Canada Gazette, Part I, Volume 156, Number 11: Regulations Amending Certain Regulations Concerning Cannabis Research and Testing and Cannabis Beverages

March 12, 2022

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 Order.)

Executive summary

Issues

The Regulations Amending Certain Regulations Concerning Cannabis Research and Testing and Cannabis Beverages and the Order Amending Schedule 3 to the Cannabis Act (the proposed regulations) would address four issues.

Non-therapeutic research on cannabis

Interventional non-therapeutic research on cannabis with human participants (referred to onwards as non-therapeutic research on cannabis) is a diverse area of scientific investigation. It can include, for example, studies that examine the onset and duration of the effects of a cannabis product, studies that inform product development, and studies related to public health. In contrast, interventional research on cannabis with human participants for therapeutic purposes focuses on research relating to the diagnosis, treatment, mitigation, or prevention of a disease or its symptoms, or on the restoration or correction of organic functions including for the purpose of developing drugs (in this case, drugs containing cannabis). All interventional therapeutic research on cannabis and, currently, most non-therapeutic research on cannabis meets the definition of a “clinical trial” under the Food and Drug Regulations (FDR). Researchers interested in carrying out the majority of this type of research must secure authorization under the Cannabis Regulations (the Regulations) and receive a No Objection Letter (NOL) from Health Canada under the clinical trial framework under the FDR.^{footnote 1}

Many researchers have had difficulty securing a NOL for non-therapeutic research on cannabis. For example, they face challenges in conducting research with cannabis products available in Canada’s legal, regulated market, since these products are manufactured to meet the regulatory requirements for quality control set out in the Regulations — Good Production Practices (GPP) — rather than the quality control requirements specified in the FDR —Good Manufacturing Practices (GMP).

Cannabis-related research could provide Canadians with more information on the risks and effects of cannabis, such as those associated with a certain quantity or use, thereby allowing them to make informed decisions about their consumption. The barriers to research using commercially available cannabis products may have the potential to affect the climate for cannabis research in Canada. These barriers may result in both researchers being unable to use grants received for cannabis research, and funding bodies deciding not to offer grants for cannabis research, which could create a risk of researchers choosing to pursue their work outside of Canada. Health Canada recognizes the need to fill the knowledge gaps for cannabis and the need to continue to support Canadians in making informed decisions.

Reference standards and test kits

Reference standards are used to calibrate analytical instruments and assess testing methods. Currently, only licensed processors are able to sell reference standards, which potentially limits their availability and variety. However, many analytical testing licence holders and government laboratories have the equipment and expertise to produce high-quality reference standards.

Cannabis test kits are used to test for the presence or quantity of cannabis (e.g. in a drug-testing device). The Regulations authorize the sale and distribution of registered test kits by any person; however, similar to cannabis reference standards, only licensed processors are able to produce them. Allowing analytical testing licence holders, as well as government laboratories, to carry out a broader range of activities with reference standards and test kits would improve the availability and variety of these products, and strengthen Canada’s cannabis testing system.

In addition, the current regulatory requirements for reference standards do not align with their risk profile and purpose. Reference standards are currently subject to certain requirements, including GPP requirements under Part 5 of the Regulations. While these requirements are designed to ensure quality control of cannabis products intended for human consumption, they are not necessary for reference standards, which are not intended to be sold to consumers at the retail level. Compliance costs represent a significant expense for licence holders.

Head of laboratory

Under the Regulations, a holder of an analytical testing licence must employ a person to act as the “head of laboratory.” This person is responsible for all cannabis testing activities that take place at the analytical testing laboratory site. Among other qualifications, heads of laboratory must have a university degree in a relevant science field from a Canadian university or, if awarded by a foreign university, that is recognized by a Canadian university or professional association. These requirements are more stringent than those used for the qualified person in charge under the Regulations, which is comparable in roles and responsibilities to the head of laboratory, and may limit the pool of eligible head of laboratory candidates. Candidates with different education levels and qualifications and with the necessary skills and experience could fulfill the duties of the position.

Cannabis beverages

The Cannabis Act (the Act) sets a public possession limit of 30 g of dried cannabis or its “equivalent” for other forms of cannabis. The public possession limit facilitates the investigation and enforcement of illegal distribution and sale activities of cannabis. Schedule 3 to the Act sets the amounts of various classes of cannabis that are considered equivalent to 1 g of dried cannabis. Cannabis beverages (i.e. edible cannabis that is meant to be consumed by drinking, and that has a concentration of 3% or less of tetrahydrocannabinol [THC]) are currently part of the “non-solids containing cannabis” class, where the equivalent amount to 1 g of dried cannabis is 70 g. This means that an adult is able to possess, in public, a maximum of 2 100 g (or approximately 2.1 L) of cannabis beverages. Effectively, this also means that consumers can only purchase this amount of cannabis beverages at a legal retail outlet (which is a public place), otherwise they would exceed their public possession limit. Therefore, some provinces and territories have enacted corresponding sales limits to prevent this from occurring.

Stakeholder feedback and analysis conducted by Health Canada revealed that the dried cannabis equivalency set out in Schedule 3 (referred to herein as “the equivalency”) unintentionally restricts the possession and sale of cannabis beverages, particularly those in standard-sized containers (e.g. 355 mL cans), more so than other forms of cannabis. Due to the equivalency factor set for the non-solids containing cannabis class and the relatively high weight of cannabis beverages compared to other forms of cannabis in that class, consumers are limited to possessing five standard sized beverages (i.e. 5 x 355 mL cans). Stakeholders have noted that the equivalency also creates a disincentive for consumers to purchase beverages in the legal market, since they can purchase more of other products (e.g. 60 x 0.5 g pre-rolls of dried cannabis or 45 x 10 g cannabis chocolate bars). The equivalency and corresponding public possession limit applicable to cannabis beverages were not intended to create a disincentive to the purchase of beverages compared to other products.

Background

The Act and the Regulations create a strict legal framework for the production, distribution, sale, import, export and possession of cannabis in Canada. The purpose of the Act is to protect public health and public safety and, in particular, to enhance public awareness of the health risks associated with cannabis use, provide access to a quality-controlled supply of cannabis, and provide for the licit production of cannabis to reduce illicit activities in relation to cannabis, among other things. In addition, the Act sets out a public possession limit for dried cannabis and an “equivalent amount” for other types of cannabis, including cannabis beverages, which helps to deter illegal activity in relation to cannabis through appropriate sanctions and enforcement measures.

In support of these objectives, the Regulations set out several licence classes that authorize various activities involving cannabis, including research and testing. The research licence class authorizes licence holders to perform certain activities with cannabis for the purpose of research, and the analytical testing licence class enables activities involving cannabis for the purpose of testing. Analytical testing activities can involve testing for chemical contaminants, such as pesticides, microbial contaminants, cannabinoid content, dissolution or disintegration, sterility and stability. The Regulations also authorize employees of government laboratories, who are involved in the testing of cannabis, to carry out activities necessary to conduct such testing. Other licence classes may also allow holders to conduct in-house testing activities if authorized under their licence, subject to certain conditions.

Health Canada has identified opportunities to facilitate further non-therapeutic research and testing activities with cannabis, and an opportunity to adjust the equivalency and public possession limit for cannabis beverages so that they are more in line with other classes of cannabis.

Non-therapeutic research on cannabis

Many researchers are interested in conducting non-therapeutic research on cannabis. Non-therapeutic research on cannabis would, in Health Canada’s view, include interventional investigations in respect of cannabis (where cannabis is distributed/administered to human participants) for the purposes of increasing the knowledge on cannabis and its effects, generating knowledge to inform public health and public safety measures, public education, and policy and/or furthering research and development of cannabis products. Such research supports the objectives of the Act, which include enhancing public awareness of the health risks associated with using cannabis.

Under the Regulations, research licence holders can already be authorized to carry out specific forms of non-therapeutic research on cannabis without receiving a NOL under the FDR. For example, certain organoleptic testing and research on cannabis testing devices do not meet the definition of a clinical trial. Organoleptic testing involves assessing the taste, touch, sight and smell of cannabis products with human participants in a controlled setting. Holders of a cannabis research licence who are authorized to conduct this research may be subject to additional terms and conditions on their licence, including submission of attestations. Cannabis device testing, which involves the verification, validation, or standardization of a device detecting cannabis, could also be subject to additional terms and conditions on their licence.

It should be noted that observational studies with cannabis, such as studies involving the recording of observations and data analysis, may not require authorization under the Regulations if they do not involve the distribution of cannabis from a researcher to a participant, unless the study involves other activities regulated by the Act.

While certain organoleptic testing and research on cannabis testing devices may be currently authorized under the Regulations without requiring additional authorization under the Food and Drugs Act (FDA) and its regulations, most non-therapeutic research on cannabis currently meets the definition of a clinical trial under the FDR. Research with cannabis sold to be used for the purpose of a clinical trial must receive authorization under the Regulations and a NOL, because the cannabis used for such purpose is not exempted from the FDA under the Cannabis Exemption (Food and Drugs Act) Regulations.

Researchers interested in conducting this type of research are facing difficulties in securing a NOL. Many of these challenges stem from the requirement that drugs (including cannabis) used in a clinical trial be produced in accordance with the quality standards set out in the FDR, namely GMP. Additionally, the clinical trial framework requires product-specific pre-clinical and non-clinical data. Given the nature of the framework for cannabis, and since cannabis products are not required to have this type of data prior to sale on the retail market, this data is often unavailable.

Under the legal framework for cannabis, cannabis products must comply with the GPP quality standards set out in the Regulations, rather than the GMP requirements specified in the FDR. GPP and GMP serve similar purposes. They set out strict controls relating to sanitation, testing and quality assurance, among other activities. However, GPP requirements are unique to Canada’s cannabis framework and address the specific risks associated with cannabis and cannabis products. This difference, as well as other requirements of the clinical trial framework, creates challenges for researchers to obtain a NOL to carry out studies using the quality-controlled cannabis that is readily available on the legal, regulated market.

Reference standards and test kits

Reference standards play a vital role in assisting laboratories in accurately testing different product characteristics and validating the accuracy of their testing methods, which contribute to maintaining a quality-controlled supply of cannabis products. Cannabis test kits, as defined in the Regulations, are designed to be used during the course of a chemical or analytical procedure to test for the presence or quantity of cannabis for a medical, laboratory, industrial, educational, law administration or enforcement, or research purpose. Since both generally contain only small amounts of cannabis and are not intended for retail sale or consumption, they pose comparatively little risk of diversion or accidental consumption.

Many analytical testers and government laboratories have the equipment, capacity and expertise to produce and sell reference standards and test kits, but cannot do so without becoming licensed processors or without holding an exemption under the Act. Either pathway imposes a burden that is not commensurate with reference standards’ or test kits’ risk level.

Furthermore, the GPP requirements governing cannabis products intended for retail sale may not be appropriate for reference standards. For example, some reference standards are intended to contain contaminants and pesticides so that they can be used to detect or quantify the presence of these materials in test samples. Additionally, reference standards require the oversight of the licence holder’s quality assurance person (QAP), as currently only licensed processors are allowed to produce reference standards.

Head of laboratory

The Regulations stipulate that the person in the head of laboratory position must have the necessary knowledge and experience, as well as a university degree in a science field related to the work. The degree must be from a Canadian university or, if awarded by a foreign university, be recognized by a Canadian university or professional association. These requirements were established to help ensure that heads of laboratory were sufficiently qualified to carry out the responsibilities of the position; namely, to be responsible for the required testing on cannabis — testing for phytocannabinoids, testing for contaminants, and dissolution and disintegration testing.^{footnote 2} However, Health Canada has heard concerns that the current provision may, as a result of its restrictions, be excluding candidates that would be able to fulfill the duties of the position, but do not have the required education.

