and compliance processes. The proposed repealing of some reporting requirements in the KIR would decrease both time and resources required by Health Canada to review these information requirements.

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

Cost-benefit statement

• Number of periods: 10 periods of 12 months (2025 to 2034)
• Base year for costing: 2023
• Present value period 1: 2025
• Discount rate: 7%

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, websites and internal processes (SOPs)	$14,128	$0	$0	$14,128	$2,011
Costs to industry	Not applicable	$0	$0	$0	$0	$0
All stakeholders	Total costs to all stakeholders	$14,128	$0	$0	$14,128	$2,011

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
Removal of licence requirements and record-keeping requirements for certain cannabis research licence holders	$65,652	$65,652	$65,652	$493,393	$70,248
Removal of recording and retaining a list of individuals entering or exiting storage areas	$643,012	$643,012	$643,012	$4,832,384	$688,023
Remove reporting requirement for information related to promotion	$88,752	$88,752	$88,752	$666,988	$94,964
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
Removal of some record-keeping requirements for key investors reports	$26,903	$26,903	$26,903	$202,183	$28,786
Removal of some record-keeping requirements for substances applied to cannabis	$300,237	$300,237	$300,237	$2,256,347	$321,253
Removal of the notice of new cannabis products reporting requirements for fresh and dried cannabis products	$73,447	$73,447	$73,447	$551,973	$78,588
Change the measurement unit for monthly reporting for cannabis plant seeds from weight to number	$7,335	$7,335	$7,335	$55,127	$7,849
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	$21,525,396	$21,525,396	$21,525,396	$161,768,353	$23,032,174

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
Removal of the need to print hard copies of Consumer Information Sheet	$4,818,010	$4,818,010	$4,818,010	$36,208,463	$5,155,271
Removal of 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
Removal of "room within a room" storage requirements	$8,764,803	$6,289,145	$6,289,145	$49,740,044	$7,081,863
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	$20,096,107	$16,371,508	$16,371,508	$126,760,281	$18,047,812
Total benefits of the regulatory proposal to all affected stakeholders	$41,621,504	$37,896,904	$37,896,904	$288,528,634	$41,079,986

Table 5: Summary of monetized costs and benefits

Impact	Period 1 (2025–2026)	Period 5 (2029–2030)	Final period (2034–2035)	Total present value	Total annualized value
Total costs	$14,128	$0	$0	$14,128	$2,011
Total benefits	$41,621,504	$37,896,904	$37,896,904	$288,528,634	$41,079,986
Net benefits	$41,607,376	$37,896,904	$37,896,904	$288,514,506	$41,077,975

Negative impacts

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 proposed regulatory amendments without impacting the comprehensive public health and public safety approach to the regulation of cannabis. No negative impacts are expected from the proposed regulatory amendments.

Proposed changes to physical and personnel security measures would 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 operations areas to prevent unauthorized access, and having access restricted only to people whose presence is required, among others.

Proposed changes to packaging and labelling measures would not result in negative impacts, as core controls intended to protect young persons remain, including the prohibition of promotion, packaging and labelling that could be appealing to young persons, including testimonials or endorsements and depictions of persons, characters or animals, among other restrictions. Proposed regulatory changes would permit additional information to be shared by licensed cannabis processors to purchasers of cannabis products through accordion labels, QR codes, inserts and leaflets, subject to existing rules. This information would 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 proposed regulatory changes would permit the cap and container to be different colours and allow transparent packaging or cut-out windows for dried and fresh cannabis products, these proposed changes do not fundamentally change the overall controls in place to protect young persons.

Positive impacts

The qualitative positive impacts of the proposed regulatory amendments would include aligning regulatory requirements with existing guidelines to provide greater clarity to industry; cost savings for 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 illegal market; and revised packaging and labelling requirements would allow businesses to increase their ability to present product information to consumers, which may help consumers make better-informed purchase decisions. These proposed changes would allow further differentiation of cannabis products to displace the illegal market and expand the range of available packaging options that may be more environmentally friendly.

Small business lens

The proposed amendments would impact small businesses positively, as it is expected that small businesses would benefit from the reduced regulatory burden. About 89% of the affected businesses are small businesses. Some of the small businesses would benefit from the changes associated with compliance cost savings and administrative cost savings. It is anticipated that small businesses would also benefit from improved clarity and consistency of the regulatory requirements.

