Canada Gazette, Part I, Volume 160, Number 39: Order Amending the Cannabis Tracking System Order (Streamlining of Requirements)
September 26, 2026
Statutory authority
Cannabis Act
Sponsoring department
Department of Health
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Executive summary
Issues: To implement the Cannabis Tracking System Order (CTSO), Health Canada collects monthly reports on cannabis production, inventories, distribution, and sales from reporting parties. Over time and through ongoing engagement with stakeholders, Health Canada identified that certain reporting requirements under the CTSO are overly burdensome or require a level of detail that is not necessary for effective oversight of the cannabis supply chain.
Description: The proposed amendments aim to reduce the regulatory burden by streamlining reporting requirements under the CTSO. The proposed changes would simplify reporting for federal licence holders by removing certain reporting requirements without compromising effective oversight of the cannabis supply chain. Requirements to report capacity information and book value would be eliminated, and several inventory-related categories would be consolidated. For example, reporting on the class of cannabis for inventory would be considerably simplified by consolidating the current 14 classes of cannabis to 7 classes.
The proposed amendments would also repeal CTSO reporting requirements that apply to public bodies and private distributors and retailers authorized by the provinces and territories (P/Ts) to administer the distribution and retail aspects of the cannabis supply chain within their jurisdictions. P/Ts would continue to have their own oversight mechanisms in place for regulating the cannabis supply chain within their jurisdictions.
Rationale: The purpose of the CTSO, as outlined in the Cannabis Act (the Act), is to track cannabis to prevent it from being diverted to an illegal market or activity and to prevent illegal cannabis from being a source of supply in the legal market. Health Canada monitors the movement of cannabis across the supply chain through mandatory reporting requirements set out in the CTSO. Based on the implementation experience gained since the coming into force of the CTSO and in keeping with its original objective, Health Canada is proposing changes to the CTSO that would reduce administrative effort while maintaining effective regulatory oversight.
Recognizing both the need to modernize regulatory frameworks and support robust economic growth in Canada, the Government of Canada launched a Red Tape Review across all federal departments and agencies in July 2025. This proposal would contribute to the Government of Canada’s Red Tape Review activities to further streamline rules and reduce the burden on both reporting parties and the government.
The cost-benefit analysis estimates that these proposed amendments would result in total incremental costs to Health Canada of $1,146,401 present value (PV) [or $163,222 in annualized value] associated with implementation of the proposed changes. The total incremental costs to federal licence holders are estimated at $382,259 PV (or $54,425 in annualized value). The total incremental benefits for reporting parties, in terms of administrative and compliance cost savings, are estimated at $135,069,175 PV (or $19,230,812 in annualized value). The net benefit of the proposed amendments is estimated at $133,540,516 PV (or $19,013,165 in annualized value).
Under the small business lens, the proposed amendments would result in cost savings to small businesses in the Canadian cannabis industry. The net benefits for all affected small businesses are estimated at $110,033,722 PV over 10 periods (or $15,666,327 in annualized value). The one-for-one rule would apply and would result in a reduction of $5,402,253 in annualized value (in 2012 dollars) as the proposed amendments are expected to decrease the administrative burden on businesses.
Issues
To implement the CTSO, Health Canada collects monthly reports on cannabis production, inventories, distribution, and sales from reporting parties. Through ongoing engagement with stakeholders, Health Canada identified that certain reporting requirements under the CTSO are overly burdensome or require a level of detail that is not necessary for effective oversight of the cannabis supply chain. Amendments to the CTSO would allow Health Canada to lower the administrative burden on reporting parties.
Background
The Act established a legal framework to control the production, distribution, sale, import, export, and possession of cannabis in Canada, in a manner that protects public health and public safety. The Act’s purpose includes, among other things, providing adults with access to a quality-controlled supply of cannabis and deterring illegal activities related to cannabis through enforcement, sanctions, and robust monitoring of the legal supply chain.
Oversight is shared between federal and P/T governments. The federal government’s responsibilities include regulating cannabis production. The P/Ts are responsible for overseeing the distribution of cannabis products and their retail sale to consumers, including the authorization of private cannabis distributors and retailers. Together, federal licence holders, public bodies authorized by P/Ts to oversee the sale of cannabis (typically a crown corporation or P/T ministry), and P/T-authorized private distributors and retailers provide adults across Canada with access to a legal, regulated supply of cannabis.
The CTSO came into force in 2018. Its purpose, as outlined in the Act, is to track cannabis to prevent it from being diverted to an illegal market or activity and to prevent illegal cannabis from being a source of supply in the legal market. Health Canada monitors the movement of cannabis across the supply chain through mandatory reporting requirements set out in the CTSO. Under the CTSO, reporting parties include holders of federal licences for cannabis cultivation, processing, and sale for medical purposes that authorize the possession of cannabis, public bodies authorized by P/Ts to oversee the sale of cannabis, as well as P/T-authorized private distributors and retailers. The CTSO does not apply to holders of federally issued cannabis drug licences, and licences for industrial hemp, research, analytical testing, or sale for medical purposes without the possession of cannabis.
Under the CTSO, federal licence holders must submit monthly reports detailing additions and reductions to the number of cannabis products and the quantity of unpackaged cannabis in their inventory. This includes requirements to report on cannabis that is, as the case may be
- produced, purchased, returned, sent, sold or distributed;
- destroyed, lost, or stolen; and
- used at each stage of production (such as when it is transformed from one class to another, or when it is packaged and labelled for sale).
The CTSO also requires federal licence holders to report the book value, in Canadian dollars, of cannabis that is part of the closing inventory and cannabis that is sold to other federal licence holders, sold to P/T-authorized distributors and retailers, sent or delivered directly to consumers, and that is exported outside Canada. When reporting on book value, reporting parties provide an estimated sales value of cannabis, and so the reporting of book value can vary significantly, even for items that belong to the same class of cannabis. Federal licence holders are further required to provide sales information for each class of cannabis sold in each P/T by type of recipient (e.g. the sending or delivering directly to consumers for non-medical purposes, sale for medical purposes, intra-industry sales to other federal licence holders, sales to P/T-authorized distributors and retailers). Federal licence holders must additionally provide information on their licence number, the reporting period, and their capacity information (i.e. the total growing or processing area used at a site).
P/T-authorized distributors and retailers are subject to similar reporting requirements under the CTSO, but only with respect to cannabis products. In addition, P/T-authorized distributors and retailers must report on the cannabis products sold directly to consumers at on-site retail locations (a requirement that is not applicable to federal licence holders). The CTSO does not require the reporting of any personal information about consumers who purchase cannabis at the retail level.
Under the CTSO, federal licence holders and public P/T bodies are required to report no later than the 15th day of the month immediately following the reporting period. Private distributors and retailers are required to report no later than the 10th day of the month to public P/T bodies. In all cases, relevant records, reports, and data need to be retained for at least two years after they were required to be provided, in order to enable auditing.
Monthly reports are submitted electronically to Health Canada via the Cannabis Tracking and Licensing System — a web-based application designed for the submission of this information. Health Canada subsequently validates and analyzes the data.
The CTSO works in an integrated way with other regulatory measures to ensure effective oversight of the cannabis supply chain. For example, in addition to the reporting requirements under the CTSO, federal licence holders are subject to extensive regulatory measures set under the Cannabis Regulations, including rigorous physical and personnel security requirements, and detailed record-keeping requirements related to their production of cannabis.
Beyond the CTSO requirements that apply to public P/T bodies and to P/T-authorized private distributors and retailers, the Act requires persons authorized to sell cannabis by P/Ts to keep appropriate records respecting the cannabis they possess for commercial purposes and to take adequate measures to reduce the risk of this cannabis being diverted to an illegal market or activity. These requirements under subsection 69(3) of the Act, among others, must be met in order for P/Ts to authorize the sale of cannabis in their respective jurisdictions.