The Regulations set out qualification requirements for a position with a similar role in the cannabis framework, namely the qualified person in charge (QPIC). The QPIC is responsible for supervising the activities with respect to cannabis that are authorized under the cannabis drug licence and for ensuring their compliance. A QPIC must have a diploma, certificate, or credential from a post-secondary educational institution in Canada in a field or occupation that is relevant to their duties, or the equivalent from a foreign educational institution.

In addition, the Regulations place additional burden on candidates for the head of laboratory role who have foreign qualifications. For the QPIC position, Health Canada accepts equivalency assessments issued by organizations or institutions designated by Immigration, Refugees, and Citizenship Canada (IRCC), among others. However, only foreign credentials recognized by a Canadian professional association, or by a Canadian university are acceptable equivalency assessments for the head of laboratory position. Only one university, the University of Toronto, has a foreign credential assessment service that is recognized by IRCC. Many candidates whose foreign credentials have been assessed as equivalent by an IRCC-designated organization or institution would need to obtain another assessment, causing undue burden. It is not Health Canada’s intent that the head of laboratory candidates would have less flexibility for foreign equivalency assessments. Broader equivalency assessments would still be appropriate given the duties of the head of laboratory.

Cannabis beverages

The Act sets a public possession limit and distribution limit for cannabis, which helps to deter illegal activity in relation to cannabis through appropriate sanctions and enforcement measures.

Under the Act, adults are prohibited from possessing in public or distributing to another adult more than 30 g of dried cannabis or its “equivalent” in other forms of cannabis for non-medical purposes. The limit was implemented based on recommendations made in 2016 by the Task Force on Cannabis Legalization and Regulation (the Task Force). The Task Force heard from stakeholders in the law enforcement community who strongly supported setting public possession limits, advising that in the event that cannabis became legal for adults to possess, a public possession limit would help facilitate the investigation and enforcement of illegal distribution and sale of cannabis. Given the intent of this provision, the limit for adults only applies to how much cannabis they can possess in public. The Task Force also found that many other jurisdictions that had legalized cannabis for non-medical purposes had also established a public possession limit. The Task Force concluded that instituting a limit in Canada would be a reasonable measure to assist law enforcement.

Given the diversity of cannabis produced and sold (e.g. creams, vape pens, capsules, beverages), the Task Force also recommended Health Canada outline what 30 g of dried cannabis would be equivalent to in other forms of cannabis for law enforcement purposes. Schedule 3 to the Act outlines the amount of cannabis, by class, that is deemed, for the purposes of the Act, to be equivalent to 1 g of dried cannabis. Equivalent amounts have been set for six different broad classes, covering all types of cannabis. Health Canada’s approach to developing the equivalency amounts set in the Act aligns with the approach taken in other United States jurisdictions that had legalized cannabis for non-medical purposes at that time, such as Washington State and Oregon.

The Act sets 1 g of dried cannabis as equivalent to 70 g of “non-solids containing cannabis”. This allows an adult to possess 2 100 g of non-solids containing cannabis in public, which is roughly equal to 2 100 mL of liquid (given the density of water is roughly 1 g/mL). The non-solids containing cannabis class encompasses cannabis that is not a solid at room temperature (approximately 22 degrees Celsius) and contains a concentration of 3% or less of THC. This class therefore contains a wide range of cannabis, such as cannabis beverages (e.g. sparkling waters, lemonades), lower-THC cannabis oils, and some cannabis topicals, such as creams. It should be noted that the Act outlines a separate class, “cannabis concentrates,” that contains all cannabis with a concentration of more than 3% w/w of THC. This class is subject to a lower possession limit and will not be changed as part of the proposed amendments.

Cannabis beverages available in the legal market are sold in many different product sizes. Based on sales data from 355 provincially/territorially authorized cannabis retail stores from March 2020 to December 2020, the most popular format is 355 mL containers, which is the standard size for many other beverages. In order for an adult consumer to respect the public possession limit, they are effectively limited to purchasing five standard sized beverages (i.e. 5 × 355 mL cans), given that, as noted above, a retail outlet is considered a public space.

Health Canada is aware that some provinces and territories have created an equivalent sales limit in their respective legal frameworks. This is done so as not to put consumers at risk of breaking the law (i.e. not abiding by the public possession limit) as they leave an authorized retail store. Therefore, the public possession limit can limit how much a consumer can purchase per transaction.

While the public possession limit applies to and therefore affects the purchase of all cannabis products, data on consumer spending habits and retail prices of cannabis beverages illustrates that cannabis beverages face greater restrictions. According to data from the 2020 Canadian Cannabis Survey (CCS), consumers report spending on average $67 on cannabis per month, and report typically making purchases once per month.^{footnote 3} This average spending is comparable to the average transactional values reported by provincial wholesalers in Ontario, British Columbia, Quebec and Nova Scotia in fiscal year 2019–2020, where consumer spending per transaction ranges from $35 to $87 and averages $56. For all other cannabis products, a consumer could spend that average amount without exceeding the maximum quantity of cannabis defined by the public possession limit. However, for cannabis beverages, consumers can only purchase five 355 mL cans per transaction, which have an average market value of $30, a value that is well below typical consumer spending habits.

In addition to the restrictions on purchase, the current equivalency has the effect, in practice, of imposing stricter restrictions on total THC for cannabis beverages. Given that edible cannabis products, such as beverages, have a limit of 10 mg of THC per immediate container, the maximum amount of THC an adult could possess in this form is 50 mg (5 cans × 10 mg of THC). Other forms of cannabis that are also subject to the 10 mg THC cap, such as solid edible cannabis products (e.g. gummies and chocolate bars), are not affected in the same manner since their dried cannabis equivalency allows for the possession of a greater number of these products. For example, an adult could possess or distribute 45 × 10 g chocolate bars containing a total of 450 mg of THC.

Objectives

The proposed amendments would support the purposes of the Act by fostering a stronger research climate, facilitating cannabis testing, and addressing unintended restrictions to the legal purchase of cannabis beverages compared to other products.

The creation of a new pathway for non-therapeutic research on cannabis would address challenges faced in the conduct of such research and help create a more robust research climate that would contribute to addressing the remaining knowledge gaps and increasing the understanding of cannabis. In order to protect the health and safety of participants, Health Canada would assess applications for research licences proposing to conduct non-therapeutic research with cannabis in accordance with the Act and the Regulations. Where appropriate, terms and conditions could be applied to research licences.

Reference standards and cannabis test kits contribute to maintaining a quality-controlled supply of cannabis products. Allowing a broader range of licence holders to produce and sell reference standards and test kits would make them more widely available, and would help enable cannabis testing activities. In addition, broadening the educational requirements for the head of laboratory position would allow for a larger pool of qualified candidates to occupy this role, while still ensuring that those individuals are able to fulfill the duties of the position.

Finally, the amendments to Schedule 3 to the Act would increase the public possession limit for cannabis beverages, which would correct an unintended consequence of the current equivalency, which restricts the possession and sale of beverages to a greater extent than other forms of cannabis. The proposal would seek to increase the limit on cannabis beverages to be more in line with the limits that exist for other forms of cannabis.

Description

Non-therapeutic research on cannabis

The proposal would amend the Cannabis Exemption (Food and Drugs Act) Regulations to create an exemption from the application of the Food and Drugs Act for certain non-therapeutic research on cannabis authorized under the proposed regulations; such research would remain regulated under the Cannabis Act and its Regulations. The amendments would also make a number of changes to the Regulations. In particular, they would define non-therapeutic research on cannabis as research involving the distribution of cannabis to human participants, subject to certain exceptions. As defined under the Act, and for the purposes of non-therapeutic research on cannabis, distributing cannabis includes administering cannabis. The exceptions would include, in particular, research related to the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state or its symptoms or the restoration or correction of organic functions, in human beings or animals. It would also exclude any research involving the participation of, or related to, young persons. For the purpose of the relevant provisions, a young person is an individual who is under 18 years of age. All excluded studies could still be subject to the requirements of the clinical trial framework.

In addition, the proposed amendments would modify the definition of a drug under the Regulations to add an exclusion with respect to cannabis manufactured or sold for use in non-therapeutic research on cannabis. This amendment would clarify that any requirements under the Regulations that relate to a “drug,” including requirements relating to drugs containing cannabis under Part 8 of the Regulations, would not apply to the excluded cannabis.

Further, the amendments would set out requirements to protect participants in studies for non-therapeutic research on cannabis, building on existing health and safety protections in the Regulations. First, the amendments would require that all cannabis distributed to participants comply with GPP requirements. It would therefore be required that the cannabis used in the research be quality controlled. This can already be required for organoleptic testing, under the terms and conditions of a cannabis research licence authorizing this research, and is required for all cannabis products sold to consumers, including those individuals accessing cannabis for medical purposes. Second, while these amendments would allow research to be conducted with cannabis products as well as certain cannabis that are not products (such as cannabis that a licence holder is developing into a cannabis product, regardless if this is eventually successful or not), all cannabis, including cannabis that is not a product, used in the research would be required to comply with the requirements in Part 6 of the Regulations that apply to cannabis products in the legal, regulated market. For example, cannabis products must comply with chemical and microbial contaminant limits set out in the Regulations. Cannabis that is not a cannabis product used in non-therapeutic research would also have to comply with this requirement.

The proposed amendments would also supplement current authorities in the Act and the Regulations by adding specific grounds to refuse to issue, renew or amend a licence for research that involves the distribution of cannabis to participants for the purpose of conducting non-therapeutic research on cannabis. This would apply if there are reasonable grounds to believe that the use of the cannabis in the research would present a risk of injury to the health of a research participant or another person that cannot reasonably be mitigated, or if there are reasonable grounds to believe that the objectives of the research would not be achieved. Similar grounds would also be added to the circumstances for suspending or revoking a licence.

The proposal would also set out adverse reaction reporting requirements for research licence holders conducting non-therapeutic research on cannabis. The proposed amendments would require research licence holders to record any adverse reactions, also known as side effects, that occur in the conduct of non-therapeutic research on cannabis. If the effects were serious, the licence holder would be required to notify Health Canada. This requirement would rely on existing definitions of “adverse reaction” and “serious adverse reaction” in the Regulations, and would use reporting timelines consistent with the clinical trial framework under the FDR. This reporting would help protect participants by providing information to Health Canada and licence holders, allowing them to identify and respond to emerging health and safety issues with cannabis. The record retention time for adverse reactions occurring under non-therapeutic research on cannabis would be the same as for cannabis products under the Regulations (i.e. 25 years).

The proposed amendments would also set out record-keeping and retention requirements for non-therapeutic research on cannabis. In particular, requirements would be established respecting the retention of documents demonstrating that the cannabis distributed to participants in the conduct of non-therapeutic research on cannabis was produced, packaged, labelled, distributed, stored, sampled and tested in accordance with the applicable provisions of Parts 5 (GPP) and 6 (Cannabis Products) of the Regulations. Requirements would also be established respecting the retention of documents that list the ingredients of cannabis used in the research. This is similar to the requirements for products sold in the consumer market. Further, research licence holders conducting non-therapeutic research on cannabis would need to retain most records related to the research for at least two years after completion of the study.

Reference standards and test kits

The proposal would make a series of amendments to the Regulations to support testing activities with cannabis. The proposed amendments would define a “reference standard” to mean a standardized form of cannabis that is intended to be used as a measurement base when testing a substance to confirm its identity, strength, quality or purity for a medical, laboratory, industrial, educational, law administration or enforcement, or research purpose. Reference standards would not be considered cannabis products.

