Enjoy your cannabis hot chocolate, but not so fast on the cannabis beer
January 25, 2019

By Alice Tseng and Jahdiel Larraguibel

The Canadian Federal government’s proposed amendments to the Cannabis Act and Regulations were published last month. Until February 20, 2019, Health Canada will be accepting comments on the proposed amendments, which set out the requirements for three new classes of cannabis that will become legal no later than October 17, 2019.

Most anticipated by industry stakeholders are the laws surrounding edibles. Retailers and producers have been eagerly waiting to make their claim in a market expected to match, or surpass, that of dried cannabis. There has been some industry concern that the regulations would restrict certain forms of edibles – for example, California restricts products from being called “candy”– but there is no blanket prohibition. Of course, the Cannabis Act still prohibits the sale of cannabis with an appearance or shape that could be appealing to young persons. Anyone looking forward to purchasing edible gummy bears will not be seeing them hit the shelves in Canada anytime soon.

Another proposal welcomed by the cannabis industry is the relaxing of the current prohibition on the sale of cannabis mixed with caffeine. This amendment would permit edible cannabis to contain caffeine so long as the caffeine is of a natural source (e.g. from chocolate) and does not exceed 30 mg.

The conversation surrounding “cannabis beers” may have made headlines, but the proposals add a slight hitch to those plans with respect to marketing and advertising. Under the proposed Regulations no association with alcoholic beverages is permitted, including the use of a brand element affiliated with an alcoholic beverage (e.g. name or logo of a company that manufactures alcoholic beverage) and even the use of the word “beer” or “wine”.

Though these proposals are top of mind for industry insiders, there are more potential adjustments worth taking note of. We have provided a detailed summary of the proposed amendments below.

Summary of the New Classes of Cannabis

Schedule 4 of the Cannabis Act will be amended to add three new classes of cannabis which could be manufactured and sold by authorized persons. Selected key points are below:

Edible Cannabis: Products containing cannabis intended to be “consumed in the same manner as food”.

  • Edibles cannot be manufactured in the same building that conventional food is manufactured;
  • Must be shelf stable;
  • Only food and food additives in accordance with the Food and Drug Regulations' requirements can be used as ingredients;
  • Cannot be fortified with vitamins or mineral nutrients;
  • Cannot contain “Temporary Marketing Authorization Letter” (“TMAL”) ingredients (e.g. “caffeinated energy drink” is approved by a TMAL, so it cannot be used as an ingredient for an edible cannabis);
  • Restrictions when a hermetically sealed container is used (to minimize botulism risk);
  • Meat products, poultry products and fish are prohibited with limited exceptions (e.g. certain dried ingredients);
  • Low amounts of ethyl alcohol permitted (cannot exceed 0.5% w/w);
  • Ingredients containing naturally occurring caffeine permitted provided the total amount of caffeine in a package does not exceed 30mg; and
  • Licensed processors which manufacture edibles would be required to prepare, retain, maintain and implement a written preventative control plan, similar to that required in the Safe Food for Canadians Act.

Cannabis Extracts: Products that are produced by subjecting cannabis to extraction processing methods or by synthesizing phytocannabinoids. Cannabis concentrates would not be a new class of cannabis added to Schedule 4, as originally contemplated, and instead would be included within the category of cannabis extract. After a six-month transitional period, cannabis oil would be removed from Schedule 4 as a permitted class of cannabis but would be subsumed under cannabis extract.

  • Flavouring agents are permitted, in addition to one or more carrier substances and any substance to maintain the quality or stability;
  • Prohibited from containing sugars, sweeteners or sweetening agents;
  • Prohibited from containing ingredients set out in Column 1 of Schedule 2 in the Tobacco and Vaping Products Act (e.g. amino acids, caffeine, colouring agents, essential fatty acids, glucuromolactone, probiotics, taurine, vitamins, and mineral nutrients);
  • Cannabis extracts intended to be ingested are permitted to contain ethyl alcohol (e.g. tinctures) but cannabis extracts with ethyl alcohol are restricted to a maximum package size of 7.5g regardless of the THC content;
  • Liquid cannabis extracts are restricted to a maximum package size of 90 mL.

Cannabis Topicals: Products that contain cannabis and are intended for use, directly or indirectly, exclusively on external body surfaces, including hair and nails.

  • Cannot contain ingredients that may cause injury to the consumer when the product is used as intended; Health Canada’s Cosmetic Ingredient Hotlist can be used for guidance on what ingredients to avoid.

Summary of the Proposed Amendments to Allow for the New Classes

THC Limits: The proposed amendments would establish THC limits of the new classes of cannabis as set out in the table below.