Reporting parties, including P/T-authorized private distributors and retailers, can also be ordered under the Act to provide information to the Minister, to conduct tests on their cannabis, or to take any measures the Minister considers necessary to prevent non-compliance with the Act or to address issues of public health or public safety. Private distributors and retailers are additionally subject to oversight mechanisms established under P/T legislative frameworks. These measures, alongside other requirements set out in federal and P/T legislation, ensure effective oversight of the cannabis supply chain.
Red Tape Review
Recognizing both the need to modernize regulatory frameworks and support robust economic growth in Canada, the Government of Canada launched a Red Tape Review across all federal departments and agencies in July 2025. The review called on departments and agencies to review their regulations, including how they are administered, and develop reports detailing their progress. The resulting Health Canada and the Public Health Agency of Canada’s report on red tape reduction identified initiatives and actions to remove regulatory red tape, without undermining the core purpose of regulations to protect health and safety. Among these, streamlining the CTSO was identified as an initiative to simplify reporting requirements, reduce regulatory burden, and create operational efficiencies, while still meeting the objective of tracking inventory to prevent the inversion and diversion of cannabis.
Objective
This proposal aims to reduce the regulatory and administrative burden faced by reporting parties while maintaining the objective of tracking to monitor the high-level movement of cannabis throughout the supply chain. The CTSO would continue to work in an integrated way with other regulatory measures designed to prevent inversion of illegal cannabis into, and diversion of cannabis out of, the legal market, including compliance and enforcement regimes and rigorous physical and personnel security, record keeping, and other requirements set out in federal as well as P/T legislation.
Description
The amended CTSO would continue to apply to holders of federally issued licences for cultivation, processing, and sale for medical purposes that authorize the possession of cannabis. As with the current CTSO, the amendments would not apply to holders of federally issued cannabis drug licences and licences for industrial hemp, research, analytical testing, or sale for medical purposes without the possession of cannabis.
In addition, the proposal would repeal sections 4 and 5 of the CTSO such that the reporting requirements under the CTSO would no longer apply to
- public P/T bodies, which are required to provide information to the Minister under the current CTSO; and
- P/T-authorized private distributors and retailers, which are required to provide information to the relevant P/T public body (typically a Crown corporation or a provincial ministry) under the current CTSO.
Federal licence holders
Federal licence holders have raised concerns regarding the complexity and administrative burden associated with reporting due to the large amount of detailed information that is required by the CTSO. They currently each spend, on average, approximately 1 098 hours per year to comply with the CTSO reporting requirements. The proposed amendments would streamline CTSO reporting requirements that apply to federal licence holders while maintaining requirements that are essential for effectively tracking the movement of cannabis to prevent inversion and diversion. On average, these changes would save each licence holder approximately 378 hours annually, depending on the type of licence held (i.e. cultivation, processing and/or sale) and its class (i.e. standard or micro, reflecting the size of the licensed operation) and the reportable activities conducted under the licence (e.g. production, sale, destruction).
Classes of cannabis
Health Canada is aware that reporting parties may struggle to distinguish between certain classes of cannabis, and that this issue has contributed to the administrative burden on reporting parties and inconsistencies in reporting on cannabis inventory and sales. To simplify and improve the accuracy of reporting, federal licence holders would no longer be required to report on certain classes of cannabis under the CTSO. The classes of cannabis plants that are not budding or flowering and cannabis plants that are budding and flowering would be combined under the class “cannabis plants.” Similarly, the classes of solid and non-solid edible cannabis would be combined under one edible cannabis class, and the three classes for cannabis extracts would be combined under one cannabis extract class. The pure intermediates class (i.e. unpackaged cannabis that is used in the production of edible cannabis, cannabis extracts, or cannabis topicals) would also be combined into the cannabis extract class. The amendments would consolidate two schedules indicating the classes of cannabis and units of measurement that need to be provided in reporting into one amended schedule.
The amended CTSO would still require the reporting of the quantity of any unpackaged cannabis that is not of an enumerated class referred to in the amended schedule. For cannabis products, Health Canada has determined that all inventory types would be captured using the classes proposed in the amended schedule, so there is no need to require reporting on “other” cannabis products.
Health Canada is aware that some current requirements may be overly burdensome for a low-value return on information about low-risk activities. Given that the Cannabis Regulations include detailed record-keeping requirements for federal licence holders regarding all cannabis they obtain from another person, it is proposed that federal licence holders no longer report specifically on the quantity of industrial hemp in respect of their inventory under the CTSO. The reporting of any industrial hemp in the inventory will be subsumed under the applicable class of cannabis under the schedule.
In total, these changes would consolidate the classes of cannabis that federal licence holders report on from the current 14 classes down to 7 classes (in addition to reporting on “other” unpackaged cannabis that is not referred to in the 7 classes). These changes would improve alignment of the amended schedule to the CTSO with Schedule 4 to the Act and reflect stakeholder feedback. The proposal would remove unnecessary cannabis categories that contribute to reporting complexity and administrative burden while maintaining the ability to effectively track inventory.
Book value
The CTSO requires reporting of the book value associated with the closing inventory for unpackaged cannabis and cannabis products, as well as the export of unpackaged cannabis, by class of cannabis. Book value is also required to be reported with respect to the sale and distribution of cannabis products by class of cannabis, type of recipient, and P/T location. Since book value reporting has not proven to meaningfully support high-level tracking of cannabis through the supply chain, it is proposed that federal licence holders no longer be required to report this information under the CTSO.
Capacity information
To further reduce the administrative burden, the proposed amendments would remove all requirements for reporting capacity information (e.g. number of square metres of the licensed indoor growing area) from the CTSO. Health Canada has determined that the monthly reporting of capacity information under the CTSO is not necessary to support the high-level tracking of cannabis through the supply chain.
Inventory additions and reductions
While the proposed amendments would maintain key inventory monitoring requirements to support the tracking of cannabis to identify potential inversion and diversion issues, certain categories for reporting inventory additions and reductions would be consolidated where the level of detail is not necessary to meet the objective of the CTSO. For instance, returns of cannabis to a federal licence holder (i.e. an inventory addition) would no longer be reported separately from the quantity of cannabis that was sold or distributed to the federal licence holder domestically (i.e. also an inventory addition). In addition, with respect to reporting on intra-industry sales of cannabis, the sending and delivering of cannabis for non-medical purposes directly to consumers, and the sale for medical purposes, federal licence holders would no longer be required to report these activities by P/T location. However, for wholesale sales to distributors and retailers, federal licence holders would still need to report by P/T location. This would ensure that the movement of cannabis products destined for retail sale would continue to be tracked following the proposed repeal of reporting requirements under the CTSO that apply to public P/T bodies and P/T-authorized private distributors and retailers.
While the amendments would result in an overall reduction of reporting requirements, the proposal would introduce a new requirement for federal licence holders to specify the reasons for any inventory additions or reductions reported under “any other reason.” For example, a federal licence holder could specify that the addition of 0.5 kg of unpackaged dried cannabis that they reported under the “any other reason” category for additions to their inventory was due to the unpackaging of a cannabis product or rounding errors, among other reasons. This change would enable more accurate reporting and support the effective tracking of cannabis.
Public P/T bodies and P/T-authorized private distributors and retailers
Currently, a public P/T body spends approximately 95 hours per month and a P/T-authorized distributor or retailer spends approximately 6 hours per month to comply with CTSO reporting requirements. The proposed amendments would entirely remove CTSO reporting requirements that apply to public P/T bodies (i.e. repeal section 4 of the CTSO), and to P/T-authorized private distributors and retailers (i.e. repeal section 5 of the CTSO). P/Ts are responsible for regulating the distribution and retail aspects of the cannabis supply chain within their jurisdictions and continue to have their own oversight mechanisms in place. CTSO provisions that require federal licence holders to report on sales of cannabis products to private distributors and retailers by P/T location would continue to provide information on the P/T destination of cannabis inventory, maintaining Health Canada’s ability to track cannabis inventory across Canada.
