The Cannabis Act is here

THECANNABISACTISHERE

JASONMOSCOVICIANDCATHERINETHALLDUBÉ*
ROBIC,LLP
LAWYERS,PATENTANDTRADEMARKAGENTS

Followingmonthsofspeculationandatleastonefalsestart,theCanadianCannabisAct(the“Act”)
hasfinallycomeintoforceonOctober17th2018,endingthedebateastohowandwhenthealready
establishedcannabisindustry(therapeuticpurposes)willpivotintoanadult-useone.Thispivotis
oftenreferredtoasthesecondwaveoflegalization.
Somecontext:AfterlengthypublicconsultationsontheexistingAccesstoMedicalCannabis
regimeandfollowinganelectoralpromisebytheLiberalgovernmentofCanada,theActwas
introducedtoParliamentinApril2017.TheActthenpingpongedbetweenthegovernmentandthe
Senate.Theindustrywasofcourseeagertohavesomeclarityastothedirectioniteventually
neededtotakemovingforward.That’sthequickandeasyversionofthestory.
OriginallypromisedforJuly1st2018,theActcameintoforceshyoftwomonthsandahalflater,
onOctober17th2018.Thisgavetheindustryjustenoughtimetodigestanotherpieceoflegislation
thatwastabledoverthesummerof2018:theCannabisRegulations(the“Regulations”)insupport
oftheAct.Theseregulationsweretheresultofpublicconsultationsonthetopicsoflicenseclasses,
permittedactivitiesinvolvingcannabis,securityclearances,reportingdutiestoHealthCanada,
administrativepenalties,etc.Theprovinceswerealsobusyatworkdraftingtheirownlegislation
onhowcannabisproductswillbemadeavailable,marketed,soldandconsumedineachrespective
province.
ManyarticleshavesincebeenwrittenreportingonhowtheindustryshouldinterprettheAct,and
howthegovernmentshouldenforceitinanticipationforOctober17th,thedatethemarketbecame
opentotheadultuseofcannabis.
Aswearecomfortablypastthatdate,nowisasgoodatimeasanytogiveageneraloverviewof
somekeycommercialaspectsoftheActandtheRegulationstothosewhoareattractedbythe
industry.
CannabisProducts
WhentheActwasopenfordebate,andpriortoRoyalAscent,therewereseveraldiscussions
regardingtheclassesofproductsthatwouldbeavailableforsaletothepublic,theirmodeof

©CIPS,2018.*JasonMoscoviciisalawyerandbiochemistandCatherineThallDubéisalawyerforROBIC,LLP,a
firmoflawyers,patentandtrademarkagents.

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consumptionandtherestrictionsregardingthepotencyoftheseproducts.ForExample:Wouldwe
seeedibles?
ThefollowingfivecategoriesofCannabisProductsare,atthetimethisarticlewaswritten,theonly
formatsavailableinCanadapostOctober17,2018,excludingadditionalrestrictionsimposedby
individualprovincialregimes(forexampleQuebec,withitsbanonhomegrowing),orforother
commercialreasons:
1.DriedCannabis;
2.FreshCannabis;
3.CannabisOil;
4.CannabisPlants
5.CannabisSeeds.

ClassesofLicenses
TheRegulationscreatesixdifferentclasses(withadditionalsubclasses)oflicensesthatauthorize
theindustrytohandlecannabisinonewayoranother.Multipleclassesoflicensescanbeheldby
thesameholder,atthesametime:
-LicenseforCultivation;
-LicenseforProcessing;
-LicenseforAnalyticalTesting;
-LicenseforSale;
-LicenseforResearch;and
-CannabisDrugsLicense.