The proposed amendments would exempt reference standards from certain requirements under the Regulations. Reference standards would be exempt from GPP requirements, since they would not be authorized for sale to consumers. Furthermore, the requirements relating to QAP that apply to licensed processors would not apply with respect to reference standards.

The proposal would also make a series of amendments to authorize individuals working in government laboratories to produce, distribute, and sell reference standards, as well as to produce test kits. This would enable them to conduct a broader range of activities with cannabis for their own testing purposes, and to sell and distribute reference standards to other licence holders or authorized persons for cannabis testing activities. The proposal would make similar amendments to the authorized activities for analytical testers, allowing them to produce, distribute, and sell reference standards as well as produce test kits. Finally, there would be minor amendments to allow research licence holders to sell cannabis plants and cannabis plant seeds to analytical testers and individuals working in government laboratories for research purposes. This would enable further testing on cannabis plants and cannabis plant seeds by these parties.

Head of laboratory

The proposal would amend the qualifications required for a person to become head of laboratory. It would expand the eligible credentials to include a diploma, certificate or credential from a Canadian post-secondary educational institution in a field or occupation relevant to the duties of the head of laboratory position. It would also expand the recognition of international credentials for this position. The proposed amendments would permit accepting equivalency assessments issued by organizations or institutions designated by IRCC or recognized by a province.

Cannabis beverages

Finally, this proposal also intends to increase the quantity of cannabis beverage equivalent to 1 g of dried cannabis, which would have the effect of increasing the public possession limit for cannabis beverages from 2 100 g (2.1 L) to 17 100 g (17.1 L) by amending Schedule 3 to the Act. Under subsection 151(2) of the Act, Schedule 3 can be amended by an Order in Council.

The proposal would replace the non-solids containing cannabis class by two new classes of cannabis in Schedule 3. The first class would encompass cannabis beverages, including those that are commercially prepared or homemade. Cannabis beverages would be defined as edible cannabis that is intended to be consumed by drinking and that has a concentration of 3% or less of THC. The second class would encompass non-solids containing cannabis other than cannabis beverages, such as cannabis oils and topicals with a concentration of 3% or less of THC. The equivalency for the latter class would remain at 70 g, which is the current dried cannabis equivalency set for the non-solids containing cannabis class. This amendment would increase the equivalency for cannabis beverages to 570 g. As a result, the amount of cannabis beverages that an adult could possess in public would be equivalent to 48 standard-sized beverage cans. Although there is no federal limit on purchase or sale, it would effectively increase the amount of cannabis beverages an adult could purchase without being at risk of exceeding the federal public possession limit. Provinces and territories could choose whether to align their respective public possession or sale limits to this increased limit.^{footnote 4}

Schedule 3 to the Act is also used to set out quantities of cannabis that can be possessed by certain persons covered under the Regulations pertaining to access to cannabis for medical purposes (Part 14 of the Regulations). Therefore, the proposed amendment to Schedule 3 would also impact how many cannabis beverages they can possess in public. For example, a person who is authorized to access cannabis for medical purposes can be authorized to possess up to the equivalent of 150 g of cannabis for medical purposes in public, in addition to any other quantity authorized under the Act (i.e. the 30 g that adults may possess). By increasing the dried cannabis equivalency, they will be able to possess an amount of cannabis beverages that is more in line with what they can currently possess of other classes of cannabis such as dried cannabis.

Although the proposed amendment would increase the amount of cannabis beverages an adult could possess in public, this amendment is not expected to have any public health impacts such as creating inducements to use cannabis. Adult consumers can already possess and purchase much higher quantities of other cannabis products per transaction, such as 60 × 0.5 g pre-rolls of dried cannabis or 45 × 10 g cannabis chocolate bars, yet rarely do. It is also important to note that there are a number of aspects of the regulatory framework that focus on preventing the unique risks associated with the consumption of cannabis beverages, namely overconsumption and accidental consumption, which would remain in place. For example, the limit of 10 mg of THC per immediate container and the requirement that containers be child resistant would remain. Finally, it should be noted that the federal framework does not set limits on how many cannabis beverages an adult can possess at home.

In addition to amending Schedule 3, this proposal would include a transitional provision to provide the cannabis industry with sufficient time to update the labels of affected cannabis products. The Regulations require that the label of any container in which edible cannabis products are packaged must include a public possession limit statement outlining the amount of dried cannabis that the product is equivalent to (based on the dried cannabis equivalency amounts in Schedule 3 to the Act). This provides a tool for consumers and law enforcement to determine whether an individual is compliant with the federal public possession limit. Should the proposed amendment to Schedule 3 come into force, the labels of cannabis beverages would need to be updated with a new public possession limit statement. To reduce the impact of these changes on the industry, the proposed regulations would provide a transition period allowing all licence holders and persons authorized to distribute or sell edible cannabis products (e.g. licensed processors, federally licensed sellers of cannabis for medical purposes, provincially and territorially authorized distributors and retailers) to distribute or sell cannabis beverages that have been packaged and labelled in accordance with the current requirements under the Act and Regulations. This exemption would cease to apply to licensed processors after a period of 12 months. Following the 12-month transition period, all cannabis beverages distributed and sold by holders of a licence for processing would be required to include a public possession limit statement that is reflective of this amendment. However, other authorized persons (e.g. federally licensed sellers of cannabis for medical purposes, provincially and territorially authorized distributors and retailers) could continue to sell previously labelled and packaged products (in order to sell or distribute their existing inventory of these products).

This means that consumers may continue to see cannabis beverages with a public possession limit statement based on the current dried cannabis equivalency even once the limit has been increased. While some consumers may have difficulty understanding how many cannabis beverages they can possess in public, it is unlikely that a consumer would be placed in a position of unknowingly possessing more cannabis beverages in public than they are permitted to, because the new limit will be higher than it appears on the label. In addition, all other packaging and labelling provisions would continue to apply, including requirements to label the net volume of the product, which could be used by consumers to determine how much a product contributes to their public possession limit. Furthermore, engagement with law enforcement in advance of the coming-into-force date would ensure they are aware of the increased limit and would not rely solely on the possession limit statement on cannabis beverages to assess compliance.

Health Canada intends to engage in a proactive communication strategy regarding this proposed change that would include engaging with law enforcement and the public to ensure awareness, supporting provinces and territories in updates they choose to make to their respective sale limits and public possession limits, and promoting awareness of Health Canada’s online calculator to support law enforcement’s and consumers’ understanding of how much cannabis can be possessed.

Regulatory development

Consultation

Since the Act and the Regulations first came into force on October 17, 2018, stakeholders have indicated that the framework for cannabis research under Health Canada’s various regimes has resulted in challenges in conducting non-therapeutic research on cannabis. Health Canada has met and corresponded with the research community and cannabis industry on these issues since the legalization and regulation of cannabis for non-medical purposes.

More recently, Health Canada held several discussions with stakeholders on the issues addressed in this proposal. For example, in March 2020, officials took part in a teleconference with academic researchers to discuss their ongoing difficulties in securing authorization and/or a NOL for non-therapeutic research on cannabis.

On December 12, 2020, Health Canada published a Notice of Intent (NOI) in the Canada Gazette, Part I. The notice provided a 30-day consultation period for stakeholders to comment on the proposal to address cannabis research and testing. Health Canada received 236 submissions from a diverse group of stakeholders, including universities and researchers, cannabis licence holders, cannabis industry associations, public health stakeholders, health care associations, provinces and territories and individual Canadians.

Most respondents were supportive of the proposal to create a framework for non-therapeutic research on cannabis under the Regulations. Many respondents indicated that the requirements proposed in the NOI appropriately reflected the differences between the cannabis used and the risks from non-therapeutic research on cannabis compared to the clinical trial framework under the FDR. They indicated that FDR requirements with respect to the submission of detailed non-clinical and clinical data (i.e. investigator’s brochure), product quality and/or safety information would not be necessary for non-therapeutic research on cannabis, particularly if the study used legal cannabis products accessible to adult consumers. Respondents further indicated that there should be no restrictions (e.g. type of cannabis being studied, route of administration) as long as the cannabis met GPP requirements and the products were permissible under the Act. In addition, many respondents advocated for a risk-based approach in authorizing these studies with certain fundamental elements in place, similar to the clinical trial framework. Specifically, they recommended that organoleptic studies and studies using commercially available cannabis products have a lower level of oversight and requirements, compared to studies that may pose higher risks.

Many of the submissions received were also supportive of the proposed amendments to expand the production, distribution and sale of reference standards and test kits for certain licence holders and government laboratories. They indicated that enabling these activities for other licence holders would increase reference standards’ availability, improve the quality of cannabis testing activities and decrease costs and increase consumer confidence in cannabis products.

Respondents were further supportive of the proposed amendments to expand the qualifications for the head of laboratory. However, some indicated that Health Canada should instead adopt a proficiency-testing program to accredit analytical testing licence holders to ensure the testing would meet certain testing quality standards. Health Canada has determined that, at this time, the current approach to the regulation of analytical testing of cannabis continues to meet the objectives of the Act and the Regulations. Health Canada continues to monitor this approach.

Many respondents were in favour of increasing or removing the public possession limit, the majority of whom mentioned removing or increasing the limit specifically to permit the possession and sale of a greater number of cannabis beverages per transaction.

The feedback obtained through these consultations informed the development of the proposed amendments.

Modern treaty obligations and Indigenous engagement and consultation

This regulatory proposal would impact federal cannabis licence holders (e.g. licensed processors, researchers, and analytical testers) and government laboratories. The proposal would also impact anyone participating in cannabis-based research and testing activities, and consumers of cannabis beverages, which could affect all Canadians, including Indigenous peoples.

Health Canada is committed to acknowledging and upholding the diverse and distinct contexts, history, and cross-sections of Indigenous nations and modern treaty holders across Canada, and exploring and supporting new ways to work together. Engagement with modern treaty holders would respect and take into account their jurisdiction.

Health Canada has not specifically engaged with Indigenous peoples on the proposed amendments. However, as part of its consultations with Canadians during the Canada Gazette, Part I, consultation period, the Department plans to seek feedback and comments to ensure that the proposed amendments are informed by, and responsive to, the cannabis industry, cannabis researchers and other relevant stakeholders, which include Indigenous-affiliated licence holders. As of May 31, 2021, there is one Indigenous-affiliated analytical testing licence holder and five Indigenous-affiliated research licence holders. The Department is also committed to ensuring any adjustments made to the proposed amendments clearly define parameters for modern treaty partners, and would continue to assess for treaty implications in future consultations and to address any identified implications or obligations.

The proposal is not expected to impact modern treaties with the Indigenous peoples of Canada.

Instrument choice

Non-therapeutic research on cannabis

Health Canada considered a variety of non-regulatory actions. For example, the Department investigated the possibility of allowing GPP-compliant cannabis to be used in clinical trials if the cannabis met additional requirements (e.g. further testing) similar to those for GMP. Licence holders interested in carrying out such research would have been subject to additional terms and conditions on their cannabis research licence. However, Health Canada determined that this approach risked compromising mutual international GMP recognition agreements and undermining the integrity of the clinical trial framework. As an interim measure, the Department published guidance for stakeholders, which was revised on May 31, 2021, that noted that Health Canada intended to allow some flexibility with respect to the data required for clinical trial applications involving non-therapeutic research on cannabis. All clinical trial applications must contain an investigator’s brochure summarizing available non-clinical and clinical information about the product under investigation. In the guidance, Health Canada indicates that it may consider the absence of product-specific information acceptable for this type of study, provided that the information is sufficient to evaluate the principal, active ingredient(s) — for instance, cannabidiol (CBD) and/or THC — related to their proposed use in the study. The information must nonetheless be relevant to the product under investigation in terms of route of administration, size and frequency of dose, and product form or class. Despite this interim measure, Health Canada determined that additional policies to further reduce the regulatory burden for researchers conducting non-therapeutic research on cannabis under the FDR would weaken the integrity of the clinical trial framework, and risk compromising Canada’s standing regarding international agreements and standards on clinical trials. Regulatory amendments, in contrast, would allow researchers to use commercially available cannabis products and support the objectives of the Act.