Regulatory development
Consultation
Notice of intent
Health Canada published the Notice of Intent — Consultation on potential amendments to the Cannabis Tracking System Order to seek stakeholder input on streamlining reporting requirements under the CTSO in the Canada Gazette, Part I, on August 30, 2025. A notice was also published in the First Nations Gazette. During the 60-day public consultation period, interested parties had the opportunity to provide input on how Health Canada could simplify reporting requirements under the CTSO while ensuring the CTSO meets its objective of tracking cannabis to prevent inversion into, and diversion from, the legal market. Health Canada received 32 responses to the consultation, largely from the cannabis industry, industry associations, and P/T government stakeholders. Stakeholders were largely supportive of the proposal to streamline reporting requirements under the CTSO. Key highlights of the feedback received are summarized thematically below.
Requirements that apply to federal licence holders
Most federal licence holders and industry associations recommended combining the classes for cannabis plants that are not budding or flowering and cannabis plants that are budding and flowering under Schedule 2 to the CTSO into a single cannabis plant class to simplify reporting without reducing oversight of inventory. However, some stakeholders opposed combining the cannabis plant classes, noting that this would involve changes to their tracking systems, or that maintaining separate cannabis plant classes facilitates investigation of inventory discrepancies.
Additionally, there were several recommendations to remove requirements to report on pure intermediates as a class of cannabis separate from cannabis extracts. Cannabis industry associations noted that the distinction between the cannabis classes for pure intermediates and cannabis extracts is ambiguous and they proposed merging these to better accommodate tracking and reporting of innovative processing activities. Overall, they noted that cannabis processing activities can vary significantly between federal licence holders and depend on the intended end use of that cannabis, and that reporting on pure intermediates as a separate class is burdensome.
Similarly, some respondents proposed consolidating the 14 current classes of cannabis under Schedules 1 and 2 to the CTSO into a total of 7 classes of cannabis to reflect the classes of cannabis as defined under Schedule 4 to the Act. Several respondents noted this approach would support the objective of the CTSO while reducing reporting volume by half. No comments were received regarding reporting requirements for industrial hemp under the CTSO.
Some cannabis industry stakeholders emphasized that the requirements to report book value for cannabis inventory are not an effective manner of detecting inversion or diversion. For example, book value is reported as an estimated sales value of cannabis, and these estimates are not essential to conducting high-level tracking of cannabis.
One federal licence holder indicated that site capacity cannot be reliably correlated with production capacity or inventory amounts, and proposed this information should only be required to be reported by micro-cultivation licence holders, since those licence holders are subject to limits on their cultivation, propagation, and harvesting activities.
Respondents from the cannabis industry suggested the requirements to report sales of cannabis products could be streamlined by no longer requiring federal licence holders to specify whether sales were made directly to consumers or wholesalers, or the P/T location of the recipient. Finally, several respondents from the cannabis industry emphasized that alignment with the reporting requirements established by the Canada Revenue Agency (CRA) under the Excise Act, 2001 would be necessary to achieve meaningful burden reduction.
Requirements that apply to public P/T bodies and P/T-authorized private distributors and retailers
Public P/T bodies and P/T-authorized private distributors and retailers were mainly concerned with the burden of fulfilling the CTSO requirements. They suggested reducing the frequency of reporting, and having private distributors and retailers report directly to Health Canada rather than to public P/T bodies. One federal licence holder noted that the reporting of inventory additions by public P/T bodies to Health Canada is redundant, as these details are also reported by federal licence holders. Other suggestions included harmonizing reporting formats across P/T and federal systems and enhancing data sharing across government agencies. One respondent stated that it would be more difficult to monitor industry trends without a consistent national approach to data collection. One retailer noted that reducing reporting requirements under the CTSO would have little impact on their business operations, since their reporting process is automated, though businesses with fewer resources may benefit more from streamlined reporting requirements.
Other consultations
On March 12, 2025, Health Canada published the Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements), the Order Amending the Cannabis Tracking System Order (Cultivation Waste), and the Order Amending Schedule 2 to the Cannabis Act in the Canada Gazette, Part II. As part of the development of these amendments, Health Canada held two public consultations. Responses from these consultations included suggestions for changes to the CTSO. The most common feedback provided was to simplify and reduce the reporting requirements because the current level of reporting detail is not necessary to effectively track the movement of cannabis throughout the supply chain.
Indigenous engagement, consultation and modern treaty obligations
These amendments would impact federal licence holders, as well as public bodies authorized by P/Ts to oversee the sale of cannabis and P/T-authorized private distributors and retailers. They do not specifically target Indigenous peoples. However, there are currently 56 Indigenous affiliated licence holders, 8 of which are on reserve, who would be impacted by the proposed amendments.
As part of Health Canada’s commitment to engage with Indigenous partners on the regulatory proposal, various methods were used to notify Indigenous governments, representative organizations, and reporting parties. These methods include publishing a notice in the First Nations Gazette regarding the Notice of Intent — Consultation on potential amendments to the Cannabis Tracking System Order, sending Indigenous federal licence holders and Indigenous representative organizations direct emails, as well as holding informal bilateral meetings with these organizations. These efforts served to further the implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act.
One response was received from an individual to the Notice of Intent publication related to the impacts on Indigenous peoples. There were no submissions received in direct response to the notice published in the First Nations Gazette and the informal bilateral meetings with Indigenous partners.
As per the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, a preliminary assessment of modern treaty implications was conducted, which examined the geographical scope and subject matter of the regulatory proposal in relation to modern treaties in effect. The preliminary assessment did not identify any potential impact on the rights of Indigenous peoples recognized and affirmed under section 25 of the Constitution Act, 1982, and no impacts related to modern treaties with the Indigenous peoples of Canada are expected. The preliminary assessment concluded that the amendments would not trigger any modern treaty obligations or a duty to consult with Indigenous peoples.
Most of the proposed amendments respond to stakeholder feedback to reduce the regulatory and administrative burden. As these changes would amend existing cannabis reporting practices, they would not specifically target Indigenous peoples.
Instrument choice
Health Canada considered several options prior to developing these proposed regulatory amendments, including maintaining the status quo and replacing the Cannabis Tracking and Licensing System with an alternative tracking system. Health Canada continues to hear from reporting parties that they are struggling with the regulatory burden; therefore, proposing regulatory amendments that reduce the burden on reporting parties without fundamental changes to the public health and public safety controls was deemed to be in the best interest of Canadians and the cannabis industry.
If the regulatory framework were to remain as is, reporting parties would continue to experience challenges identified with regulatory requirements and related burden, including overly detailed reporting requirements, when simplified requirements could achieve the objective of tracking to prevent the inversion and diversion of cannabis. Maintaining CTSO reporting requirements that apply to public P/T bodies and P/T-authorized private distributors and retailers would also maintain unnecessary federal regulatory overlap with P/T legal frameworks that oversee the distribution and retail sale of cannabis products to consumers. The status quo would not address the regulatory and administrative burden that stakeholders indicated adds strain on resources without improving the tracking of inventory. Replacing the current Cannabis Tracking and Licensing System with an alternative tracking system was not deemed to be an immediate means of the reducing regulatory and administrative burden. An additional consideration was that an alternative tracking system would introduce significant costs and implementation burden on reporting parties.
Therefore, the proposed approach is to make targeted amendments to the CTSO to reduce the regulatory and administrative burden for federal licence holders, and to repeal CTSO reporting requirements that apply to public P/T bodies, and to P/T-authorized private distributors and retailers. These changes would allow Health Canada to reduce regulatory red tape consistent with the Government of Canada’s Red Tape Review while respecting P/T responsibility for, and regulatory oversight of, the distribution and retail aspects of the cannabis supply chain.