The total benefits are estimated at $256,790,484 PV over 10 periods (or $36,561,188 in annualized value). The benefit per impacted small business is estimated at $193,904 PV over 10 periods (or $27,608 in annualized value).

No specific or additional flexibility would be provided to small businesses, as there would be incremental benefits to small businesses.

Small business lens summary

• Number of small businesses impacted: 1 324
• Number of periods: 10 (from 2025 to 2034)
• Base year for costing: 2023
• Present value period 1: 2025
• Discount rate: 7%

Table 6: Benefit — Administrative cost savings

Activity	Present value	Annualized value
Removal of licence requirements and record-keeping requirements for certain research licence holders	$439,120	$62,521
Removal of recording and retaining a list of individuals entering or exiting storage areas	$4,300,822	$612,340
Remove reporting requirement for information related to promotion	$593,620	$84,518
Reduce the record-keeping requirements for destruction of cannabis	$135,510,142	$19,293,596
Removal of some record-keeping requirements for key investors reports	$179,943	$25,620
Removal of some record-keeping requirements for substances applied to cannabis	$2,008,149	$285,915
Removal of the notice of new cannabis products reporting requirements for fresh and dried cannabis products	$491,256	$69,944
Change the measurement unit for monthly reporting for cannabis plant seeds from weight to number	$49,063	$6,986
Remove the monthly reporting requirement for certain cannabis cultivation waste	$401,720	$57,196
Total administrative cost savings	$143,973,834	$20,498,635

Table 7: Benefit — Compliance cost savings

Activity	Present value	Annualized value
Removal of the need to print hard copies of consumer information sheets	$32,225,532	$4,588,191
Removal of 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
Removal of "room within a room" storage requirements	$44,268,639	$6,302,858
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	$112,816,650	$16,062,553

Table 8: Total administrative and compliance cost savings

Description	Present value	Annualized value
Total benefits (all impacted small businesses)	$256,790,484	$36,561,188
Benefits per impacted small business	$193,904	$27,608

One-for-one rule

The proposed amendments would be to existing regulatory titles, with no new regulatory titles being created or repealed. The one-for-one rule would apply, and the proposal would be considered an “out” under the rule as the proposed amendments are expected to result in a decrease in administrative burden on business. It is estimated that the administrative burden reduction on business would be $52,001,856  PV (or $7,403,894  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	$52,001,856
Annualized administrative cost savings	$7,403,894

All values are expressed in and discounted to $2012.

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, Thailand, 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 proposed changes would 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 this package proposes a minor change to a specific import and export permit requirement (i.e. listing port of entry and exit), there are still necessary controls in place that would respect the international drug control treaties.

This proposal has 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.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal as the primary audience would be the cannabis industry (i.e. those regulated by the Government of Canada). This proposal is gender balanced (i.e. the Regulations apply equally to different sub-groups of the population).

As the proposed changes would remove 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.

There would be no differential or adverse outcomes to Canadians resulting from these proposed changes.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed amendments would be made pursuant to the authorities of the Act and the FDA. The final regulations would 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 proposed amendments to the Order and the Regulations, respectively, would 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.

Licence changes

Existing standard-class licence holders would need to apply for a licence amendment to change to a micro-class licence. The increased micro-class threshold limits would only be applied once the final Regulations come into force.

Those licence holders who have an existing cannabis research licence and are conducting non-human research with possession of 30 g or less of dried cannabis (or equivalent) would have the option to let their licence expire, or to voluntarily request its revocation. Similarly, licence holders who would 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 would continue to be required if a stakeholder intends to produce an isolated or concentrated phytocannabinoid, including the extraction of CBD from flowering heads or any other part of industrial hemp. Health Canada would 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 topicals or inhaled extracts would only be able to do so 60 days following the submission of a NNCP to Health Canada. This NNCP submission could only be submitted on the date of the coming into force of final Regulations. Removing the requirement to provide NNCPs for fresh and dried cannabis products would enable licensed processors to sell these products, including those in a discrete unit greater than 1 g, upon the coming-into-force date.