Health Canada also considered using terms and conditions on a licence to impose requirements pertaining to non-therapeutic research on cannabis, rather than proposing regulatory amendments. As provided for by the Act, the Minister may make a licence subject to terms and conditions. This approach is currently used for certain organoleptic testing, where terms and conditions governing adverse reaction reporting, quality controls and other elements are applied to the research licence. Health Canada considered the pros and cons of relying on terms and conditions on a licence, taking into account the complexity of the proposed regime, stakeholder feedback, and other considerations. Health Canada determined that the best approach was proposing regulatory amendments and applying additional terms and conditions on a licence as needed, to protect the health and safety of research participants.

Reference standards and test kits

Health Canada considered the option of issuing exemptions under section 140 of the Act, which would allow interested analytical testers and government laboratories to produce, distribute and sell reference standards and test kits. However, this option would increase the regulatory burden for licence holders and government laboratories, lack transparency and would not address the burden caused by requiring reference standards to be compliant with GPP requirements. The proposed amendments are a more comprehensive approach to address the current challenges with reference standards and test kits.

Head of laboratory

As educational qualifications are specified in the Regulations, regulatory amendments are the only appropriate instrument.

Cannabis beverages

This proposal would use an Order in Council to amend Schedule 3 to the Act that would remove one class of cannabis and create two new classes of cannabis, pursuant to subsection 151(2) of the Act.

Health Canada considered increasing the public possession limit for the entire non-solids containing cannabis class. However, this would have raised the limit for all other cannabis in this class, including certain liquid cannabis oils and cannabis topicals. Based on the feedback Health Canada received from stakeholders and from additional analysis, it was determined that this issue is specific to the equivalency for cannabis beverages. Health Canada is proposing to focus the amendment in a manner that would address the unique and unintended restrictions the dried cannabis equivalency currently poses on cannabis beverages.

Regulatory analysis

The costs and benefits of the proposed amendments have been assessed in accordance with the Treasury Board Secretariat Canadian Cost-Benefit Analysis Guide: Regulatory Proposals. The cost-benefit analysis attempts to evaluate and monetize the economic and social impacts of the regulatory changes (the regulatory scenario) relative to a world in which these changes did not occur (the baseline scenario). Monetized values are reported in present values over 2022–2031, discounted at 7% and expressed in 2020 dollars, unless otherwise noted.

Benefits and costs

The amendments in this proposal are necessary so that the Government of Canada can continue to fully and effectively implement the Act. This includes meeting the objectives of enhancing public awareness of the health risks associated with cannabis use by continuing to enable research on cannabis, as well as providing access to a quality-controlled supply of cannabis by facilitating cannabis testing. Additionally, increasing the public possession limit by amending the equivalency for beverages would better support the Act’s objective of providing for the licit production of cannabis to reduce illicit activities in relation to cannabis. Based on stakeholder consultations and Health Canada subject matter experts’ opinions, it is expected that the proposed amendments would result in total costs of $3,046,514 (PV) over 10 years for the cannabis industry and the Government of Canada.

Baseline versus regulatory scenario

The cost-benefit analysis evaluates incremental changes for cannabis researchers, analytical testing licence holders, the cannabis beverage industry, the public and the government. The proposed requirements and their impacts have been examined so that costs and benefits can be compared in both the baseline and regulatory scenarios. Table 1 presents the baseline scenario and the regulatory scenario requirements, as well as incremental changes due to the proposed amendments.

Table 1: Baseline versus regulatory scenario

Amendments	Baseline scenario	Regulatory scenario	Changes due to amendments
Non-therapeutic research on cannabis	This type of research is regulated under both the FDA and the Act.	This type of research would be regulated under the Act.	Enables non-therapeutic research with GPP-compliant cannabis. Government of Canada would require three full-time employees to review research applications, enforce the regulations, and ensure compliance.
Reference standards and test kits	Analytical testing licence holders are required to obtain an exemption under the Act or become a licensed processor to produce and sell cannabis reference standards and test kits.	Amendments would allow analytical testing licence holders to produce and sell cannabis reference standards and test kits under their existing authorizations, if authorized under their licence.	Avoids transactional fees associated with applying for a processing licence. Avoids costs associated with acquiring GPP compliance. Avoids administrative burden associated with applying for a processing licence. Enables the sale of cannabis reference standards and test kits among analytical testing laboratories. Helps to enable access to a quality-controlled supply of cannabis products.
Head of laboratory	Health Canada recognizes university degrees in a relevant science field. The degree must be from a Canadian university or from a foreign university recognized by a Canadian university or professional association.	Health Canada would expand the educational credentials, and accept equivalency assessments issued by organizations or institutions designated by IRCC or recognized by a province.	Avoids cost of potential re-assessment of degrees. Provides analytical testing laboratories access to a larger pool of qualified candidates.
Cannabis beverages	1 g of dried cannabis is equivalent to 70 g of non-solids containing cannabis. Therefore, an adult could possess 2 100 g (or approximately 2.1 L) of cannabis beverages in public.	1 g of dried cannabis would be equivalent to 570 g of cannabis beverages, and 70 g of non-solids containing cannabis other than cannabis beverages. As such, an adult could possess 17 100 g (approximately 17.1 L) of cannabis beverages in public, and 2 100 g of non-solids containing cannabis other than cannabis beverages.	Facilitates production and sale of cannabis beverages for the legal market. Allows adult consumers to purchase a greater amount of cannabis beverages without being at risk of exceeding the federal public possession limit. Cannabis industry would be impacted by paying to update the labelling of the beverages, point of sales and e-commerce systems to accommodate the new public possession limit. Government of Canada would incur implementation costs such as engaging in additional communication and outreach activities.

Costs

Compliance with the requirements would result in incremental costs to the cannabis industry totalling $32,315 (PV) over the period of 2022 to 2031. This cost is imposed only by the proposed amendments pertaining to cannabis beverages. In addition, it is expected that the proposed amendments would result in total costs of $3,014,199 for the Government of Canada, over the same period. The majority of these costs result from receiving and reviewing research licence applications, enforcing the regulations and ensuring compliance.

Non-therapeutic research on cannabis

Under the baseline scenario, most non-therapeutic research with cannabis meets the definition of a clinical trial and must comply with requirements under the FDA as well as the Act. The requirements under the FDA and the FDR (e.g. GMP requirements) currently pose barriers for the researchers who want to use commercially available cannabis products, which are in compliance with the GPP requirements under the Regulations, in their research. Under the proposed amendments, non-therapeutic research on cannabis would still be regulated under the Act and the Regulations and stakeholders would still be required to obtain an authorization under the Act before conducting this type of research. However, it would no longer be required to obtain an authorization relating to clinical trials under the FDA and the FDR. In addition, the proposed requirements would better reflect the differences between the cannabis used and the risks from non-therapeutic research on cannabis compared to the clinical trial framework under the FDA and its regulations. For example, unlike the FDA, the proposed amendments would not require product-specific pre-clinical data in every circumstance, or extensive chemistry and manufacturing data. As a result, it is expected that the proposed amendments would reduce the regulatory burden, and there would not be incremental costs to stakeholders.

To ensure the safety of participants in these studies, the proposed amendments would require researchers to report serious adverse reactions associated with cannabis distributed during the course of the research. Despite these proposed requirements, this would not lead to incremental costs, as the proposed adverse reaction reporting requirements are consistent to those under the FDR (baseline scenario). Consequently, it is not expected that the proposed amendments would result in incremental costs to stakeholders.

However, Health Canada would incur incremental costs to receive and review research licence applications, enforce the proposed regulations, and ensure compliance. It is expected that three full-time employees would be needed to complete these tasks. The associated costs to the Government are estimated to be $3,012,547 (PV) over the 10-year analytical framework (2022–2031). Health Canada would administer the proposed Regulations with existing funds.

Cannabis beverages

The Regulations require the label of any container in which certain cannabis products are packaged, including edible cannabis products, to include a public possession limit statement that outlines the amount of dried cannabis that the product is equivalent to (based on the dried cannabis equivalency amounts in Schedule 3 to the Act). As a result of the proposed amendments, licensed processors would be required to update labels of cannabis beverages in accordance with the proposed amendments to Schedule 3 to the Act. Based on point-of-sale data collected from 481 provincially and territorially authorized cannabis retail stores across Canada between January and June 2021, it is estimated that 46 unique cannabis beverage products would be impacted by the proposed amendments to Schedule 3. Since updating the equivalency on the product label only requires minor changes, it is expected that updating each product label would require two hours of additional work for a food labelling specialist (at $32.50 per hour, including overhead), resulting in a one-time cost in 2022 of approximately $2,990 (PV) over 10 years. In order to reduce the impacts of these amendments on industry, a 12-month transition period would be provided. During this period, licensed processors would be permitted to deplete stocks of existing products. Any cannabis beverages packaged and labelled in accordance with the existing provisions in the Regulations, prior to the end of the 12-month transition period, may continue to be sold indefinitely by authorized retailers and licence holders authorized to sell cannabis products. Therefore, it is not expected that the proposed amendments would require stakeholders to relabel their existing products or replace their existing label stock.

In addition, Health Canada is aware that retailers (online and in store) have systems that enable them to calculate the equivalent amount of cannabis purchased in dried cannabis. These systems help to ensure that consumers do not purchase more cannabis than the public possession limit permits. The equivalencies and limits for affected cannabis products would need to be updated in cannabis sales systems according to the proposed amendments to Schedule 3. Both e-commerce (for online sales) and point of sale (for in store sales) are designed to easily incorporate these proposed changes. Based on stakeholder consultation, approximately 40 different companies would need to update the equivalency ratio of the 46 affected cannabis beverages in their systems. Incorporating the proposed changes to the equivalencies and public possession limits into the sale systems would require a maximum of 0.5 hours of additional work per product per system for a sale system analyst (at $31.90 per hour, including overhead), resulting in a one-time cost in 2022 of approximately $29,325 (PV).

Finally, Health Canada would incur some costs in order to communicate with stakeholders about the proposed amendments to Schedule 3 to the Act. Implementation costs include updating relevant Health Canada web pages and social media channels, issuing a letter and guidance documents to licensed sellers of cannabis for medical purposes and law enforcement authorities and conducting outreach activities with the provinces and territories. It is expected that these activities would require 25 hours of additional work for a senior policy analyst in 2022, resulting in a one-time cost of approximately $1,652 (PV).

Benefits

Since the proposed amendments are expected to be a low cost, the benefits are discussed qualitatively. The amendments in this proposal are necessary so that the Department can continue to fully and effectively implement the Act. This includes meeting the objectives of enhancing public awareness of the health risks associated with cannabis use by continuing to enable research with cannabis, and providing access to a quality-controlled supply of cannabis by facilitating cannabis testing. Additionally, increasing the public possession limit for cannabis beverages would better support the Act’s objective of providing for the licit production of cannabis to reduce illicit activities in relation to cannabis.