Other federal mechanisms that are designed to ensure effective oversight of the cannabis supply chain would remain in place. For example, record-keeping requirements that apply to P/Ts under the Act would remain unaffected. Ministerial authorities under the Act to compel P/Ts, including private distributors and retailers, to provide information or to take other measures would also remain unaffected. Physical and personnel security requirements, record-keeping obligations, and other requirements that apply to federal licence holders under the Cannabis Regulations would likewise be maintained, as would Health Canada’s inspections, compliance verification, and enforcement practices. The proposed regulatory changes were largely supported by reporting parties in public consultations. These amendments would offer a responsive and efficient approach to supporting the effective monitoring of the high-level movement of cannabis through the supply chain while maintaining public health and public safety objectives.
Regulatory analysis
The costs and benefits of the proposed amendments have been assessed in accordance with the Treasury Board Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals.
All monetized impacts are reported in PVs over 10 periods of 12 months (2027–2036), discounted at 7% and expressed in 2025 constant dollars unless otherwise noted.
Benefits and costs
The Cabinet Directive on Regulation requires departments to analyze the costs and benefits of proposed federal regulations. This cost-benefit analysis (CBA) evaluates incremental regulatory impacts on federal licence holders, public P/T bodies, P/T-authorized private distributors and retailers, and the federal government. To measure these impacts, the costs and benefits 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”). All costs and benefits presented in the CBA are incremental. Where quantification was not possible, the incremental impacts were evaluated in qualitative terms.
A CBA survey was conducted, and responses from it as well as information collected from the Notice of Intent — Consultation on potential amendments to the Cannabis Tracking System Order were used in this analysis. Health Canada also used internal administrative data to quantify impacts. The CBA report is available upon request from the departmental contact listed at the end of this document.
Licences are issued under the Act and are associated with sites where federal licence holders conduct their authorized activities. The Cannabis Regulations set out the activities that a federal licence holder is authorized to do. A federal licence holder may be an individual or an organization and may hold one or more licences (that is, operate at multiple sites). Under the CTSO, federal reporting parties include holders of licences for cannabis cultivation, processing, and sale for medical purposes that authorize the possession of cannabis. These federal licence holders are required to submit monthly reports for each licensed site. The CTSO does not apply to holders of federally issued cannabis drug licences and licences for industrial hemp, research, analytical testing, or sale for medical purposes that do not authorize the possession of cannabis.
The analysis of costs and benefits considered the number of federal licence holders that would be affected based on the types of activities they are authorized to conduct, and the number of sites, where appropriate.
Overarching assumptions:
- The analysis evaluates the costs and benefits over a 10-year period, which is expressed as 10 periods of 12 months, from period 1 (2027) to period 10 (2036).
- The number of affected federal licence holders (846) and the number of affected licensed sites (902) as of December 31, 2025, were used in the calculations. Based on previous analysis, 10% of licensed sites report a “lack of activity” where there is no movement of cannabis in multiple months within the past 12 months, resulting in no time spent on reporting activities. Therefore, for the number of affected licensed sites, a 10% reduction was applied, and 812 was used as the number of affected licensed sites. It is assumed that those numbers would hold constant for the 10-year analytical period. While the number of federal licence holders entering the legal cannabis industry has increased since 2018, there has also been an increase in the number of federal licence holders leaving the market.
- Thirteen P/T bodies and 3 465 P/T-authorized private distributors and retailers would be affected. It is assumed that those numbers would hold constant for the 10-year analytical period.
- The incremental impacts would start in period 1 once the amendments come into force. For public P/T bodies and P/T-authorized private distributors and retailers, period 1 would begin immediately upon coming into force. However, as coming into force of the amendments is proposed to be delayed for federal licence holders, their impacts would begin later, and they may experience costs and benefits for only part of the 12 months in period 1.
- Health Canada would absorb the estimated one-time costs to the Department through existing funding.
Baseline versus regulatory scenario
Tables 1a through 1c summarize the baseline and regulatory scenario requirements for each reporting party, and the incremental changes of the proposed amendments to the CTSO.
| Baseline scenario | Regulatory scenario | Estimated benefits/costs |
|---|---|---|
| Federal licence holders report on 11 classes of cannabis products, as indicated in Schedule 1 to the CTSO, and 14 classes of unpackaged cannabis, as indicated in Schedule 2 to the CTSO. | Federal licence holders would report on seven classes of cannabis under the schedule to the CTSO, and on any "other" unpackaged cannabis that is not of those seven classes. | There would be administrative cost savings for federal licence holders related to the simplified reporting requirements. |
Federal licence holders report the quantity of unpackaged cannabis as well as the number of cannabis products that were sold or distributed to them domestically (i.e. additions to their inventory) separately from the inventory returned to them by other parties. Also, federal licence holders report the quantity of unpackaged cannabis as well as the number of cannabis products that they sold or distributed domestically (i.e. reductions to their inventory) separately from the inventory that they returned to other holders. |
Federal licence holders would report the cannabis products that were sold or distributed to them domestically, and that were returned to them by other parties, under one inventory additions category. This change would also apply to reporting on unpackaged cannabis. Also, federal licence holders would report the cannabis products that they sold or distributed domestically, and that they returned to other holders, under one inventory reductions category. This change would also apply to reporting on unpackaged cannabis. |
There would be administrative cost savings for federal licence holders related to the simplified reporting requirements. |
| Federal licence holders report changes in their inventory, including the quantity of unpackaged cannabis and number of cannabis products, that are due to "any other reason" without the need to provide a specific reason. | When reporting changes in their inventory of unpackaged cannabis and cannabis products as being due to "any other reason," federal licence holders would be required to specify the reason. | Federal licence holders would assume minimal administrative costs associated with the proposed requirement to specify the reason for what they included under their reporting of "any other reason" for changes to cannabis inventory. |
Federal licence holders report the quantity of unpackaged cannabis that they sold or distributed intra-industry (i.e. to another federal licence holder) by P/T location. They also report the number of cannabis products they sold or distributed by P/T location and categorized by type of recipient, as follows:
|
When reporting sale and distribution of cannabis intra-industry, sale for medical purposes, or the sending or delivering of cannabis products directly to consumers for non-medical purposes, federal licence holders would no longer provide this information by P/T location. However, the reporting on sales or distribution to private distributors and retailers would continue to be provided by P/T location. |
There would be administrative cost savings for federal licence holders related to the simplified reporting requirements. |
| Federal licence holders report the book value of certain inventory. | There would be no book value reporting requirements. | There would be administrative cost savings for federal licence holders due to the removal of book value reporting requirements. |
| Federal licence holders report certain capacity information for their licensed sites. | There would be no capacity information reporting requirements. | There would be administrative cost savings for federal licence holders due to the removal of capacity-related reporting requirements. |
| Baseline scenario | Regulatory scenario | Estimated benefits/costs |
|---|---|---|
Public P/T bodies report on their inventory of cannabis products, as well as on the inventory of private distributors and retailers that the respective public P/T body has authorized to conduct cannabis sale activities, to Health Canada. Public P/T bodies report on additions to inventory (e.g. cannabis products received domestically, received as returns, other additions) and reductions to inventory (e.g. cannabis products sold or distributed domestically, returned to other parties, destroyed). They also report the book value and number of each class of cannabis product sold or distributed, broken down by type of recipient (i.e. sale for medical purposes, sending or delivery directly to consumers for non-medical purposes, wholesale to distributors or retailers) and by P/T location of these sales. |
Public P/T bodies would have no reporting requirements. | Administrative burden would be eliminated for public P/T bodies. |
| Baseline scenario | Regulatory scenario | Estimated benefits/costs |
|---|---|---|
| The CTSO reporting requirements that apply to P/T-authorized private distributors and retailers are the same as those that apply to public P/T bodies (see Table 1b), except that private distributors and retailers report directly to their respective public P/T body rather than to Health Canada. | Private distributors and retailers would have no reporting requirements. | Administrative burden would be eliminated for private distributors and retailers. |
Summary of the cost-benefit analysis
The amended requirements would result in federal licence holders assuming incremental costs estimated at $382,259 PV over 10 periods (or $54,425 in annualized value). These costs would arise from the time needed for federal licence holders to familiarize themselves with the amended requirements, update internal data systems, and specify the reason for any inventory additions and reductions that they report as being due to “any other reason.” Health Canada would bear one-time costs estimated at $1,146,401 PV over 10 periods (or $163,222 in annualized value) for updating forms, guidance materials, web pages, the Cannabis Tracking and Licensing System, and internal processes (e.g. standard operating procedures [SOPs]). Combined, these represent a total of $1,528,660 PV of incremental costs over 10 periods (or $217,647 in annualized value).