In advance of any final Regulations coming into force, licence holders may choose to produce these new cannabis products to build inventory, and in turn, would assume all the risks associated with doing so. They may also wish to prepare their supply arrangement with provinces and territories, including issuance and evaluation of product calls, pricing negotiations, and issuance of supply agreements. However, the supply arrangement could only be finalized on the day the cannabis products could be made available for sale, as the point at which a purchase order is issued or signed would be considered as the point at which sale occurs.

Communications and guidance

Health Canada would notify stakeholders, including regulated parties, of the proposed amendments and public comment period via publication in the Canada Gazette, Part I, and concurrent publication in the First Nations Gazette, via emails, the Consultation and Stakeholder Information Management System, the Government of Canada consultation website and through targeted posts on social media platforms.

Health Canada is committed to continuing to provide industry, the provinces and territories and other stakeholders with relevant and timely information. Guidance documents would 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) would take place to inform licence holders, researchers, importers/exporters, distributors and retailers of cannabis of regulatory amendments.

Compliance and enforcement

The proposed 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 would clarify regulatory authorities, enable a more consistent enforcement approach, and would introduce a less permanent licensing action available to Health Canada. The proposed changes are consistent with Health Canada’s broader approach to compliance and enforcement for cannabis, which include 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 would continue to be available to Health Canada. These measures would 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 would 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, would continue their regular enforcement and compliance activities. Health Canada would 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

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements) under subsection 139(1) of the Cannabis Act ^{footnote a} and subsection 30(1)^{footnote b} of the Food and Drugs Act ^{footnote c}.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Regulatory, Legislative and Economic Affairs Division, Strategic Policy Directorate, Controlled Substances and Cannabis Branch, Department of Health, Address Locator: 0302I, 150 Tunney’s Pasture Driveway, Ottawa, Ontario K1A 0K9 (email: cannabis.consultation@hc-sc.gc.ca).

Ottawa, May 31, 2024

Wendy Nixon
Assistant Clerk of the Privy Council

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 2} are replaced by the following:

• (i) in the case of cannabis that is a cannabis product or that is contained in a cannabis accessory that is a cannabis product, does not meet the requirements set out in subsection 101.3(5.1) or (6) or section 101.31, 102.2 or 102.3, and
• (ii) in the case of any other cannabis, would not meet the requirements set out in subsection 101.3(5.1) or (6) or section 101.31, 102.2 or 102.3 if it were a cannabis product or if it were contained in a cannabis accessory that is a cannabis product; or

(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 cultivation, propagation and harvesting of cannabis and that are intended for destruction. (déchets de culture)

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

• (b) the following persons may, in accordance with their licence or the provincial authorization, as the case may be, sell a cannabis extract that is a cannabis product and that contains ethyl alcohol if the cannabis extract is intended to be consumed by means of inhalation and meets the requirements set out in subsection 101.3(5.1) or if it is intended to be ingested and meets the requirements set out in subsection 101.3(6):

(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,

• (a) a holder of a licence for processing that authorizes the sale of cannabis may, in accordance with the licence, sell a cannabis topical that is not a cannabis product and that contains denatured ethyl alcohol; and
• (b) the following persons may, in accordance with their licence or the provincial authorization, as the case may be, sell a cannabis topical that is a cannabis product and that contains denatured ethyl alcohol:
  • (i) a holder of a licence for processing that authorizes the sale of cannabis,
  • (ii) a holder of a licence for sale that authorizes the sale of cannabis products, and
  • (iii) a person that is authorized under a provincial Act referred to in subsection 69(1) of the Act to sell cannabis.

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

• (b) to obtain dried cannabis, fresh cannabis, cannabis pollen, cannabis plants or cannabis plant seeds by cultivating, propagating and harvesting cannabis;

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

• (a) to sell and distribute dried cannabis, fresh cannabis, cannabis pollen, cannabis plants and cannabis plant seeds to any of the following:

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

• (b) to sell and distribute cannabis pollen, cannabis plants and cannabis plant seeds to a holder of a licence for a nursery;

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

• (a) must clearly delineate a surface area that does not exceed 800 m² in which all the cannabis plants, including all the parts of the plants, must be contained; and

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

• (b) to obtain cannabis pollen, cannabis plants or cannabis plant seeds by cultivating, propagating and harvesting cannabis;