Non-therapeutic research on cannabis

The proposed amendments would remove certain non-therapeutic research on cannabis from the application of the FDA; such studies would remain regulated under the Act and its Regulations. This would help to create a more robust research climate that would contribute to addressing the current knowledge gaps and increasing the understanding of cannabis. The evidence and data gathered would provide information to help inform consumer decision-making and further increase public awareness of the health risks associated with consuming cannabis. In addition, the evidence and data gathered would inform Health Canada, the provinces and territories, and stakeholders in the public health sector in producing better public education materials and enabling better public health decision-making and public health measures. Specifically, this proposal would allow researchers to investigate cannabis and its effects from a non-therapeutic perspective and would allow more research in the context of cannabis product development. The results from the product development studies would likely feed into licence holders’ business decisions regarding the release of new cannabis products and allow consumers to have better information about the effects of cannabis, thereby better protecting public health and safety. Further, adverse reaction reporting requirements generally similar to those that already applied to sponsors of a clinical trial under the FDR would be applied on licence holders conducting non-therapeutic research on cannabis, helping to protect participants.

Reference standards and test kits

Without the proposed amendments, analytical testing licence holders would continue to need to apply for an exemption under the Act or apply for a processing licence in order to produce and sell reference standards. The proposed amendments would allow analytical testing licence holders to undertake those activities without going through those processes. They would benefit from avoiding the costs associated with getting a processing licence. For example, they would not need to pay for the application and additional security clearance fees.

As of June 2021, there are 145 analytical testing licence holders. It is expected that the demand from the cannabis industry for reference standards and test kits could be met by approximately 13 analytical testing licence holders engaging in the production and sale of test kits or reference standards. These 13 analytical testing licence holders would no longer need to spend time obtaining a processing licence to undertake these activities; hence, they would benefit from administrative cost savings, which is discussed in the “One-for-one rule” section below. As a result of more licence holders producing and selling reference standards and producing test kits, these materials, which are necessary to conduct cannabis testing and integral to maintaining access to a quality-controlled supply of cannabis, would be more widely available in the market.

Head of laboratory

The proposed amendments to expand the acceptable qualifications for a person to become a head of laboratory would benefit these laboratories by giving them access to a larger pool of qualified candidates. Moreover, candidates whose foreign credentials have already been recognized by a designated organization or institution by IRCC would no longer be required to obtain another assessment, which would result in cost savings.

Cannabis beverages

Increasing the public possession limit for cannabis beverages would better support the Act’s objective of providing for the licit production of cannabis to reduce illicit activities in relation to cannabis. Specifically, the amendments to Schedule 3 to the Act would correct an unintended consequence of the current dried cannabis equivalency, which restricts public possession and sale of cannabis beverages to a greater extent than other forms of cannabis. Increasing the amount of cannabis beverages that an adult could possess in public would benefit adults who consume cannabis beverages.

Cost-benefit statement

The total costs would be $3,046,514 (PV) over 10 years. The benefits associated with these amendments are described qualitatively.

• Number of years: 10 years (from 2022 to 2031)
• Base year for costing: 2020
• Present value base year: 2022
• Discount rate: 7%

Table 2: Monetized costs (in thousands)

Impacted stakeholder	Description of cost	Base year (2022)	Other relevant years (2026)	Final year (2031)	Total (present value)	Annualized value
Government	Three full-time employees to receive and review research licence applications, enforce the proposed regulations, and ensure compliance	$400.9	$400.9	$400.9	$3,012.5	$428.9
Government	Implementation and communication of the updated equivalencies and public possession limits for cannabis beverages	$1.7	$0.0	$0.0	$1.7	$0.2
Industry	Updating cannabis beverage product labelling	$3.0	$0.0	$0.0	$3.0	$0.4
Industry	Updating the cannabis equivalencies and possession limits in retail sales systems	$29.3	$0.0	$0.0	$29.3	$4.2
All stakeholders	Total costs	$434.8	$400.9	$400.9	$3,046.5	$433.8

Qualitative benefits

Positive impacts

• Head of laboratory applicants whose foreign credentials have already been recognized by a designated organization or institution by IRCC would benefit from cost savings.
• The proposed amendments would enhance public awareness of the health risks associated with cannabis use by further enabling research with cannabis and by providing access to a quality-controlled supply of cannabis by facilitating cannabis testing.
• The amendments to increase the equivalency for cannabis beverages would increase the amount of cannabis beverages an adult could possess in public.

Small business lens

Analysis under the small business lens^{footnote 5} concluded that the proposed amendments would impact small businesses. These amendments are expected to have a net reduction in costs to small businesses due to expanding authorized activities under existing analytical testing licences and changes to the requirements for the head of laboratory position. Since the proposed amendments are relieving in nature, no flexible approaches were considered; however, proactive steps would be taken to further reduce the cost imposed on small businesses.

Of the 145 analytical testing licence holders as of June 2021,^{footnote 6} 82 are considered small businesses. Ten of these small businesses are expected to engage in the production and sale of reference standards and the production of test kits. These ten small businesses would benefit from avoiding the costs associated with getting a processing licence, including the administrative costs discussed in the “One-for-one rule” section. Moreover, other small analytical testing licence holders would benefit from these products becoming more widely available for them to purchase.

The proposed amendments to expand the acceptable qualifications for a person to become a head of laboratory would benefit small business analytical testing licence holders by enlarging the pool of eligible candidates. Candidates whose foreign credentials that are already recognized by an IRCC designated organization or institution would no longer be required to obtain another assessment, which would result in cost savings.

The proposed amendments to Schedule 3 to the Act would allow consumers to purchase more cannabis beverages, thereby benefiting small businesses that produce them. However, these proposed amendments would also result in some costs to small businesses. Cannabis retailers have systems that enable them to ensure that consumers do not purchase more cannabis than the public possession limit. While not a regulatory requirement, to continue ensuring that consumers do not purchase more than the public possession limit, the equivalencies and limits for affected cannabis products would need to be updated in cannabis sales systems according to the proposed amendments to Schedule 3. Based on stakeholder consultations, approximately ten companies that manage cannabis retail point-of-sale and e-commerce systems are small businesses. It is expected that incorporating the proposed equivalencies and limits into these systems would result in some costs to small businesses. Licensed processors would also be required to update product labels as a result of the amendments to Schedule 3 to the Act. Based on data from Health Canada’s Cannabis Tracking System, a national inventory tracking system administered by Health Canada, only three of the nine affected licensed processors are small businesses. These small businesses produce 7 of the 46 impacted products, so there would be a cost to them associated with this requirement. These costs to small businesses are expected to be smaller than the cost savings discussed above.

In considering the impact of these amendments on small businesses, it is proposed that cannabis beverage producers would be provided with a 12-month transition period to sell and use existing products and labels. As a result, small businesses would not pay any additional costs to relabel existing products or replace their existing label stock. No small business specific flexibilities were considered, as these amendments are generally relieving in nature and tailored to help small businesses in these sectors.

One-for-one rule

The one-for-one rule applies since there is an incremental decrease in the administrative burden on business, and the proposal is considered a burden out under the rule. No regulatory titles are repealed or introduced. The net change in annualized administrative activities is a saving of $8,620 or $59 per business (expressed in and discounted to $2012, calculated over 2022–2031, and discounted 7% as required by the Red Tape Reduction Regulations).^{footnote 7}

By authorizing analytical testing licence holders to produce and sell reference standards and produce test kits under their existing authorizations, these businesses would no longer need to go through the process of obtaining a processing licence. This is expected to result in administrative cost savings for the businesses that will undertake these activities. As mentioned above, of the 13 projected analytical testing licence holders that could meet the cannabis industry’s demand for reference standards or test kits, 3 would be medium or large businesses and 10 would be small businesses. Health Canada estimates that the processing licence application process would take, on average, 162.9 hours to complete. The time involved in this process would be divided between a senior person (25%) with a wage rate of $62.25 per hour (including overhead) and a responsible person (75%) with a wage rate of $38.75 per hour (including overhead). The licence holders would be required to renew their licence every three years. This is expected to take, on average, 22.5 hours to complete. The division of labour would be the same as the initial application. With the proposed amendments, this would result in annualized administrative cost savings of $8,620 or $59 per business.

Regulatory cooperation and alignment

Non-therapeutic research on cannabis, reference standards and test kits, and head of laboratory

Cannabis continues to be illegal for non-medical use in the vast majority of countries. Despite this restriction, many foreign jurisdictions, including the United States, allow research with cannabis.

As a result of the proposed changes, Canada may be perceived as being less aligned with international standards provided by the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), of which Canada is a member. This is because international standards require that research substances, including cannabis, used in a clinical trial be compliant with GMP, not GPP. Further, these international standards, unlike the regime proposed in these amendments, do not recognize a distinction between research on cannabis for therapeutic and non-therapeutic purposes. As a result of the proposed amendments, more cannabis produced in Canada would be available for use in interventional non-therapeutic research on cannabis, as Canadian researchers would be allowed to use GPP-compliant cannabis rather than solely GMP compliant cannabis. It should also be noted that cannabis clinical trials that are authorized under the FDA would still align with ICH requirements, as those clinical trials would still be required to use GMP compliant cannabis.

The Act provides for the oversight and licensing of a legal cannabis supply chain of which federal and provincial/territorial governments share responsibilities. The federal Minister of Health is responsible for licensing, among other activities, the production of cannabis (cultivation and processing), while provincial and territorial governments can authorize the distribution and retail sale of cannabis in their respective jurisdictions. Research involving cannabis requires authorizations from Health Canada; however, researchers may also have to comply with other provincial and territorial requirements related to research. For example, there are provincial and territorial requirements in certain jurisdictions and court rulings that set rules on informed consent and research ethics boards in certain jurisdictions.

Cannabis beverages

Many foreign jurisdictions that have legalized cannabis for non-medical use have set a public possession limit for dried cannabis, which is similar to Canada’s 30 g limit. In addition to the limit on dried cannabis, they have also set equivalency amounts for other forms of cannabis. However, each jurisdiction has taken its own approach to developing the equivalency of a quantity, many of which differ from Canada’s (e.g. some have set limits based on THC). Given the current differences in approaches among jurisdictions, the proposed changes to Schedule 3 to the Act do not affect alignment with the rules for cannabis possession in other jurisdictions. Moreover, international drug control treaties prohibit the import or export of cannabis, with exceptions for medical and scientific purposes. Individuals are generally not permitted to carry cannabis across borders and thus would not need to be aware of, or be affected by, the various possession limits set by different countries.

Some provinces and territories have instituted corresponding public possession and sale limits on cannabis within their regulatory frameworks to align with the federal public possession limit. Most provinces and territories cross-reference Schedule 3 to the Act and thus the update to their public possession and sale limits could be automatic once the proposed amendment comes into force. Health Canada would ensure provinces and territories are aware of the proposed approach and work closely with those who wish to align their regulations with the federal limit.

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

Non-therapeutic research on cannabis

The proposed amendments to enable non-therapeutic research on cannabis are intended to allow more cannabis-based research involving human participants with appropriate public health and safety controls. Historically, clinical trials and similar research have been conducted on young, healthy, white males, primarily due to their position of privilege and accessibility in society. However, with increasing evidence to suggest that certain demographic traits (e.g. sex, ethnicity, socioeconomic status) play a significant role in affecting disease determinants, there is a need to diversify the representation of clinical trial subjects.^{footnote 8 footnote 9 footnote 10}underrepresentation of minority population participants in clinical trials and similar research is problematic because these research studies are essential in informing and advancing health care innovation, delivery, intervention, and outcomes.^{footnote 11}

With respect to cannabis, Canadian surveys generally suggest there are differences in the prevalence of cannabis use according to age (with youth and young adults having higher rates of use than adults over the age of 25) and sex (with males having higher rates of use compared to their female counterparts). Furthermore, there is preliminary evidence to suggest that sex-based differences as to the effects of cannabis are due to differences in gonadal hormone levels, muscle mass, fat tissue distribution and other pharmacokinetic and pharmacodynamic factors.^{footnote 12 footnote 13} While there is a lack of robust research in the area, some studies suggest that there are a number of differences in effects of cannabis intoxication (e.g. duration of effect) between males and females.^{footnote 14} This further emphasizes the need for more clinical trials and similar research on the effects of cannabis on various subpopulations.