TheLicenseforCultivationincludesthreesubclasses:(a)micro,(b)standardand(c)nursery
cultivation.Thesesubclassesdictatetheamountandthetypeofcannabisthatthelicenseholder
willbeentitledtocultivateperyear.Forexample,anurserylicenseallowsforthehandlingof
cannabisplantsorseeds,butnotdriedcannabis.Boththestandardandmicrocultivatorswillbe
authorizedtoobtaindriedcannabis,freshcannabis,cannabisplantsorseedsbycultivation.Micro
cultivatorswillbelimitedtoasurfaceareaof200m2.Interestingly,CultivationLicenseholderswill
beabletomakeaone-timedeclarationatthetimethattheirapplicationisfiledwithHealthCanada
regardingthetypeandquantityoftheirstartingmaterial,whetheritbefromalicitmarketornot.
AsfortheLicenseforProcessing,therearetwosubclasses:(a)microand(b)standard
processing.Processinginvolvestransformingtheproduct,suchascreatingcannabisoilsvia
extraction.Suchalicensedoesnotincludetherighttocultivatecannabisandconversely,aholder
ofaprocessinglicensewillbeauthorizedtoproducecannabisproductsinwaysthatcannotbe
obtainedwithaLicenseforCultivationalone.Microprocessorsarerestrictedtoayearlyamount
thatisequivalentto600kgofdriedcannabisunlesstheyalsoholdalicenseformicro-cultivation
forthesamesiteandforwhichthecannabisissoldexclusivelytothatsite.

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ALicenseforAnalyticalTestingauthorizesthepossessionofcannabis,aswellasalteringits
chemicalorphysicalproperties,forthepurposeoftesting.Thiswasincludedtoallowaspecialized
industrytoserviceCannabisbusinesses(totestforpesticides,potency,orevendeveloptheirown
products),withoutthecumbersomeframeworkthatexistedprior.
ALicenseforResearchallowsaholder,forthepurposeofresearch,topossessandproduce
cannabis,aswellassellcannabisplantsandplantseedstoacultivationlicenseholder,toanother
holderofalicenseforresearch,toaholderofacannabisdruglicense,andtoadministerand
distributecannabistoaresearchsubject.
TheLicenseforSaleincludesa“LicenseforSaleforMedicalPurposes.”Assuch,thismodel
isforthosewhowishtosellanddistributecannabisproductsdirectlythroughtherapeuticonly
channels.
ALicenseforCannabisDrugs:Verysuccinctly,cannabiscan,undercertainconditions,be
qualifiedasapharmaceuticaldrugrequiringaDINnumber.Inordertodevelopthesedrugs
containingcannabis,onemustholdacannabisdruglicenseaswellasadrugestablishment
licenseundertheFood&DrugAct.
SecurityClearancesandKeyInvestors
Forcannabislicenseholders,newcategoriesofindividualsmustnowobtainavalidsecurity
clearanceinordertoexercisetheirfunctions.Forexample,a“keyinvestor”havingdirectcontrol
ofacannabislicenseholder.
Briefly,akeyinvestorissomeonewho,byvirtueoftheircontributiontothelicenseholder(whether
monetaryornot),isinapositiontoexercisedirectorindirectcontroloverthiscannabisbusiness.
Ineithercase(directorindirectcontrol),aholderofalicensewillhavetomaintainarecordthat
containspersonalinformationoneachkeyinvestor,whichwillthenhavetobedisclosedannually
toHealthCanada.Intheeventthatakeyinvestorisinapositiontohavedirectcontroloverthe
operationsofacannabiscompany,thiskeyinvestorwillalsoneedtobesecuritycleared.This
criteriaalonehasalreadyforeffecttherestructuringofthewayinwhichcommercialtransactions
aremanagedinthecannabisspace.
Conclusion
Thiswasaverygeneraloverviewofthecontextinwhichthecannabisindustrynowfindsitselfin
Canada.Itgoeswithoutsayingthatmasteringthenewregulatoryframeworkiskeytoplottinga
successfulbusinessplanforcannabisrelatedactivities.Giventheregulatorychallenges,itisof
coursesuggestedtodealwithprofessionalsfamiliarwiththefield,suchasthosewhoarepartof
ROBIC’sCannabisGroup.