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

• (a) to sell and distribute cannabis pollen, cannabis plants and cannabis plant seeds to any of the following:

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

• (a) clearly delineate a total surface area that does not exceed 200 m² in which all the budding or flowering cannabis plants, including all the parts of those plants, must be contained;
• (b) not possess more than 20 kg of flowering heads harvested from the plants referred to in paragraph (a), with the exception of the cannabis plant seeds; and

7 Section 18 of the Regulations is repealed.

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

Alternate

(3) A holder 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:

• (b) to sell cannabis pollen, cannabis plants and cannabis plant seeds to any of the following:

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

• (b) cannabis pollen, cannabis plants and cannabis plant seeds to the following:

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

Non-human cannabis research

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

• (a) possesses no more than the equivalent of 30 g of dried cannabis at all locations where the research is conducted at any time;
• (b) does not administer or distribute cannabis to a human participant; and
• (c) does not conduct research within a dwelling-house or at an address specified in a registration certificate issued under subsection 313(1).

Authorized activities

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

• (a) to possess cannabis;
• (b) to produce cannabis, other than obtain it by cultivating, propagating or harvesting it; and
• (c) to distribute cannabis to a holder of a licence for analytical testing or a holder of a licence for 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 Paragraph 30(b) of the Regulations is replaced by the following:

• (b) the holder of a licence has failed to pay a fee in relation to the licence, or any other licence issued to that holder, that is fixed by an order made under subsection 142(1) of the Act;
• (b.1) the holder of a licence has failed to submit to the Minister a statement of cannabis revenue in accordance with an order made under subsection 142(1) of the Act;

13 Paragraph 42(1)(a) of the Regulations is replaced by the following:

• (a) the holder ensures that the cannabis that is at the location is, at all times, in the presence of at least one individual who holds a security clearance, or in the case of a holder of a licence for research, an individual who is an employee of the holder of the licence; and

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

• (b) in the presence of an employee of the holder of the licence; and
• (c) in the case where the cannabis is destroyed at a location other than the site set out in the licence, if the holder of the licence ensures that the cannabis that is at the location is, at all times, in the presence of at least one individual who is an employee of the licence holder.

(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.

15 Section 44 of the Regulations is repealed.

16 Sections 65 to 67 of the Regulations are repealed.

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

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

• (a) the following visual recordings made under section 64 or 70, for at least one year after the day on which they are made:
  • (i) in the case of visual recordings made using a device that is activated by motion, the visual recordings depicting movements only, and
  • (ii) in the case of visual recordings made using a device that does not have this feature, all of those recordings; and
• (b) the document referred to in subsection 72(3) for at least two years after the day on which it is prepared.

19 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) and (2), 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.

20 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.

21 Section 100 of the Regulations is repealed.

22 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) may contain the following quantities of ethyl alcohol if the cannabis extract is intended to be consumed by means of inhalation and the net weight of the cannabis extract in each immediate container does not exceed 7.5 g:

• (a) in the case of a cannabis extract that is in discrete units, 10 mg or less per unit; or
• (b) in the case of a cannabis extract that is not in discrete units,
  • (i) 10 mg or less, or
  • (ii) more than 10 mg, if the immediate container does not permit the extract to be easily removed from the container and contains an integrated mechanism that dispenses no more than 10 mg of ethyl alcohol per activation.

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

• (a) the net weight of the cannabis extract in each immediate container of the cannabis product does not exceed 7.5 g, or
• (b) in the case where the net weight of the cannabis extract in each immediate container of the cannabis product exceeds 7.5 g, the concentration of ethyl alcohol does not exceed 0.5% w/w of the cannabis extract.

23 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.

24 Section 102.8 of the Regulations is replaced by the following:

Exemption — sale of cannabis beverage

102.8 (1) A person that is authorized to sell cannabis, other than the holder of a licence for processing, is exempt from the application of section 25 of the Act in respect of the sale of a cannabis beverage that is a cannabis product if the cannabis beverage has been packaged and labelled in accordance with these Regulations.

Exemption — distribution of cannabis beverage

(2) A licence holder that is authorized to distribute cannabis, other than the holder of a licence for processing, is exempt from the application of subsection 106(1) in respect of the distribution of a cannabis beverage that is a cannabis product if the applicable requirements set out in sections 108 to 136 have been met in respect of the cannabis beverage.