Federal licence holders would experience incremental benefits estimated at $78,513,224 PV over 10 periods (or $11,178,517 in annualized value) as a result of the streamlined reporting requirements under the regulatory scenario. On average, a licence holder would save 378 hours annually. The annual average value of these savings is estimated at $14,161. Public P/T bodies would experience incremental benefits estimated at $3,004,587 PV over 10 periods (or $427,786 in annualized value), and P/T-authorized private distributors and retailers would experience incremental benefits estimated at $53,551,365 PV over 10 periods (or $7,624,510 in annualized value), due to no longer being required to report under the amended CTSO. On average, a public P/T body would save 1 137 hours or $48,644 annually. A PT-authorized private retailer would save, on average, 69 hours or $2,274 annually. Together, these components represent the total incremental benefits estimated at $135,069,175 PV over 10 periods (or $19,230,812 in annualized value) for reporting parties.
Comparing the total costs with the total benefits yields the net PV of the regulatory proposal, which reflects the net monetized impacts. Over the 10 periods, the regulatory proposal would result in total net incremental benefits estimated at $133,540,516 PV (or $19,013,165 in annualized value). The reported total incremental costs and benefits, and net benefits for regulatory parties, may not add up exactly due to rounding.
Costs
The proposed amendments would introduce some incremental administrative and compliance costs to federal licence holders as well as some one-time costs to Health Canada.
Costs to federal licence holders
One-time costs to federal licence holders to familiarize themselves with the amendments
Under the regulatory scenario, affected federal licence holders would assume a one-time compliance cost to familiarize themselves with the amended reporting requirements. This includes the time required for a responsible manager to review the amended requirements and communicate the necessary changes to relevant staff involved in tracking, compiling, and submitting the required information.
As of December 31, 2025, there were 846 federal licence holders subject to reporting requirements under the CTSO, and it is anticipated that all of them would be impacted and experience incremental costs. The total incremental cost associated with relevant staff familiarizing themselves with the amended reporting requirements is estimated at $226,570 PV over 10 periods (or $32,258 in annualized value).
One-time costs to update internal data systems
The proposal would streamline reporting requirements for federal licence holders as summarized in Table 1a. Federal licence holders may need to update their internal data systems to comply with the amended requirements. This would involve updating internal data-tracking fields and validating the revised system. It is expected that affected federal licence holders would assume a one-time cost to implement these changes.
It is anticipated that all federal licence holders subject to reporting requirements under the CTSO would be impacted. The total incremental cost associated with updating internal data systems is estimated at $95,691 PV over 10 periods (or $13,624 in annualized value).
Costs associated with specifying “any other reason” for changes to inventory
Under the regulatory scenario, federal licence holders would be required to specify the reason for the inventory additions and reductions that they reported as being due to “any other reason.” This is anticipated to increase the amount of time federal licence holders would need to complete their monthly report submissions via the Cannabis Tracking and Licensing System. All federal licence holders subject to reporting requirements under the CTSO would be impacted. The total incremental cost associated with specifying the reason for inventory additions and reductions categorized as occurring for “any other reason” is estimated at $59,998 PV over 10 periods (or $8,542 in annualized value).
Costs to Health Canada
Health Canada would need to update the Cannabis Tracking and Licensing System to implement the proposed amendments. These updates would include enabling the submission, storage, and validation of newly added reporting fields, as well as modifying or removing certain existing fields. These updates would create incremental one-time costs related to: salary expenditures (reflecting the staff time required to update the Cannabis Tracking and Licensing System); and operations and maintenance expenditures (reflecting the performance of quality assurance testing). It is expected that these one-time costs would be assumed in period 1 (2027–2028). For analytical periods 2 to 10, ongoing system maintenance would be required regardless of the changes to the Cannabis Tracking and Licensing System. Therefore, no additional ongoing costs are anticipated for analytical periods 2 to 10. The incremental costs to Health Canada to update the Cannabis Tracking and Licensing System are estimated at a total of $1,012,951 PV over 10 periods (or $144,221 in annualized value).
Under the regulatory scenario, it is anticipated that Health Canada would also incur one-time incremental costs associated with updating SOPs, guidance materials, and Web pages. The one-time incremental cost to Health Canada associated with these activities is estimated at $133,450 PV over 10 periods (or $19,000 in annualized value). In total, Health Canada would bear one-time costs estimated at $1,146,401 PV over 10 periods (or $163,222 in annualized value) related to the implementation of the proposed amendments.
Benefits
Quantitative benefit analysis
Benefits to federal licence holders
The proposal would streamline reporting requirements under the CTSO that apply to federal licence holders (see Table 1a) and is anticipated to result in administrative cost savings. The extent of these benefits would vary based on the activities that federal licence holders conduct at their licensed sites. For example, a standard class licence holder conducting processing activities at a site (that is, producing and selling cannabis products) would save, on average, 439 hours annually, and a micro class licence holder conducting cultivating and processing activities at a site (that is growing cannabis as well as producing and selling cannabis products) would save, on average, 395 hours annually. The average annual value of these savings is estimated at $16,466 for the standard processor and $14,820 for the micro cultivator and processor. A delayed coming into force of the proposed amendments until January 1, 2028, would provide federal licence holders with additional time to implement the changes. Due to this delayed coming into force, the benefits to federal licence holders in the first analytical period (2027–2028) would accrue only for the portion of the period during which the proposed amendments to the CTSO are in effect. Overall, the incremental benefits in the form of cost savings for all affected federal licence holders are estimated at a total of $78,513,224 PV over 10 periods (or $11,178,517 in annualized value).
In addition, under the regulatory scenario the improved clarity of the streamlined reporting requirements is anticipated to result in more accurate reporting by federal licence holders. Reduction of reporting errors would represent considerable time savings for federal licence holders due to the reduced need to coordinate with Health Canada to correct errors in reports submitted in the Cannabis Tracking and Licensing System.
Benefits to public P/T bodies
Under the baseline scenario, public P/T bodies are required to report on the cannabis inventory and sales information that they receive from private distributors and retailers, as well as information generated from their own operations when acting as public distributors and public retailers (see Tables 1b and 1c). All public P/T bodies incur administrative costs associated with tracking, compiling, and submitting information to Health Canada under the current requirements. Under the regulatory scenario, public P/T bodies would save considerable time (approximately 1 137 hours annually per P/T body) due to no longer being required to report to Health Canada under the CTSO. The average annual cost savings are estimated at $48,644 per P/T body. The analysis examines all 13 public P/T bodies affected by the proposed amendments. Overall, the total incremental cost savings for public P/T bodies are estimated at a total of $3,004,587 PV over 10 periods (or $427,786 in annualized value).
Under the regulatory scenario, additional benefits in the form of significant time savings would also be anticipated because public P/T bodies would no longer need to coordinate with Health Canada or with private distributors or retailers to correct errors in reports submitted in the Cannabis Tracking and Licensing System.
