Proposed federal licenses for commercial exploitation of cannabis

2017-12-12

Proposedfederallicensesfor
commercialexploitationofcannabis
JasonMoscovici*andLilianaKorosi†
ROBIC,LLP
Lawyers,PatentandTrademarkAgents

HealthCanadarecentlypublishedaconsultationpaperentitledProposedApproachtothe
RegulationofCannabis,withthepurposetosolicitpublicinputandviewsontheapproach
totheregulations(the”Regulations”)whichthefederalgovernmentwilladoptforthe
applicationofthefutureActrespectingcannabisandtoamendtheControlledDrugsand
SubstancesAct,theCriminalCodeandotherActs(the”CannabisAct”).Mostofthe
proposedregulatoryrequirementsaresimilartothoselongagoestablishedandinplace
forthecurrentproducersofcannabisformedicalpurposesorindustrialhemp.Those
interestedinexpressingtheirpointofviewandcommentsareinvitedtousethislink,
beforeJanuary20,2018.
Furthertoouranalysisoftheproposedapproach,wehavesummarizedbelowthesix
typesoflicenses(withtheirrespectivesub-types,whenapplicable)proposedbythe
federalgovernmentinordertoregulateandcontroltheproductionandcommercialization
ofcannabis:

1.CULTIVATION
a)StandardCultivation
AuthorizedActivities:
•large-scalegrowingofanyvarietyofcannabisplants
•productionandharvestingofmaterialfromthoseplants,suchascannabis
seeds,cannabisplants,freshcannabisanddriedcannabis
•associatedorsupplementalactivitiesrelatedtothesecoreactivities,
including(i)possession,transportation,researchanddevelopment,
storage,anddestruction,(ii)intra-industrysaleofseeds,plants,and
harvestedmaterials(e.g.,freshanddriedcannabisinbulkorunfinished
form)toothercultivators,processors,andholdersofaresearch
authorization,and(iii)cultivationofindustrialhempplants

©CIPS,2017.*JasonMoscoviciisalawyerandbiochemistforROBIC,LLP,afirmoflawyers,patentandtrademarkagents.†LilianaKorosiisalawyerforROBIC,LLP,afirmoflawyers,patentandtrademarkagents.

ROBIC,LLPMONTREALQUEBECLAWYERS,PATENTAGENTSANDTRADEMARKAGENTS1001VictoriaSquare,BlocE–8thfloor2875LaurierBoulevard,Delta-3–Suite700Montreal(Quebec)CanadaH2Z2B7Quebec(Quebec)CanadaG1V2M2ROBIC.COMTel:514987-6242Tel:418653-1888INFO@ROBIC.COM