Head of laboratory

Similar to the historical realities discussed with respect to clinical trials and similar research, white males have also been historically more likely to attain a higher education credential (e.g. post-secondary education) in Canada. While diversification has increased in higher education institutions in Canada, there is evidence to suggest that racial/ethnic minorities, Indigenous peoples, individuals from lower socioeconomic groups, rural/remote areas, etc., continue to be underrepresented in higher education institutions, mainly due to financial and accessibility constraints.^{footnote 15} For example, university attainment for Indigenous populations is significantly lower (i.e. 14% of the off-reserve Indigenous population) compared to the total population (33%).^{footnote 16} Similarly, in 2016, of individuals that held a university certificate, diploma or degree at the bachelor level or above, only 31% were a visible minority.^{footnote 17} Socioeconomic class is also an indicator on whether one is likely to pursue post-secondary education. In 2014, 79% of 19-year-old Canadians from families in the top after-tax income quintile were enrolled in post-secondary programs, compared to only 45% of their peers in the bottom income quintile.^{footnote 18}

In Canada, the attainment of a post-secondary degree is significantly correlated with employment rate, with university graduates having a higher employment rate compared to high school graduates.^{footnote 19} For example, among Canadians over the age of 25 in 2019, the employment rate for those with another form of post-secondary degree or diploma (e.g. college diploma) was 69%, compared to 74% for university graduates.^{footnote 19} Amendments to the head of laboratory qualifications under the Regulations would allow those who have a post-secondary diploma from a college or CEGEP in a relevant field for the work of the head of laboratory to be eligible for the position. This change may lead to a more diverse range of candidates becoming eligible for the head of laboratory position.

Cannabis beverages

The proposed amendments would increase the equivalency for cannabis beverages, thereby increasing the amount of cannabis beverages that an adult could possess in public to be more in line with the amount they can possess of cannabis in other forms. This change may result in changes in consumer preferences, leading to cannabis beverages becoming a more popular cannabis product; however, there is no evidence to support that this change to equivalency and the corresponding impact on consumer preferences would occur. Despite the proposed changes to the public possession limit for cannabis beverages, all other public health controls on edible cannabis products (including cannabis beverages) would remain unchanged, including the maximum limit of 10 mg of THC per immediate container.

The proposed amendments to cannabis beverages may have a larger impact on young adults (20–24 years old), and males in general. According to the 2020 CCS, among respondents who reported using cannabis in the last 12 months, the use of cannabis beverages was highest among 20–24 year olds (9.1%) compared to those aged 25 and older (5.3%), while data was not available for youth (19 years old and younger).^{footnote 20} Further, according to the 2020 CCS, there was no significant difference in use of cannabis beverages between males and females (6.6% males vs. 5.2% females).^{footnote 20} However, according to the 2018–2019 Canadian Student Tobacco, Alcohol, and Drugs Survey (CSTADS), there was a difference among grade 7–12 students who reported using cannabis in the previous year. Males were significantly more likely to consume cannabis beverages (17%) than females (13%).^{footnote 21} While those under the age of 18 generally cannot buy cannabis beverages from a legal retailer, CSTADS provided a source of data showing that there may be significant differences in cannabis beverage use between males and females. In addition, young adults (20–24 years old) tended to consume greater quantities of cannabis beverages in one sitting than those 25 years and older (25+).^{footnote 20} Among past 12-month consumers of cannabis beverages, the average amount consumed on a typical day by 20–24 year olds when they consume cannabis beverages was 404.8 mL, compared to older consumers (25+), where the average amount consumed on a typical day was 284.2 mL.^{footnote 20}

Contact: A detailed gender-based analysis plus report is available upon request. If interested, please send an email to cannabis.consultation@hc-sc.gc.ca.

Implementation, compliance and enforcement, and service standards

Implementation

Non-therapeutic research on cannabis

The proposed amendments related to non-therapeutic research on cannabis would come into force on the day the proposed regulations are registered. After the coming into force, parties interested in conducting this type of research could submit an application for a research licence under the Regulations. The option to apply for a NOL from Health Canada to conduct non-therapeutic research on cannabis by way of a clinical trial under the FDR would still remain. For example, researchers may want to use the results from the non-therapeutic study as part of the drug development plan for a cannabis product in the treatment of a specific disease or condition. Further, those already conducting clinical trials with cannabis would not have to seek further authorization under the Regulations. Such research would continue to be regulated under the FDR and the Regulations, and relevant sections of the Regulations (e.g. production and record retention) would continue apply.

Health Canada would determine how to transition existing research licences conducting research included under non-therapeutic research on cannabis, such as organoleptic studies, as part of the implementation plan. No transitional provisions are proposed related to non-therapeutic research on cannabis.

If the proposal moves forward, Health Canada intends to assess applications for research licences proposing to conduct non-therapeutic research with cannabis in accordance with the Act and the Regulations. The application requirements could depend on various factors, including the type of cannabis studied, the design of the proposed research and/or the overall level of risk to the participants. The Department also intends to assess changes relating to research licences, such as amendment requests or notifications, in accordance with the Act and the Regulations. Where appropriate, for example to protect the safety of participants and to aid in monitoring compliance, conditions could be applied to research licences. The existing requirements for research licences include requirements for applicants to submit information about the proposed site and its personnel, physical security, and others, as set out in the Cannabis Licensing Application Guide: Research. Additional or modified application requirements specific to non-therapeutic research on cannabis could be set if the proposal moves forward.

Reference standards and test kits

The proposed amendments allowing analytical testing licence holders and government laboratories to produce, distribute and sell reference standards and produce test kits would come into force on the day the proposed Regulations are registered. After the coming into force, parties interested in producing, distributing or selling reference standards, or producing test kits would be encouraged to apply for an analytical testing licence. Individuals working in government laboratories could automatically be allowed to conduct these activities.

Head of laboratory

The proposed amendments to the qualification of the head of laboratory would come into force on the day the proposed Regulations are registered.

Cannabis beverages

The proposed amendments to the equivalency for cannabis beverages would come into force on the day the proposed regulations are registered. However, a transitional provision would be included to provide the cannabis industry with sufficient time to update the labels of affected cannabis products, as described in the “Description” section above.

Communications and guidance

Health Canada would notify stakeholders via email, the Consultation and Stakeholder Information Management System, and the Government of Canada consultation websites of the proposed amendments.

Health Canada is committed to continuing to provide industry, the provinces and territories and other stakeholders with relevant and timely information. Updates to guidance documents and compliance promotion and outreach activities (including notices) aimed at informing licence holders, government laboratories, researchers, importers/exporters, distributors and retailers of cannabis would take place to increase awareness of the measures set out in this proposal and to assist parties in achieving compliance. Additionally, Health Canada would engage with law enforcement authorities to ensure they are aware of changes to the public possession limit for cannabis beverages.

Consistency with other regulatory frameworks

The proposal has been developed taking into consideration existing regulatory frameworks such as the FDR and the Natural Health Products Regulations. Health Canada would continue to evaluate opportunities to align with requirements under other frameworks, as appropriate.

Compliance and enforcement

The regulatory proposal for non-therapeutic research on cannabis includes additional authorities to protect the health and safety of participants. They are consistent with Health Canada’s broader approach to compliance and enforcement for cannabis, which includes compliance promotion, compliance monitoring and enforcement actions.

In alignment with Health Canada’s compliance and enforcement policy framework for the Act, and informed by the circumstances of each case, Health Canada takes a risk-based approach to its enforcement actions and chooses the most appropriate tool to achieve compliance and mitigate risks as circumstances warrant. The proposed changes would provide Health Canada with the authority to suspend or revoke a research licence, where there are reasonable grounds to believe that the use of the cannabis in the research presents a risk of injury to the health of a participant or other person that cannot reasonably be mitigated, or if the objectives of the research that are set out in the application will not be achieved.

Other regulatory amendments within this proposal, such as those related to reference standards and test kits, head of laboratory, and the equivalency for cannabis beverages, would not impact Health Canada’s existing compliance and enforcement powers or policy.

Health Canada would continue to provide oversight to verify that regulated parties are aware of and adhere to the proposed regulatory requirements. Health Canada would take timely actions where appropriate to address risks to public health and/or public safety and non-compliance with the applicable requirements. Health Canada’s national compliance and enforcement approach would continue to apply, including promoting and verifying compliance with the Act and the Regulations through inspections and other means, and working toward preventing non-compliance. These measures range 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. Furthermore, the enforcement measures under the Act and the Regulations would continue to be available to Health Canada.

Depending on the circumstances, compliance and enforcement measures could include, but are not limited to, warnings, amending a federal licence, suspending or revoking a federal licence, 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 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.

Service standards

Health Canada’s current service standards for research licences vary depending on the type of licence required. The service standard for a single protocol application is 42 days, whether for a new licence, an amendment, or a renewal. For a multiple sites licence or an institutional licence, the service standard is 180 days for a new licence, 30 days for an amendment, and 60 days for a renewal.

The proposed changes would not affect service standards for research licences or any other type of licence (e.g. processing or analytical testing), or any service standards regarding government laboratories.

Contact

John Clare
Director General
Strategic Policy Directorate
Controlled Substances and Cannabis Branch
Health Canada
Address Locator: 0302I
Ottawa, Ontario
K1A 0K9
Email: cannabis.consultation@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to paragraphs 30(1)(b.1)^{footnote a} and (j)^{footnote b} of the Food and Drugs Act^{footnote c} and subsection 139(1) of the Cannabis Act^{footnote d}, proposes to make the annexed Regulations Amending Certain Regulations Concerning Cannabis Research and Testing and Cannabis Beverages.

Interested persons may make representations concerning the proposed Regulations within 45 days after the date of publication of this notice. All such representations must be submitted online on the Canada Gazette, Part I, or, if submitted by email, post or other format, must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to John Clare, Director General, Strategic Policy, 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).

