How Canada’s legal pot rules could change in 2021
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Health Canada wants to know how the public feels about the way cannabis is sold, labeled, and researched. Industry experts expect the feedback to ease the rules for packaging and owning infused beverages slightly, leaving controversial topics such as advertising for a broader review of the cannabis law in 2021.
The Federal Health Office asked the public for 30 days on December 11 to comment on a number of questions related to cannabis. The request is perpetual but specifically asks for feedback on product labeling, small-scale growing and non-therapeutic research, and how ownership restrictions are applied to products such as beverages. The consultation is ahead of a full review of the federal legal framework for Legal Pot in Canada, due to begin no later than October 17, 2021, the three-year anniversary of the legalization of recreational activities.
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Michael Armstrong, a Brock University economics professor who studies Canada's legal cannabis market, criticized the limited information producers are allowed to put on their packaging. Currently, labels are required to display THC and CBD content. Facts about other cannabinoids and terpenes are optional. Health Canada would like to know if more information is needed and if it would help consumers choose the right products for their needs.
Armstrong believes that producers should be allowed to include a paragraph of information, similar to the one on the back of a wine bottle, explaining what type of flavor and what level to expect. He said regulators need to make sure the messages don't contain medical claims, such as promises to improve sleep or alleviate anxiety. He blames the limited information on packages for the prevailing consumer focus on simple THC content and price.
"It is in the public interest that manufacturers speak to consumers and explain the properties of their product," he said in an interview. "If automakers could only advertise power and torque, they would mostly be selling muscle cars."
Another rule Armstrong expects Health Canada to be receptive to change is cannabis possession equivalence rates. Current rules allow individuals to carry up to 30 grams of dried cannabis, but only 2.1 liters of cannabis infused beverages.
The rules limit many Canopy Growth (WEED.TO) (CGC) beverages to five cans per purchase. Competitors like Aurora (ACB.TO) (ACB) and The Green Organic Dutchman (TGOD.TO) have responded by releasing stronger “shots” and powders that can be purchased in much larger quantities.
"Whether you compare it to the rest of the cannabis room or alcohol, it's a flawed concept," chief executive David Klein told Yahoo Finance Canada in June.
While many in the industry have long had the same regulatory playing field with alcohol, some doubt regulators will allow this to happen, given the health and societal implications of alcohol.
"Health Canada has always said that they thought alcohol policy was largely some kind of failed public policy," said Deepak Anand, chairman of the board of Materia Ventures and longtime commentator on cannabis regulations.
"Some in the cannabis industry are calling for parity with alcohol, and regulators say they don't want to regulate it that way. I think that's the cause of a lot of concerns and frustrations in the industry."
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The Health Canada consultation note also highlighted possible changes for microcultivators, microprocessors and nurseries - small-scale producer licenses. The Agency would like to know whether the lower regulatory burden on these types of producers is appropriate given their size and whether the current framework puts smaller producers at a disadvantage compared to larger peers.
Another topic of the consultation is “non-therapeutic research with cannabis with human participation”. The questions asked by Health Canada focus on who can participate, what types of cannabis and dosages are used, and how side effects should be reported. The agency is also soliciting feedback on how licensees can make their own cannabis testing kits, and manufacture and sell cannabis reference standards.
Ryan Greer, Co-Chair of the National Cannabis Working Group of the Canadian Chamber of Commerce, is cautiously optimistic that the consultation between Health Canada, the public and industry stakeholders will result in mutually beneficial regulatory changes.
"The fact that it's 30 days and over the holidays is a bit strange," he said. "I hope this doesn't mean they already have a good idea of what they want to do and really want feedback."
He believes Health Canada will largely stick to its harm reduction strategy rather than focusing on improving the industry's economic health. The issue of public safety regulations, which are holding back the growth of the sector in the fight against competition in the illegal market, is often discussed at the Chamber's online round tables prior to the cannabis law review.
"Health Canada, and you would say it yourself, is not about promoting growth," Greer said.
Anand and Armstrong agree and do not expect major changes anytime soon. Armstrong expects the tougher issues the industry is facing, such as advertising and celebrities, to be addressed in the government's review of cannabis law.
"Anything that is controversial, I think, will be postponed," he said.
Jeff Lagerquist is a Senior Reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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