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

Exceptions

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

• (a) ethyl alcohol in or on a cannabis product referred to in subsections 101.3(5.1) and (6) or sections 101.31 and 102.3 if the conditions set out in those subsections or sections, as the case may be, are met; and
• (b) caffeine in or on a cannabis product referred to in section 102.2 if the conditions set out in that section are met.

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

label does not 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).

27 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.

28 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:

• (a) the colour of each surface and the panel;
• (b) the colour of the container and the lid or cap of the container.

29 (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.

30 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.

31 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.

32 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:

• (a) in the case of dried cannabis or fresh cannabis,
  • (i) the outermost container meets the requirements of sections 124 and 124.1,
  • (ii) the immediate containers meet the requirements, as the case may be, of
    • (A) section 124, if they contain dried cannabis or fresh cannabis that is in discrete units and that is not intended to be consumed by means of inhalation,
    • (B) section 124.1, if they contain dried cannabis or fresh cannabis that is in discrete units and that is intended to be consumed by means of inhalation, or
    • (C) section 125, if they contain dried cannabis or fresh cannabis that is not in discrete units, and
  • (iii) the quantity of cannabis contained in the outermost container does not exceed the equivalent of 30 g of dried cannabis, as determined in accordance with subsection 2(4) of the Act;
• (b) in the case of a cannabis extract,
  • (i) the outermost container meets the requirements of sections 132.1 and 132.11,
  • (ii) the immediate containers meet the requirements, as the case may be, of
    • (A) section 132.1, if they contain a cannabis extract that is in discrete units and that is not intended to be consumed by means of inhalation,
    • (B) section 132.11, if they contain a cannabis extract that is in discrete units and that is intended to be consumed by means of inhalation, or
    • (C) section 132.12, if they contain a cannabis extract that is not in discrete units,
  • (iii) the quantity of cannabis contained in the outermost container does not exceed the equivalent of 30 g of dried cannabis, as determined in accordance with subsection 2(4) of the Act, and
  • (iv) the properties of the cannabis extract, other than its colour, size or flavour, are consistent in all the immediate containers;
• (c) in the case of a cannabis topical,
  • (i) the outermost container meets the requirements of section 132.15,
  • (ii) the immediate containers meet the requirements of
    • (A) section 132.15, if they contain a cannabis topical that is in discrete units, or
    • (B) section 132.16, if they contain a cannabis topical that is not in discrete units,
  • (iii) the quantity of cannabis contained in the outermost container does not exceed the equivalent of 30 g of dried cannabis, as determined in accordance with subsection 2(4) of the Act, and
  • (iv) the quantity or concentration, as the case may be, of phytocannabinoids of each type is consistent in all the immediate containers;
• (d) in the case of edible cannabis,
  • (i) the outermost container meets the requirements of section 132.18,
  • (ii) the immediate containers meet the requirements of
    • (A) section 132.18, if they contain edible cannabis that is in discrete units, or
    • (B) section 132.19, if they contain edible cannabis that is not in discrete units,
  • (iii) the quantity of cannabis contained in the outermost container does not exceed the equivalent of 30 g of dried cannabis, as determined in accordance with subsection 2(4) of the Act, and
  • (iv) the quantity or concentration, as the case may be, of phytocannabinoids of each type is consistent in all the immediate containers.

Interpretation — “unit”

(3) For the purposes of subparagraphs (2)(a)(i), (b)(i), (c)(i) and (d)(i), references to “unit” in subsection 124(1), section 124.1, subsection 132.1(1), sections 132.11 and 132.15 and subsection 132.18(1) are to be read as references to “immediate container”.

33 (1) The portion of subsection 123(1) of the Regulations before paragraph (a) is replaced by the following:

Information

123 (1) Subject to subsection (1.1), the following information must be included on the label that is applied to any container in which a cannabis product is packaged:

(2) Subparagraph 123(1)(c)(v) of the Regulations is replaced by the following:

• (v) except in the case of a cannabis plant, cannabis plant seeds or edible cannabis, the expiry date in accordance with subsection (2), if applicable;

(3) Paragraph 123(1)(g) of the Regulations is repealed.