Benefits to P/T-authorized private distributors and retailers
Under the baseline scenario, all P/T-authorized private distributors and retailers incur administrative costs associated with tracking, compiling, and submitting cannabis inventory and sales information to public P/T bodies, which, in turn, collect and then report this information to Health Canada. Under the regulatory scenario, P/T-authorized private distributors and retailers would save considerable time (approximately 69 hours annually per retailer) due to no longer being required to report to public P/T bodies under the CTSO. The average annual cost savings are estimated at $2,274 per retailer. The analysis examines all P/T-authorized private distributors and retailers that would be affected by the proposed amendments.
It is estimated that 3 465 P/T-authorized private distributors and retailers would be impacted and experience these incremental benefits. Under the regulatory scenario, it is assumed that these private distributors and retailers would continue to track inventory and sales information and maintain related records as part of their routine business operations and to maintain compliance with P/T requirements, which would take a retailer approximately 697 hours annually; therefore, the costs associated with tracking inventory and sales ($22,136 per retailer annually) were not included in the calculation of incremental cost savings. Overall, the total incremental cost savings for private distributors and retailers associated with compiling and submitting cannabis inventory and sales information are estimated at a total of $53,551,365 PV over 10 periods (or $7,624,510 in annualized value).
Further, P/T-authorized private distributors and retailers would benefit under the regulatory scenario due to no longer needing to coordinate with public P/T bodies to correct errors in reports submitted in the Cannabis Tracking and Licensing System, which is positioned to provide additional time savings to these parties.
Qualitative benefit analysis
Benefits to Health Canada
Under the regulatory scenario, Health Canada would no longer need to collect, validate or coordinate corrections for data provided by public P/T bodies and P/T-authorized private distributors and retailers, and so it is anticipated that Health Canada would no longer need to allocate resources to these functions. In addition, it is anticipated that fewer resources would be needed for Health Canada to validate the reduced amount of data submitted by federal licence holders under the regulatory scenario. The streamlined reporting requirements are also anticipated to improve reporting accuracy, which would result in a reduction in the amount of time Health Canada needs to coordinate with federal licence holders to correct reporting errors.
Cost-benefit statement
- Number of periods: 10 periods of 12 months (2027 to 2036)
- Price year: 2025
- Present value, period 1: 2027
- Discount rate: 7%
| Impacted stakeholder | Description of cost | Period 1 (2027–2028) | Period 2 (2028–2029) | Period 5 (2031–2032) | Final period (2036–2037) | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|---|
| Federal licence holders | Becoming familiar with the amendments | $242,430 | $0 | $0 | $0 | $226,570 | $32,258 |
| Updating internal data systems | $102,389 | $0 | $0 | $0 | $95,691 | $13,624 | |
| Meeting new proposed reporting requirements to specify "any other reason" for changes to inventory | $5,959 | $8,939 | $8,939 | $8,939 | $59,998 | $8,542 | |
| Total costs to federal licence holders | $350,778 | $8,939 | $8,939 | $8,939 | $382,259 | $54,425 | |
| Health Canada | Updating the Cannabis Tracking and Licensing System | $1,083,858 | $0 | $0 | $0 | $1,012,951 | $144,221 |
| Updating SOPs, guidance materials and web pages | $142,791 | $0 | $0 | $0 | $133,450 | $19,000 | |
| Total costs to Health Canada | $1,226,649 | $0 | $0 | $0 | $1,146,401 | $163,222 | |
| All stakeholders | Total costs | $1,577,427 | $8,939 | $8,939 | $8,939 | $1,528,660 | $217,647 |
| Impacted stakeholder | Description of benefits | Period 1 (2027–2028) | Period 2 (2028–2029) | Period 5 (2031–2032) | Final period (2036–2037) | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|---|
| Federal licence holders | Streamlined reporting requirements | $7,798,230 | $11,697,345 | $11,697,345 | $11,697,345 | $78,513,224 | $11,178,517 |
| Public P/T bodies | Elimination of reporting requirements | $427,786 | $427,786 | $427,786 | $427,786 | $3,004,587 | $427,786 |
| P/T-authorized private distributors and retailers | Elimination of reporting requirements | $7,624,510 | $7,624,510 | $7,624,510 | $7,624,510 | $53,551,365 | $7,624,510 |
| All stakeholders | Total benefits | $15,850,525 | $19,749,640 | $19,749,640 | $19,749,640 | $135,069,175 | $19,230,812 |
| Impacts | Period 1 (2027–2028) | Period 2 (2028–2029) | Period 5 (2031–2032) | Final period (2036–2037) | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|
| Total costs | $1,577,427 | $8,939 | $8,939 | $8,939 | $1,528,660 | $217,647 |
| Total benefits | $15,850,525 | $19,749,640 | $19,749,640 | $19,749,640 | $135,069,175 | $19,230,812 |
| Net benefits | $14,273,098 | $19,740,701 | $19,740,701 | $19,740,701 | $133,540,516 | $19,013,165 |
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. It is estimated that about 86% of the affected federal licence holders and about 80% of the affected P/T-authorized private distributors and retailers are small businesses.footnote 1 All small businesses would benefit from administrative cost savings associated with the proposal. It is anticipated that federal licence holders which are small businesses would benefit from improved clarity of the streamlined reporting requirements; however, they would also bear some incremental costs associated with becoming familiar with the proposed amendments, updating internal data systems, and meeting the new proposed requirements to specify the reason for changes to their inventory that are reported under the “any other reason” categories.
The total incremental benefits to all affected small businesses are estimated at $110,362,464 PV over 10 periods (or $15,713,132 in annualized value). The total incremental costs to all affected small businesses are estimated at $328,742 PV over 10 periods (or $46,806 in annualized value). The net benefits for all affected small businesses are estimated at $110,033,722 PV over 10 periods (or $15,666,327 in annualized value). The incremental net benefit per affected small business is estimated at $31,442 PV over 10 periods (or $4,477 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: 3 500
- Number of periods: 10 (from 2027 to 2036)
- Price year: 2025
- Present value, period 1: 2027
- Discount rate: 7%
| Administrative or compliance | Description of cost | Present value | Annualized value |
|---|---|---|---|
| Compliance | Becoming familiar with the amended reporting requirements | $194,850 | $27,742 |
| Updating internal data systems | $82,294 | $11,717 | |
| Total compliance costs | $277,144 | $39,459 | |
| Administrative | Specifying changes to inventory that are due to "any other reason" | $51,598 | $7,346 |
| Total administrative costs | $51,598 | $7,346 | |
| Total | Total costs | $328,742 | $46,806 |
| Administrative or compliance | Description of benefit | Present value | Annualized value |
|---|---|---|---|
| Administrative | Streamlined reporting requirements for federal licence holders | $67,521,372 | $9,613,524 |
| Elimination of reporting requirements for P/T-authorized private distributors and retailers |
$42,841,092 | $6,099,608 | |
| Total | Total benefits | $110,362,464 | $15,713,132 |
| Net impacts | Present value | Annualized value |
|---|---|---|
| Total costs | $328,742 | $46,806 |
| Total benefits | $110,362,464 | $15,713,132 |
| Net benefits (cost savings to all affected small businesses) | $110,033,722 | $15,666,327 |
| Net benefits per affected small business | $31,442 | $4,477 |
One-for-one rule
The amendments are to existing regulatory titles, with no new regulatory titles being created or repealed. For the purposes of the one-for-one rule, a business does not include an organization that engages in activities for a public purpose, such as a provincial government, ministry, or Crown corporation.
As explained in the CBA above, affected federal licence holders would experience incremental benefits in the form of administrative cost savings from streamlined reporting requirements under the regulatory scenario. Affected federal licence holders would also bear incremental administrative costs associated with new proposed reporting requirements. P/T-authorized private distributors and retailers would experience incremental benefits in the form of administrative cost savings associated with no longer being required to report under the CTSO.