Edible

Extract

Topical

 - 10 mg per discrete unit

 - 10 mg per package

 - 10 mg per discrete unit that is intended to be ingested or for nasal, rectal, vaginal use (e.g. capsules, sprays)

 - 1000 mg per package

 - 1000 mg per package

 

There is no proposed maximum concentration of THC but any edible, extract or topical, with a >3% THC w/w would be subject to a 7.5g smaller package size limit. Both the THC and CBD content of the new classes would also be subject to variability limits to ensure the cannabinoid content is as described but can also permit trace amounts above the prescribed limit. For instance, if the edible cannabis is intended to contain 10mg of THC, by virtue of the 15% variability limit, it is permitted to contain 8.5mg-11.5mg of THC.

Licensing: No new class of license is proposed but to manufacture any of the new classes of cannabis and/or to package and label those products for sale, a processing license (standard or micro-processing) is required. Health Canada imposes conditions on licenses limiting an authorized activity to a certain class of cannabis. Accordingly, even businesses who already have a processing license will need to have the license amended to process the particular class of cannabis in issue (e.g. edibles) before they can sell the product.

Testing: For microbial and chemical contaminant testing, licensed processors can choose to perform the requisite testing on the final form of the cannabis product or the final step in the production process during which the contaminants could be concentrated. For instance, the microbial testing can be done on the cannabis oil to be used in an edible before mixing with food ingredients, or the testing can be done on the final form of the cannabis edible.  

Packaging and Labelling: The new classes of cannabis will have specific label requirements while maintaining the core plain packaging and labelling requirements already in force (e.g. standardized cannabis symbol, health warning message, THC and CBD content, and child-resistant packaging). For example, edible cannabis will have similar labelling requirements to food, including a cannabis-specific Nutrition Facts Table (“NFT”). NFT requirements for conventional food are very prescriptive.  

The new classes would also be prohibited from making certain representations, such as no health and cosmetic benefit claim or association with alcoholic beverages. Class specific prohibitions include barring edibles from representing that a particular product has certain nutrient and energy content beyond what is permitted or that the edible is a means of meeting a particular dietary requirement. Meanwhile extracts and accessories containing extract could not make a representation that it has a confectionery, dessert, soft drink or energy drink flavour.

Some changes regarding packaging have been made. Most notably changes to allow the use of cans for beverages and to allow for increased flexibility on the use of expanded panels on labels (e.g. peel-back and accordion panels) given the reality of significant labelling requirements for small package sizes. The proposals also prohibit the sale of certain products together, including co-packaging an edible with a conventional food product and co-packaging two different classes of cannabis, as well as the use of ‘sampler packs’.

Record Keeping: Amendments to the record keeping requirements are proposed. A record would need to be kept anytime an investigation is undertaken by the Quality Assurance Person, including when due to proactive investigations or in response to a complaint. Interestingly, all license holders would be required to keep a record of any information related to the testing of phytocannabinoids and terpene content. Accordingly, though testing of terpenes is not mandatory, where such testing is done, the information must be retained.

Cannabis Accessories: And lastly, some new rules are proposed with respect to cannabis accessories.

  • Dispensing Limit: 10mg of THC would be the maximum amount that could be dispensed per activation of a cannabis accessory containing an extract (not applicable to extracts intended to be inhaled).
  • Enhancement: The accessory must not alter or enhance the effects of the product, increase the potential for physical dependence or increase toxicity unless it is through heating or combustion.
  • Labelling: Standardized cannabis symbol would be required on a cannabis accessory containing extract with THC that is intended to be inhaled (i.e. vaping cartridges and devices must have the symbol directly on the device).

Although most of industry’s focus is on cannabis, it (as well as conventional retailers) should also remember that cannabis accessories can be strictly regulated too. For example, vaporizers are subject to a myriad of legislation – federal and/or provincial laws governing cannabis, vapour products and sometimes even medical devices legislation. The sale and advertising of such products should be reviewed particularly carefully to avoid inadvertently contravening laws or triggering unexpected obligations.

If you have any questions or would like further information, then please contact Alice Tseng.

The preceding is intended as a timely update on Canadian cannabis. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.


[Lexology Webinar] Cannabis: strategies for growing the business – regulatory and marketing

12 February 2019 | 12:00 PM ET

This webinar will provide valuable insights, tips and strategies for cannabis industry players to avoid the traps and understand the opportunities to grow their business, including:

  • Updates on the latest federal regulatory developments, including edibles, concentrates and topicals
  • Opportunities in advertising and marketing for cannabis producers and retailers
  • Tips on federal and provincial regulatory nuances that affect both the commercial and marketing side of the cannabis industry

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