(4) Section 123 of the Regulations is amended by adding the following after subsection (1):

Exception — packaging date

(1.1) 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.

34 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 may be displayed on the interior or exterior surface of the wrapper in accordance with the Act, any other Act of Parliament, any provincial Act or their regulations.

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

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

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

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

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

(2) Paragraph 125(d) of the Regulations is repealed.

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

• (c) subject to subparagraph (e)(iv), it must be in a type size of at least 6 points and smaller than the type size used for the health warning message;

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

• (e) in the case of the information required under paragraphs 124(1)(e) and (g), 124.1(e) and (g), 125(c) and (e), 132.1(1)(e) and (g), 132.11(e) and (g), 132.12(1)(c) and (e), 132.15(e) and (g), 132.16(c) and (e), 132.18(1)(d), (f), (h) and (j) and 132.19(1)(c) and (e), it must be
  • (i) displayed on the principal display panel or, if there are separate principal display panels for English and French, on each principal display panel,
  • (ii) in bold type,
  • (iii) at least 6 points away from any other information, and
  • (iv) in a type size of at least 6 points and equal in size or smaller than the type size used for the health warning message.

39 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.

Non-application — subsections 130(8) and (9)

(2) Subsections 130(8) and (9) do not apply to inserts or leaflets.

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

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

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

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

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

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

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

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

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

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

45 (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.

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

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

47 (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 of the information required by these Regulations is displayed on the label.

(2) The portion of subsection 132.27(3) of the Regulations before paragraph (a) is replaced by the following:

Panel

(3) Subject to subsection (3.1), the panel must

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

• (c) include any of the following information that is not included on the label that is applied to the exterior display surface:

(4) Subparagraph 132.27(3)(c)(v) of the Regulations is repealed.

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

Exception — packaging date

(3.1) 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 label.

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

• (a) bar codes, in accordance with section 122;

48 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.

49 Paragraph 205(e) of the Regulations is repealed.

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

• (e) the country of import and, if applicable, any country of transit or transshipment;

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

• (b) the date on which cannabis plant seeds are sown and the number of seeds on that date;

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

• (b) the date on which the cannabis is destroyed and
  • (i) if whole cannabis plants are destroyed, the number of plants destroyed on that date, or
  • (ii) in any other case, the pre-destruction net weight or volume of the cannabis on that date; and
• (c) the name of the individual referred to in paragraph 43(1)(b) or (c) who witnesses the destruction.

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

Statement by witnesses

(2) The holder must obtain, for each instance in which cannabis is destroyed, a statement signed and dated by the witness referred to in paragraph (1)(c) 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.

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

• (c) in respect of each instance in which a substance — including a pest control product and a fertilizer but excluding water — is applied directly or indirectly to cannabis, retain a document that contains the name of that substance, as well as the date on which it was applied;

54 Section 236 of the Regulations is replaced by the following:

Promotion

236 (1) A holder of a licence must retain, for each calendar year in which the holder has spent money to promote cannabis, a cannabis accessory or a service related to cannabis, a document that contains the following information:

• (a) the total amount of money that the holder spent on promotion that is directed at consumers who purchase cannabis at the retail level in Canada, together with a description of the types of promotion on which the money was spent; and
• (b) the total amount of money that the holder spent on promotion conducted in Canada that is not directed at consumers referred to in paragraph (a), together with a description of the types of promotion on which the money was spent.

Retention period

(2) The holder must retain

• (a) the document referred to in subsection (1) for at least two years after December 31 of the relevant calendar year;
• (b) if applicable, a document that contains the information provided to the Minister under subsection 43(4) of the Act for at least two years after the day on which the information was provided; and
• (c) a sample or a copy of any promotional materials for at least two years after the day on which the promotion ended.

55 Paragraphs 241(1)(g) to (i) of the Regulations are repealed.

56 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:

57 Section 245 of the Regulations is repealed.

Industrial Hemp Regulations

58 Section 2 of the Industrial Hemp Regulations ^{footnote 3} is repealed.

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

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

Food and Drugs Act

Natural Health Products Regulations

61 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

62 Paragraph 1(e) of the Cannabis Exemption (Food and Drugs Act) Regulations ^{footnote 5} is repealed.

Coming into Force

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

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