LimitedQuantity:
•theRegulationswouldnotprescribealimitontheamountofcannabisthat
couldbecultivatedunderastandardcultivationlicence
•aproductionlimitmayhowever,beimposedasaconditionofalicenceif
therewerereasonablegroundstobelievethatalicenseewasproducing
morecannabisthanthislicenseewasabletosell,andthattheexcess
inventorywasatriskofbeingdivertedtoanillegalmarketoractivity(for
example,alicensedcultivatorproducingsignificantlymorecannabisthan
thiscultivatorhassupplyarrangementstoprovide).Thelicenceholder’s
compliancehistory,financialstatus,andplannedfuturesales,wouldalso
betakenintoaccountwhendeterminingiftherewasariskofdiversion.
b)Microculture
AuthorizedActivities:
•thesameactivitiesasalicenceforstandardcultivation(exceptthe
cultivationofindustrialhempplants,whichisnotexpresslymentionedas
allowedunderthislicense),butatasmallerscale,suchastoenablethe
participationofsmall-scalegrowersinthelegalcannabisindustry
Micro-cultivator:
•thequantitythresholdwouldbedeterminedbyfactorssuchas(i)plant
count,(ii)sizeofgrowingarea,(iii)totalproduction,or(iv)grossrevenue
c)IndustrialHemp
AuthorizedActivities:
•growingofindustrialhempplants(thosecontaining0.3%
tetrahydrocannabinol(THC)orless)
•productionandsaleofseedsandgrains(andtheirderivatives)
•cultivationofapprovedindustrialhempvarietiesfrompedigreedseeds(as
iscurrentlythecaseundertheIndustrialHempRegulations).Sincethe
THCcontentofplantsproducedfromtheseseedsisconsistently0.3%or
less,itisproposedthatthecurrentTHCtestingrequirementswithrespect
tothesevarietiesgrownforgrainandfiberwouldbeeliminatedexceptfor
productionofseeds.RequirementsforTHCtestingwouldbemaintained
forthedesignationofnewvarietiesoflowTHCcannabis(0.3%orless)as
anapprovedcultivarofindustrialhemptobeincludedinthelistofapproved
cultivators.
•relatedactivities,including(i)possession,transportation,researchand
development,consistentwithotherclassesoflicenses,and(ii)intra-
industrysaleofleaves,flowersandbranches(orthewholeplant)
ProposedDefinition:
•industrialhemp=cannabisplantswhoseleavesandfloweringheadsdo
notcontainmorethan0.3%THC
Non-RequiredLicense:
•activities(processingorsale)relatedtoanypartoftheplantidentifiedin
Schedule2oftheproposedCannabisAct,suchasanon-viableseedor
maturestalkwithoutanyleaf,flower,seedorbranch
•saleofderivativesofseedandgrainthatcontain10microgramspergram
ofTHCorless(asiscurrentlythecaseundertheIndustrialHemp
Regulations)

d)Nursery
AuthorizedActivities:
•cultivationofanyvarietyofcannabisplants(includingindustrialhemp)
•producelegalsourceofstartingmaterials,suchasseedsandseedlings
(includingclones),bothforcommercialandpersonalcultivation
•developmentofnewvarietiesofhighqualitycannabis
•relatedactivities,including(i)possession,transportation,researchand
development,storage,anddestruction,and(ii)saleofliveplantsandseeds
tootherlicensedcultivators,licensedprocessors,andholdersofaresearch
authorization

2.PROCESSING
a)StandardProcessing
AuthorizedActivities:
•manufacturingcannabisoil(andintermediaryproductssuchascannabis
resin)
•synthesizingphytocannabinoids
•manufacturingofotherauthorizedproducts(forexample,pre-filled
cannabisoilcapsulesororalsprays)
•packagingandlabellingofproductsforsaletothepublicandfortheintra-
industrysaleoftheseproducts,includingtoprovincially/territorially
authorizeddistributors
•relatedactivities,including(i)possession,transportation,researchand
development,storage,destruction,and(ii)theintra-industrysaleof
cannabistootherfederallicenseholdersorprovincially-orterritorially-
authorizedsellers
b)Micro-processing
AuthorizedActivities:
•thesameactivitiesasalicenceforstandardprocessing,butatasmaller
scaleinordertotoenabletheparticipationofsmall-scaleprocessorsinthe
legalcannabisindustry
Micro-processor:
•thethresholdwouldbedeterminedbyfactorssuchasleseuilserait
déterminépardesfacteurstelsque(i)limitingallowedactivitiesto
processingharvestedproductfromamaximumnumberofmicro-cultivators
andnurseries,(ii)totalproduction,(iii)on-siteinventory,or(iv)gross
revenue

3.SALE
a)SaleforMedicalPurposes
AuthorizedActivities:
•thesaleofcannabisproductsobtainedfromafederally-licensedprocessor
toregisteredclients(ortoanindividualwhoisresponsibleforaregistered
client)inamannerconsistentwiththecurrentsystemestablishedunder
theAccesstoCannabisforMedicalPurposesRegulations(orderedover

thephone,onlineorviawrittenorder,withsecuredeliverythroughthemail
orbycourier)
•relatedactivities,suchaspossession,transportation,researchand
development,storage,destruction,andtheintra-industrysaleofcannabisto
otherfederallicenseholders
b)SaleforNon-MedicalPurposes