The one-for-one rule would apply, and the regulatory proposal would be an “out” under the rule, as the proposed amendments are expected to result in a net decrease in administrative burden on business. It is estimated that the net administrative cost reduction on business would be $37,943,167 PV over 10 periods (or $5,402,253 in annualized value) in 2012 dollars and discounted to the year 2012 using a 7% discount rate.
| Totals | One-for-one rule results |
|---|---|
| Present value of administrative cost savings | $37,943,167 |
| Annualized administrative cost savings | $5,402,253 |
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 and South Africa. 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 regulated cannabis products. Cannabis continues to be illegal for non-medical use in the vast majority of countries.
In Canada, the P/Ts are responsible for authorizing the distribution and retail sale of cannabis products within their jurisdictions and set rules around how cannabis products can be sold, where stores may be located, how stores must be operated, and who is allowed to sell cannabis products. The various approaches to distribution and sale of cannabis products across the P/Ts shape the records on cannabis inventory and sales that private cannabis distributors and retailers are required to retain under the applicable P/T legal framework. The proposed amendments have been developed taking into consideration existing P/T legal frameworks. While the proposed amendments would repeal sections of the CTSO that pertain to cannabis reporting requirements for public P/T bodies (i.e. section 4 of the CTSO) and P/T-authorized private distributors and retailers (i.e. section 5 of the CTSO), cannabis record-keeping requirements established under P/T legal frameworks would remain in place. As a result, the proposed amendments would significantly reduce the overlap of requirements across federal and P/T legal frameworks for private distributors and retailers while respecting P/T jurisdictional responsibility for the oversight of distribution and retail sale of cannabis.
Certain federal licence holders are required to report on cannabis production, inventory, distribution, and sales to Health Canada under the CTSO and are also required to make similar reports to the CRA under the Excise Act, 2001. However, there are notable differences between these two reporting frameworks. For example, Health Canada collects information on the weight of cannabis inventory under the CTSO, whereas the CRA collects information on total delta-9-tetrahydrocannabinol (THC) in milligrams for certain classes of cannabis. Further, the CRA does not collect information on industrial hemp or on book value of any cannabis inventory, among other differences. Health Canada considered opportunities to harmonize CTSO reporting requirements with those of the CRA, as appropriate. Therefore, several proposed amendments would improve alignment with CRA requirements, including by simplifying the number of classes applying to cannabis extracts and edible cannabis.
International obligations
The proposed amendments 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 the proposed regulatory amendments would include changes to reporting requirements, there would still be necessary controls in place that would respect the international drug control treaties.
Effects on the environment
In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a preliminary scan concluded that a strategic environmental and economic assessment is not required.
Gender-based analysis plus
No gender-based analysis plus impacts have been identified for this proposal. The primary audience would be the cannabis industry, including holders of federal licences for cannabis cultivation, processing, and sale for medical purposes that authorize the possession of cannabis, public bodies authorized by P/Ts to oversee the sale of cannabis, as well as P/T-authorized private distributors and retailers. These proposed regulatory amendments would apply equally to different subgroups of the population, as identity factors (such as sex, gender, race, language, religion, etc.) have not been indicated for these changes.
The proposed amendments would simplify reporting requirements to reduce regulatory and administrative burden for reporting parties. Given that no new segments of the cannabis industry or other stakeholders would be impacted, a full analysis was not conducted.
No adverse outcomes to Canadians are anticipated 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. The amendments to repeal all reporting requirements for public P/T bodies and P/T-authorized private distributors and retailers would come into force upon final publication of the amendments in Part II of the Canada Gazette. The proposed amendments that affect federal licence holders would take effect on January 1, 2028. This delay gives federal licence holders time to update their tracking systems and protocols to meet the proposed reporting requirements.
System updates
Necessary changes to the Cannabis Tracking and Licensing System resulting from amendments to the CTSO would be finalized for the coming into force of the proposed amendments.
Standard operating procedures and protocols for data storage, management, and sharing have been established and would continue to enable Health Canada to ensure that the data provided is stored securely and can only be accessed by authorized personnel.
Communications and guidance
Health Canada would notify stakeholders, including reporting parties, of the proposed amendments and public comment period via publication in Part I of the Canada Gazette, 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 P/Ts and other stakeholders with relevant and timely information. Guidance documents would be updated to increase awareness of any changing measures and to assist parties in achieving compliance.
Compliance and enforcement
The enforcement measures under the Act will continue to be available to Health Canada. These measures will maintain the same delivery approach, ranging from activities intended to educate and prevent non-compliance through compliance promotion, to measures intended to bring a regulated party back into compliance or address a risk to public health or public safety.
In alignment with the Health Canada compliance and enforcement policy framework and the Compliance and enforcement policy for the Cannabis Act, and informed by the circumstances of each case, Health Canada takes a risk-based approach to its enforcement actions and will choose the most appropriate tool to achieve compliance and mitigate risks as circumstances warrant.
Depending on the circumstances, compliance and enforcement measures may include, but are not limited to, warnings, amending licences issued under the Act, suspending or revoking licences issued under the Act, issuing administrative monetary penalties of up to $1 million, and issuing ministerial orders. In certain circumstances, Health Canada may also disclose relevant information obtained under the Act, for example, when it considers that the disclosure is necessary to protect public health or public safety.
To support its compliance objectives, Health Canada’s Controlled Substances and Cannabis Branch and the Regulatory Operations and Enforcement Branch, which is responsible for inspections, will continue their regular enforcement and compliance activities. Health Canada will also continue to collaborate with other partners, including law enforcement and the P/Ts.
Contact
John Clare
Director General
Strategic Policy Directorate
Controlled Substances and Cannabis Branch
Health Canada
Address locator: 0302I
150 Tunney’s Pasture Driveway
Ottawa, Ontario
K1A 0K9
Email: cannabis.consultation@hc-sc.gc.ca
PROPOSED REGULATORY TEXT
Notice is given that the Minister of Health proposes to make the annexed Order Amending the Cannabis Tracking System Order (Streamlining of Requirements) under subsection 82(1) of the Cannabis Act footnote a.
Interested persons may make representations concerning the proposed Order within 45 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. However, 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).
Please note that as part of the prepublication process, all representations, including attachments, will be published on the Canada Gazette website, subject to its terms of use relating to the provision of comments.
Ottawa, August 28, 2026
Marjorie Michel
Minister of Health
Order Amending the Cannabis Tracking System Order (Streamlining of Requirements)
Amendments
1 (1) The definitions book value, cannabis extract, edible cannabis and public body in subsection 1(1) of the Cannabis Tracking System Order footnote 2 are repealed.
(2) The definition unpackaged cannabis in subsection 1(1) of the Order is replaced by the following:
- unpackaged cannabis
- means cannabis that is not a cannabis product, or that is contained in a cannabis accessory that is not a cannabis product. (cannabis non emballé)
(3) Subsection 1(2) of the Order is replaced by the following:
Interpretation
(2) For the purposes of this Order, the sale or distribution of cannabis — including cannabis products — does not include
- (a) the sale or distribution of cannabis for the purpose of destruction; or
- (b) the import or export of cannabis.
2 (1) Paragraph 2(1)(c) of the Order is amended by adding “or” at the end of subparagraph (ii) and by replacing subparagraphs (iii) and (iv) with the following:
- (iv) any other reason that the holder specifies;
(2) Paragraph 2(1)(d) of the Order is amended by adding “or” at the end of subparagraph (iii) and by replacing subparagraphs (iv) and (v) with the following:
- (v) any other reason that the holder specifies;
(3) Paragraph 2(1)(e) of the Order is repealed.