Ottawa, March 3, 2022

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending Certain Regulations Concerning Cannabis Research and Testing and Cannabis Beverages

Cannabis Act

Cannabis Regulations

1 (1) Subsection 1(1) of the Cannabis Regulations^{footnote 22} is amended by adding the following in alphabetical order:

cannabis beverage

means edible cannabis that is intended to be consumed by drinking and has a concentration of 3% w/w or less of THC, taking into account the potential to convert THCA into THC. (boisson de cannabis)

(2) The portion of the definition drug in subsection 1(2) of the Regulations after subparagraph (b) (ii) is replaced by the following:

It includes cannabis that is an active pharmaceutical ingredient as defined in subsection C.01A.001(1) of the Food and Drug Regulations. It also includes cannabis that is manufactured or sold for use in a clinical trial as defined in section C.05.001 of those Regulations, unless it is non-therapeutic research on cannabis. (drogue)

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

non-therapeutic research on cannabis

means research that involves the distribution of cannabis to human participants by the holder of a licence for research and that is not a clinical trial as defined in section C.05.001 of the Food and Drug Regulations for which the sale of cannabis is authorized in accordance with section C.05.006 of those Regulations. This definition does not include research

• (a) related to the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, or the restoration or correction of organic functions, in human beings or animals;
• (b) involving the distribution of cannabis that is
  • (i) represented for use in the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, or the restoration or correction of organic functions, in human beings or animals,
  • (ii) manufactured or sold by any person other than a licence holder referred to in paragraph 2(a) of the Cannabis Exemption (Food and Drugs Act) Regulations for use in the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in the restoration or correction of organic functions, in human beings or animals,
  • (iii) referred to in any of paragraphs 1(b) to (d) of those Regulations, or
  • (iv) referred to in paragraph 1(f) of those Regulations in respect of an experimental study as defined in section C.08.013 of the Food and Drug Regulations;
• (c) involving the distribution of cannabis that contains any substance that is referred to in column 1 of Schedule 5 to the Act and that
  • (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 of subsection 101.3(6) or section 102.2 or 102.3, and
  • (ii) in the case of cannabis that is not a cannabis product or that is contained in a cannabis accessory that is not a cannabis product, would not meet those requirements if it were a cannabis product or if it were contained in a cannabis accessory that is a cannabis product; or
• (d) involving the participation of, or relating to, a young person. (recherche non thérapeutique sur le cannabis)

reference standard

means a standardized form of cannabis that is intended to be used as a measurement base when testing a substance to confirm its identity, concentration, quality or purity for a medical, laboratory, industrial, educational, law administration or enforcement, or research purpose. (étalon de référence)

2 Section 4 of the Regulations is replaced by the following:

Authorized activities — federal or provincial laboratory

4 (1) Individuals who are involved in the testing of cannabis as a requirement of their duties at a laboratory that is operated by the Government of Canada or the government of a province are authorized to conduct the following activities:

• (a) to the extent necessary to conduct the testing,
  • (i) to possess cannabis,
  • (ii) to obtain cannabis by altering its chemical or physical properties by any means,
  • (iii) in the case of seed viability testing, to obtain cannabis by cultivating it, and
  • (iv) to distribute cannabis to any of the following:
    • (A) a holder of a licence for analytical testing,
    • (B) an individual referred to in subsection (4), or
    • (C) other individuals who are involved in the testing of cannabis as a requirement of their duties at a laboratory that is operated by the Government of Canada or the government of a province;
• (b) for the purpose of producing reference standards or manufacturing or assembling test kits, to produce cannabis, other than obtain it by cultivating, propagating or harvesting it; and
• (c) to sell or distribute reference standards to any of the following:
  • (i) a holder of a licence for cultivation,
  • (ii) a holder of a licence for processing,
  • (iii) a holder of a licence for research,
  • (iv) a holder of a licence for analytical testing,
  • (v) a holder of a cannabis drug licence,
  • (vi) an individual referred to in subsection (4),
  • (vii) the Minister,
  • (viii) a person to which an exemption has been granted under section 140 of the Act in relation to the cannabis or the class of cannabis that is distributed, or
  • (ix) other individuals who are involved in the testing of cannabis as a requirement of their duties at a laboratory that is operated by the Government of Canada or the government of a province.

Offer

(2) An individual who conducts an activity referred to in subparagraph (1)(a)(ii) or (iii) or paragraph (1)(b) is also authorized to offer to conduct that activity.

Use of an organic solvent

(3) An individual who conducts an activity referred to in subparagraph (1)(a)(ii) or paragraph (1)(b) is also authorized to alter or offer to alter the chemical or physical properties of cannabis by the use of an organic solvent when conducting that activity.

Authorized activities — accredited laboratory

(4) An individual who is involved in the testing of cannabis as a requirement of their duties at a laboratory that is designated as an accredited laboratory under section 2.1 of the Seeds Act is authorized to conduct the activities referred to in subparagraphs (1)(a)(i), (iii) and (iv), and to offer to conduct the activity referred to in subparagraph (1)(a)(iii), to the extent necessary to conduct the testing.

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

Reference standard

(3) For the purposes of subsection 34(1) of the Act, the following persons may sell a reference standard that contains any substance that is referred to in column 1 of Schedule 5 to the Act:

• (a) a holder of a licence for processing that authorizes the sale of cannabis;
• (b) a holder of a licence for analytical testing that authorizes the sale of cannabis; or
• (c) the individuals referred to in section 4.

4 The Regulations are amended by adding the following after section 5.3:

Prohibition — reference standards

5.4 A reference standard must not be used as an ingredient, be included in a cannabis product or be packaged and labelled for sale to a consumer at the retail level.

5 (1) The portion of paragraph 17(5)(b) of the Regulations before subparagraph (i) is replaced by the following:

• (b) to sell and distribute the following to a holder of a licence for micro-cultivation or standard cultivation:

(2) Subparagraph 17(5)(b)(ii) of the Regulations is replaced by the following:

• (ii) reference standards;

(3) The portion of paragraph 17(5)(c) of the Regulations before subparagraph (i) is replaced by the following:

• (c) to sell and distribute the following to a holder of a licence for a nursery:

(4) Subparagraph 17(5)(c)(ii) of the Regulations is replaced by the following:

• (ii) reference standards;

6 Subsection 19(4) of the Regulations is replaced by the following:

Non-application

(4) Subsections (1) to (3) do not apply in respect of a reference standard or a test kit.

7 (1) Subsections 22(1) to (3) of the Regulations are replaced by the following:

Authorized activities

22 (1) Subject to the other provisions of these Regulations, a holder of a licence for analytical testing is authorized to conduct those of the following activities that are authorized by the licence:

• (a) for the purpose of testing,
  • (i) to possess cannabis, and
  • (ii) to obtain cannabis by altering its chemical or physical properties by any means;
• (b) for the purpose of producing reference standards or manufacturing or assembling test kits, to produce cannabis, other than obtain it by cultivating, propagating or harvesting it; and
• (c) to sell cannabis.

Offer

(2) A holder of a licence for analytical testing that is authorized to conduct the activity referred to in subparagraph (1)(a)(ii) or paragraph (1)(b) is also authorized to offer to conduct that activity.

Use of organic solvent

(3) A holder of a licence for analytical testing that is authorized to conduct the activity referred to in subparagraph (1)(a)(ii) or paragraph (1)(b) is also authorized to alter or offer to alter the chemical or physical properties of cannabis by the use of an organic solvent when conducting that activity.

(2) Section 22 of the Regulations is amended by adding the following after subsection (4):

Sale

(5) A holder of a licence for analytical testing whose licence authorizes the sale of cannabis is authorized to sell and distribute reference standards to any of the following:

• (a) a holder of a licence for cultivation;
• (b) a holder of a licence for processing;
• (c) a holder of a licence for research;
• (d) another holder of a licence for analytical testing;
• (e) a holder of a cannabis drug licence;
• (f) the individuals referred to in section 4;
• (g) the Minister; or
• (h) a person to which an exemption has been granted under section 140 of the Act in relation to the cannabis or class of cannabis that is sold or distributed.

8 Subsection 23(2) of the Regulations is replaced by the following:

Qualifications

(2) The head of laboratory must

• (a) have sufficient knowledge of the provisions of the Act and these Regulations that apply to the holder of the licence for analytical testing to properly carry out the duties of the position;
• (b) have knowledge and experience relevant to the duties of the position; and
• (c) hold
  • (i) a diploma, certificate or credential awarded by a post-secondary educational institution in Canada in a field or occupation that is relevant to the duties of the position, such as chemistry, biology, laboratory technician, pharmaceutical or scientific regulatory affairs, or laboratory management, or
  • (ii) a diploma, certificate or credential awarded by a foreign educational institution in a field or occupation referred to in subparagraph (i) and
    • (A) an equivalency assessment as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations, or
    • (B) an equivalency assessment issued by an organization or institution that is responsible for issuing equivalency assessments and is recognized by a province.

9 (1) Subparagraphs 28(1)(b)(iii) to (v) of the Regulations are replaced by the following:

• (iii) a holder of a licence for analytical testing,
• (iv) a holder of a cannabis drug licence,
• (v) the individuals referred to in section 4,
• (vi) the Minister, or
• (vii) a person to which an exemption has been granted under section 140 of the Act in relation to the cannabis or class of cannabis that is sold.

(2) Subparagraph 28(5)(b)(ii) of the Regulations is replaced by the following:

• (ii) a person to which an exemption has been granted under section 140 of the Act in relation to the cannabis or class of cannabis that is distributed.

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

Requirements of Part 6

28.1 (1) The requirements of Part 6 apply to the following cannabis or cannabis accessory that is administered or distributed to a human participant in the conduct of non-therapeutic research on cannabis as if the cannabis or cannabis accessory were a cannabis product or will become one:

• (a) cannabis that is not a cannabis product or is contained in a cannabis accessory that is not a cannabis product; and
• (b) a cannabis accessory that contains cannabis and that is not a cannabis product.

References to section 97

(2) For the purposes of subsection (1), any reference in Part 6 to subsection 97(1) or (2) should be read as a reference to paragraph (3)(a) or (b), respectively.

Variability limits

(3) Cannabis that is not a cannabis product — or that is contained in a cannabis accessory that is not a cannabis product — and that is administered or distributed by the holder of a licence for research to human participants in the conduct of non-therapeutic research on cannabis must not contain

• (a) in the case of a cannabis extract or a cannabis topical, less than 85% or more than 115% of the quantity or concentration of THC or CBD represented by the holder in the licence application related to the research; and
• (b) in the case of edible cannabis,
  • (i) if the quantity of THC or CBD that is represented by the holder in the licence application related to the research exceeds 5 mg, less than 85% or more than 115% of that quantity,
  • (ii) if the quantity of THC or CBD that is represented by the holder in the licence application related to the research exceeds 2 mg but does not exceed 5 mg, less than 80% or more than 120% of that quantity, and
  • (iii) if the quantity of THC or CBD that is represented by the holder in the licence application related to the research does not exceed 2 mg, less than 75% or more than 125% of that quantity.

Requirements — edible cannabis

(4) The holder of a licence for research that administers or distributes edible cannabis to human participants in the conduct of non-therapeutic research on cannabis must ensure that

• (a) a meat product, poultry product or fish, other than a food additive, was not used as an ingredient to produce the edible cannabis — and was not a constituent of such an ingredient — unless the meat product, poultry product or fish
  • (i) was produced by a person that is authorized to produce it under the laws of a province or the Safe Food for Canadians Act or was imported in accordance with that Act, and
  • (ii) had a water activity that did not exceed 0.85 at a temperature of 22 ± 2°C at the time the meat product, poultry product or fish was obtained by the holder that produced the edible cannabis;
• (b) food that was produced by a holder of a licence for research and that was used by that holder as an ingredient to produce the edible cannabis — or as a constituent of such an ingredient — was not a meat product, poultry product or fish, and the sale of the food would not have been prohibited under section 4 of the Food and Drugs Act;
• (c) a food additive was not used as an ingredient to produce the edible cannabis unless
  • (i) the edible cannabis would be a food that is the subject of a marketing authorization if the edible cannabis did not contain or have on it anything referred to in item 1 or 3 of Schedule 1 to the Act,
  • (ii) the marketing authorization would permit the food additive to be in or on the food,
  • (iii) the conditions under which the marketing authorization would permit the food additive to be in or on the food — including any maximum levels of use — were complied with, and
  • (iv) the food additive is not caffeine or caffeine citrate; and
• (d) the edible cannabis was not irradiated unless
  • (i) the edible cannabis would be a food that is listed in item 3 or 4, column 1, of the table to Division 26 of Part B of the Food and Drug Regulations if the edible cannabis did not contain or have on it anything that is referred to in item 1 or 3 of Schedule 1 to the Act, and
  • (ii) the holder that produced the edible cannabis satisfied the requirements set out in paragraphs B.26.003(2)(a) and (b) and subsection B.26.004(1) of those Regulations in respect of the edible cannabis.

Irradiated edible cannabis

28.2 The holder of a licence for research that administers or distributes irradiated edible cannabis to human participants in the conduct of non-therapeutic research on cannabis must ensure that, in respect of the cannabis, the requirements set out in subsection 42(1) have been met in addition to the conditions set out in subparagraphs 28.1(4)(d)(i) and (ii).