•itisuptotheprovincesandterritoriestodeliverthelicensesandoversee
thedistributionandsaletoadultconsumersofcannabisfornon-medical
purposes
•thisfederallicense(potentiallyonatemporarybasis)wouldtherefore,
authorize(i)thesaleofcannabisproductsfornon-medicalpurposes
obtainedfromalicensedprocessortoadultconsumers(orderedoverthe
phone,onlineorviawrittenorder,withsecuredeliverythroughthemailor
bycourier)intheprovincesorterritorieswhichhavenotyetestablisheda
retailenvironmentwithappropriatesafeguardstoenablethepurchaseof
legal,regulatedcannabis,aswellas(ii)relatedactivities,suchas
possession,transportation,researchanddevelopment,storage,
destruction,andtheintra-industrysaleofcannabistootherfederallicense
holders
•theRegulationswouldsetstrictcontrolstopreventillegalsalestoyouthand
topreventonlinesalesbyfederally-licensedsellersinprovincesand
territoriesthathaveestablishedtheirowndistributionandsalessystems
(whichmayincludeonlinesalesauthorizedattheprovincialorterritoriallevel)

4.ANALITICALTESTING

•thislicenseauthorizesthepossessionofcannabisbyindependentthird-
partylaboratoriesforthepurposesofconductinganalyticaltestingof
cannabis,includingtestingofmicrobialandchemicalcontaminants,
residuesofsolvents,contentoftetrahydrocannabinol(THC)and
cannabidiol(CBD),disintegrationofcapsules,andtestingforthepresence
ofunauthorizedpesticides,byusingvalidatedtestingmethodologies
•thistypeoflicensewouldalsoauthorizerelatedactivities,suchas(i)
possession,transportation,storageanddestruction,aswellas(ii)research
anddevelopmentrelatedtotheanalyticaltestingofcannabis(inparticular
thedevelopmentandvalidationoftestingmethodologies),including
industrialhemp(licensedanalyticaltestinglaboratorieswouldberequired
todestroyanycannabisorindustrialhempsentforanalyticaltestingwithin
90daysofbeingtested)

5.IMPORTANDEXPORT

•theimportorexportofcannabiswouldrequireapermitfromtheMinisterof
Health,whichwouldonlybeavailableformedicalorscientificpurposes,or
inrespectofindustrialhemp

6.RESEARCH
AuthorizedActivities:
•cannabisrelatedactivitiesforthepurposeofresearchbypersonswhodo
notholdanyothertypeoflicenseissuedundertheCannabisActand
whoseactivitieswouldotherwisebeprohibitedundertheCannabisAct
•suchactivitieswouldincludepossessing,cultivating,processing,storing,
administering,andtransportingcannabis
•personsholdingafederallicensetoconductactivitieswithcannabis,such
ascultivationorprocessing,wouldbeauthorizedtoconductresearchand
developmentundertheirexistinglicense,providedthattheresearchis
relatedtothecoreactivitiesauthorizedunderthelicense(forexample,an
industrialhemplicensewouldauthorizeresearchwithindustrialhemp,but
theholderofanindustrialhemplicensewouldberequiredtoseeka
separateauthorizationtoconductresearchwithothervarietiesofcannabis)

GENERALITIES
Ingeneral,licenseholderswouldbeauthorizedto:
•conductcoreactivities(forexample,cultivation)aswellasrelated,
supplementalactivities(forexample,researchanddevelopmentrelatedto
thecultivationofcannabis);
•conductmultipleactivitiespersite(forexample,cultivation,processingand
saletothepublic).
Thefederalgovernmentalsoproposesthatspecificlicensingrequirementsand
clarificationsbeprovidedbyguidanceandgovernmentalpolicydocumentsastoallowfor
flexibilityandchangeovertimebasedonlessonslearnedasthemarketevolves,specific
risksarebetterunderstood,andtheperformanceoftheregulatedindustryisestablished.
Moreover,HealthCanadaintendstopublishasummaryofcommentsandopinions
expressedbythepublicontheproposedRegulationsapproach,aswellasadetailed
outlineofanychangestotheregulatoryproposal.
Foranyquestionsoradditionalinformation,pleasecontactdirectlytheROBICCannabis
Team.