(4) The portion of paragraph 2(1)(f) of the Order before subparagraph (iii) is replaced by the following:
- (f) the number of cannabis products that ceased to form part of the inventory during the previous month by virtue of
- (i) the sending or delivering of cannabis products to consumers, other than as a result of a sale under section 289 of the Regulations,
- (ii) the sale of cannabis products under section 289 of the Regulations,
(5) Paragraph 2(1)(f) of the Order is amended by striking out “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iv):
- (v) any other sale or distribution of cannabis products,
- (vi) the destruction of cannabis products,
- (vii) the loss or theft of cannabis products in circumstances that require notice to be provided under paragraph 246(1)(b) of the Regulations, or
- (viii) any other reason that the holder specifies;
(6) Subparagraph 2(1)(g)(i) of the Order is replaced by the following:
- (i) being sold or distributed by the holder to another holder of a licence for cultivation, a licence for processing, a licence for analytical testing or a licence for research,
(7) Subparagraphs 2(1)(g)(vii) and (viii) of the Order are replaced by the following:
- (vii) being exported, or
- (viii) any other reason that the holder specifies;
(8) Paragraphs 2(1)(h) to (k) of the Order are replaced by the following:
- (j) the number of cannabis products that formed part of the inventory on the last day of the previous month and the quantity of cannabis in respect of those products, whether the cannabis is a cannabis product or is contained in a cannabis accessory that is a cannabis product; and
- (k) the quantity of unpackaged cannabis that formed part of the inventory on the last day of the previous month.
(9) Subsections 2(2) to (5) of the Order are replaced by the following:
Number of products and quantity of cannabis
(2) In respect of cannabis products,
- (a) the number of cannabis products referred to in paragraphs (1)(a), (c), (f) and (j) must be provided for each class specified in column 1 of the schedule and, in addition, the number of cannabis products referred to in subparagraph (1)(f)(iii) must be provided for each province in which the persons to which the cannabis products are sold or distributed are located; and
- (b) the quantity of cannabis referred to in paragraph (1)(j) must be provided for each class specified in column 1 of the schedule and expressed in the applicable unit of measurement specified in column 2.
Quantity of unpackaged cannabis
(3) In respect of the unpackaged cannabis referred to in paragraphs (1)(b), (d), (g) and (k),
- (a) the quantities must be provided for each class specified in column 1 of the schedule and expressed in the applicable unit of measurement specified in column 2; and
- (b) the quantity must be provided and expressed in kilograms for any unpackaged cannabis that is not of a class referred to in the schedule.
3 Section 3 of the Order is replaced by the following:
Additional information
3 The information that is provided under section 2 must be accompanied by the licence holder’s licence number as well as the month and calendar year to which the information relates.
4 The heading before section 4 and sections 4 and 5 of the Order are repealed.
5 (1) The portion of section 6 of the Order before paragraph (a) is replaced by the following:
Manner of providing information
6 A licence holder that is required to provide information under this Order must
(2) Paragraph 6(b) of the Order is replaced by the following:
- (b) notify the Minister if an individual who was responsible for submitting the information on behalf of the holder is no longer responsible for doing so.
6 (1) The portion of subsection 7(1) of the Order before paragraph (c) is replaced by the following:
Retention
7 (1) A licence holder that is required to provide information under this Order must ensure that
- (a) the records, reports, electronic data and other documents containing the information — and any information on which the information is based — are retained
- (i) in a manner that will enable them to be audited in a timely manner,
- (ii) at the site specified in the licence, and
- (iii) for a period of at least two years beginning on the day on which the information is provided; and
(2) Subsection 7(2) of the Order is replaced by the following:
Requirement to continue to retain
(2) The requirements of subsection (1) continue to apply to a person that is no longer required to provide information under this Order, except that they must retain the documents at their place of business in Canada or, if they do not have such a place of business, at another place of business in Canada.
7 Schedules 1 and 2 to the Order are replaced by the schedule set out in the schedule to this Order.
Transitional Provisions
8 (1) In this section, former Order means the Cannabis Tracking System Order as it read immediately before the day on which sections 4 to 6 of this Order come into force.
(2) A person that was required to provide information under section 4 or 5 of the former Order must ensure that the requirements set out in subsection 7(1) of the former Order are complied with until the end of the retention period set out in that subsection.
Coming into Force
9 (1) Subject to subsection (2), this Order comes into force on the day on which it is published in the Canada Gazette, Part II.
(2) Sections 1 to 3 and 7 come into force on January 1, 2028.
SCHEDULE
(Section 7)
SCHEDULE
(Paragraphs 2(2)(a) and (b) and (3)(a) and (b))
| Item | Column 1 Class of Cannabis |
Column 2 Unit of Measurement |
|---|---|---|
| 1 | cannabis plant seeds | number of seeds |
| 2 | cannabis plants | number of plants |
| 3 | fresh cannabis as defined in subsection 1(1) of the Regulations | kilograms |
| 4 | dried cannabis | kilograms |
| 5 | edible cannabis as defined in subsection 1(1) of the Regulations | kilograms |
| 6 | cannabis extract as defined in subsection 1(1) of the Regulations | kilograms |
| 7 | cannabis topical as defined in subsection 1(1) of the Regulations | kilograms |
Terms of use and Privacy notice
Terms of use
It is your responsibility to ensure that the comments you provide do not:
- contain personal information
- contain protected or classified information of the Government of Canada
- express or incite discrimination on the basis of race, sex, religion, sexual orientation or against any other group protected under the Canadian Human Rights Act or the Canadian Charter of Rights and Freedoms
- contain hateful, defamatory, or obscene language
- contain threatening, violent, intimidating or harassing language
- contain language contrary to any federal, provincial or territorial laws of Canada
- constitute impersonation, advertising or spam
- encourage or incite any criminal activity
- contain external links
- contain a language other than English or French
- otherwise violate this notice
The federal institution managing the proposed regulatory change retains the right to review and remove personal information, hate speech, or other information deemed inappropriate for public posting as listed above.
Confidential Business Information should only be posted in the specific Confidential Business Information text box. In general, Confidential Business Information includes information that (i) is not publicly available, (ii) is treated in a confidential manner by the person to whose business the information relates, and (iii) has actual or potential economic value to the person or their competitors because it is not publicly available and whose disclosure would result in financial loss to the person or a material gain to their competitors. Comments that you provide in the Confidential Business Information section that satisfy this description will not be made publicly available. The federal institution managing the proposed regulatory change retains the right to post the comment publicly if it is not deemed to be Confidential Business Information.
Your comments will be posted on the Canada Gazette website for public review. However, you have the right to submit your comments anonymously. If you choose to remain anonymous, your comments will be made public and attributed to an anonymous individual. No other information about you will be made publicly available.
Comments will remain posted on the Canada Gazette website for at least 10 years.
Please note that communication by email is not secure, if the attachment you wish to send contains sensitive information, please contact the departmental email to discuss ways in which you can transmit sensitive information.
Privacy notice
The information you provide is collected under the authority of the Financial Administration Act, the Department of Public Works and Government Services Act, the Canada–United States–Mexico Agreement Implementation Act,and applicable regulators’ enabling statutes for the purpose of collecting comments related to the proposed regulatory changes. Your comments and documents are collected for the purpose of increasing transparency in the regulatory process and making Government more accessible to Canadians.
Personal information submitted is collected, used, disclosed, retained, and protected from unauthorized persons and/or agencies pursuant to the provisions of the Privacy Act and the Privacy Regulations. Individual names that are submitted will not be posted online but will be kept for contact if needed. The names of organizations that submit comments will be posted online.
Submitted information, including personal information, will be accessible to Public Services and Procurement Canada, who is responsible for the Canada Gazette webpage, and the federal institution managing the proposed regulatory change.
You have the right of access to and correction of your personal information. To seek access or correction of your personal information, contact the Access to Information and Privacy (ATIP) Office of the federal institution managing the proposed regulatory change.
You have the right to file a complaint to the Privacy Commission of Canada regarding any federal institution’s handling of your personal information.
The personal information provided is included in Personal Information Bank PSU 938 Outreach Activities. Individuals requesting access to their personal information under the Privacy Act should submit their request to the appropriate regulator with sufficient information for that federal institution to retrieve their personal information. For individuals who choose to submit comments anonymously, requests for their information may not be reasonably retrievable by the government institution.