11 Section 29 of the Regulations is amended by striking out “and” at the end of paragraph (j), by adding “and” at the end of paragraph (k) and by adding the following after paragraph (k):

• (l) in respect of a licence for research that would authorize non-therapeutic research on cannabis, the Minister has reasonable grounds to believe that
  • (i) the use of the cannabis proposed in the application presents a risk of injury to the health of a human participant or other person that cannot reasonably be mitigated, or
  • (ii) the objectives of the research that are set out in the application will not be achieved.

12 Section 30 of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

• (e) in respect of a licence for research that authorizes non-therapeutic research on cannabis, the Minister has reasonable grounds to believe that
  • (i) the use of the cannabis in the conduct of the research presents a risk of injury to the health of a human participant or other person that cannot reasonably be mitigated, or
  • (ii) the objectives of the research will not be achieved.

13 Section 31 of the Regulations is amended by striking out “and” at the end of paragraph (d), by adding “and” at the end of paragraph (e) and by adding the following after paragraph (e):

• (f) in respect of a licence for research that authorizes non-therapeutic research on cannabis, the Minister has reasonable grounds to believe that
  • (i) the use of the cannabis in the conduct of the research presents a risk of injury to the health of a human participant or other person that cannot reasonably be mitigated, or
  • (ii) the objectives of the research will not be achieved.

14 Section 79.2 of the Regulations is replaced by the following:

Non-application — holder of licence for analytical testing or research

79.2 Sections 80 to 87.1 do not apply to

• (a) a holder of a licence for analytical testing; or
• (b) a holder of a licence for research, except in respect of non-therapeutic research on cannabis.

Non-application — reference standard

79.3 The requirements of this Part do not apply in respect of a reference standard and anything that will be used as an ingredient in the production of a reference standard.

15 Section 137 of the Regulations is replaced by the following:

Requirement — cannabis other than a cannabis product

137 Unless the requirements in section 138 have been met,

• (a) a holder of a licence for processing, a holder of a licence for analytical testing and the individuals referred to in section 4 must not sell or distribute a reference standard; and
• (b) a holder of a licence must not export a reference standard or sell, distribute or export any other cannabis that is not a cannabis product.

16 Paragraph 138(1)(a) of the Regulations is replaced by the following:

• (a) the name, telephone number and email address of the holder of the licence that sells, distributes or exports the cannabis or, in the case where an individual referred to in section 4 sells or distributes a reference standard, the name, telephone number and email address of the laboratory where that individual carries out their duties; and

17 (1) Subsection 225(1) of the Regulations is amended by adding the following after paragraph (d):

• (d.1) if the cannabis extract, cannabis topical or edible cannabis is not a cannabis product and will not become one — or is or will be contained in a cannabis accessory that is not a cannabis product and will not become one — but is or will be distributed in the conduct of non-therapeutic research on cannabis,
  • (i) the list of ingredients that would be required to appear on the label if the cannabis or cannabis accessory were a cannabis product, and
  • (ii) the net weight, net volume or concentration by weight or volume of each of those ingredients;

(2) Subsection 225(1) of the Regulations is amended by striking out “and” at the end of paragraph (e) and by adding the following after that paragraph:

• (e.1) if the cannabis extract is not a cannabis product and will not become one — or is or will be contained in a cannabis accessory that is not a cannabis product and will not become one — but is or will be distributed in the conduct of non-therapeutic research on cannabis,
  • (i) an indication of whether each ingredient that would be required to appear on the label if the cannabis or cannabis accessory were a cannabis product is a carrier substance, flavouring agent or substance that is necessary to maintain the quality or stability of the cannabis,
  • (ii) any additional information in the possession of the holder that relates to the purpose of each ingredient, and
  • (iii) a description of the flavour, if any, of the cannabis; and

(3) The portion of subsection 225(1.1) of the Regulations before paragraph (b) is replaced by the following:

Exception to subparagraph (1)(d)(ii) or (d.1)(ii)

(1.1) The document is not required to contain the information referred to in subparagraph (1)(d)(ii) or (d.1)(ii), as the case may be, in respect of an ingredient if

• (a) the ingredient is part of a mixture of substances that was used in the production of cannabis referred to in paragraph (1)(d) or (d.1);

(4) The portion of subsection 225(1.2) of the Regulations before paragraph (a) is replaced by the following:

Exception to subparagraph (1)(e)(i) or (e.1)(i)

(1.2) The document is not required to contain the information referred to in subparagraph (1)(e)(i) or (e.1)(i), as the case may be, in respect of an ingredient if

(5) Paragraph 225(1.2)(b) of the Regulations is replaced by the following:

• (b) the holder includes in the document an indication of whether the mixture referred to in paragraph (1.1)(a) contains carrier substances, flavouring agents, substances that are necessary to maintain the quality or stability of the cannabis, or a combination of any of these.

(6) Section 225 of the Regulations is amended by adding the following after subsection (3):

Exception

(4) Despite subsection (3), in the case of cannabis that was distributed to human participants in the conduct of non-therapeutic research on cannabis, the holder of the licence for research that distributed the cannabis must retain the documents for at least two years after the day on which the research ends.

18 (1) Section 231 of the Regulations is amended by adding the following after subsection (1):

Non-therapeutic research on cannabis

(1.1) The holder of a licence for research must also retain a document demonstrating that each lot or batch of cannabis that the holder produced or received from another holder of a licence for research and that has been distributed to human participants in the conduct of non-therapeutic research on cannabis, and anything that was used as an ingredient, was produced, packaged, labelled, distributed, stored, sampled or tested in accordance with sections 28.1 and 28.2 and the provisions of Parts 5 and 6, if applicable.

(2) Subsection 231(2) of the Regulations is amended by striking out “and” at the end of paragraph (d), by adding “and” at the end of paragraph (e) and by adding the following after paragraph (e):

• (f) a document referred to in subsection (1.1), for at least two years after the day on which the research ends.

19 Subsection 237(2) of the Regulations is replaced by the following:

Non-therapeutic research on cannabis

(1.1) A holder of a licence for research must also retain, in relation to any non-therapeutic research on cannabis that the holder conducts, the following documents:

• (a) a copy of the documents submitted to the Minister in relation to the research;
• (b) a copy of the documents produced in relation to the research; and
• (c) a copy of any document required by licence conditions that the Minister has imposed under subsection 62(10) of the Act.

Retention period

(2) The following documents must be retained for the following periods:

• (a) a document referred to in subsection (1), for at least two years after the day on which it is prepared; and
• (b) a document referred to in subsection (1.1), and every other document that the holder of a licence for research must retain under these Regulations in relation to non-therapeutic research on cannabis or in relation to cannabis distributed in such research, for at least two years after the day on which the research ends or for the period specified in relation to the applicable retention requirement, whichever period is longer.

20 Section 248 of the Regulations is replaced by the following:

Definitions

248 The following definitions apply in sections 248.1 and 248.2.

adverse reaction

means a noxious and unintended response to cannabis or a cannabis accessory that contains cannabis. (réaction indésirable)

serious adverse reaction

means a noxious and unintended response to cannabis or a cannabis accessory that contains cannabis that requires inpatient hospitalization or a prolongation of existing hospitalization, causes congenital malformation, results in persistent or significant disability or incapacity, is life-threatening or results in death. (réaction indésirable grave)

Adverse reactions — cannabis products

248.1 (1) A holder of a licence that sells or distributes a cannabis product must

• (a) within 15 days after becoming aware of a serious adverse reaction to the cannabis product, provide the Minister with a detailed report containing all information in their possession that is associated with the use of the product by the individual who experienced the reaction; and
• (b) prepare an annual summary report that contains a concise and critical analysis of all adverse reactions to the cannabis product that the holder became aware of during the previous 12 months.

Retention period

(2) The holder must retain the reports for at least 25 years after the day on which they are prepared.

Non-application

(3) This section does not apply in respect of an adverse reaction to cannabis, or a cannabis accessory that contains cannabis, distributed to human participants in the conduct of non-therapeutic research on cannabis.

Adverse reactions — non-therapeutic research on cannabis

248.2 (1) During the conduct of non-therapeutic research on cannabis, the holder of a licence for research that distributes cannabis, or a cannabis accessory that contains cannabis, to human participants must,

• (a) within seven days after becoming aware of a serious adverse reaction to the cannabis or cannabis accessory that is life-threatening or that results in death, notify the Minister of the reaction; and
• (b) within eight days after notifying the Minister under paragraph (a), provide the Minister with a detailed report containing all information in their possession that is associated with the use of the cannabis or cannabis accessory by the individual who experienced the reaction, including the intended use of the cannabis or cannabis accessory, an assessment of the cause of the serious adverse reaction and a statement of what further action, if any, needs to be taken by the holder of the licence.

Other serious adverse reaction

(2) The holder of the licence must, within 15 days after becoming aware of a serious adverse reaction to the cannabis or cannabis accessory that is not life-threatening and does not result in death, provide the Minister with a detailed report containing all information in their possession that is associated with the use of the cannabis or cannabis accessory by the individual who experienced the reaction, including the intended use of the cannabis or cannabis accessory, an assessment of the cause of the serious adverse reaction and a statement of what further action, if any, needs to be taken by the holder of the licence.

Adverse reaction

(3) The holder must retain a record of each adverse reaction to the cannabis or cannabis accessory that occurs during the holder’s conduct of non-therapeutic research on cannabis and that the holder becomes aware of.

Retention period

(4) The holder must retain the reports and record for at least 25 years after the day on which they are prepared.

Food and Drugs Act

Cannabis Exemption (Food and Drugs Act) Regulations

21 The Cannabis Exemption (Food and Drugs Act) Regulations^{footnote 23} are amended by adding the following after section 2:

Non-therapeutic research on cannabis

3 Despite paragraph 1(f), cannabis is exempt from the application of the Food and Drugs Act if it is sold to be used for the purpose of non-therapeutic research on cannabis, as defined in subsection 1(2) of the Cannabis Regulations, that is conducted in accordance with those Regulations.

Transitional Provisions

Words and expressions

22 Words and expressions used in section 23 have the same meaning as in the Cannabis Regulations.

Exemption — sale of cannabis beverage

23 (1) A person that is authorized to sell cannabis 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

• (a) the cannabis beverage has been packaged or labelled in accordance with the Cannabis Regulations, other than paragraph 123(1)(g); and
• (b) the label that is applied to any container in which the cannabis beverage is packaged contains the statement set out in paragraph 123(1)(g) of those Regulations but the equivalent quantity of dried cannabis, in grams, that is indicated on the label is, despite that paragraph, determined on the basis that 70 g of cannabis beverage is deemed to be equivalent to 1 g of dried cannabis.
  

Exemption — distribution of cannabis beverage

(2) A licence holder that is authorized to distribute cannabis is exempt from the application of subsection 106(1) of the Cannabis Regulations in respect of the distribution of a cannabis beverage that is a cannabis product if

• (a) the applicable requirements set out in sections 108 to 136 of those Regulations, other than paragraph 123(1)(g), have been met in respect of the cannabis beverage; and
• (b) the label that is applied to any container in which the cannabis beverage is packaged contains the statement set out in paragraph 123(1)(g) of those Regulations but the equivalent quantity of dried cannabis, in grams, that is indicated on the label is, despite that paragraph, determined on the basis that 70 g of cannabis beverage is deemed to be equivalent to 1 g of dried cannabis.

Cessation of effect

(3) Subsections (1) and (2) cease to have effect with regard to the holder of a licence for processing on the day that, in the 12th month after the month in which this section comes into force, has the same calendar number as the day on which it comes into force or, if that 12th month has no day with that number, the last day of that 12th month.

Coming into Force

24 These Regulations come into force on the day on which they are registered.

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