Canadian Government Executive - Volume 26 - Issue 05

16 / Canadian Government Executive // January/February 2021 Regulations no shortage of market momentum. Can- nabis 2.0, the term that refers collectively to cannabis-based drinks, eats, and de- rivative products, is attracting interest all over the world and especially in Canada. Despite the advertising and promotion restrictions, LHs have been credited with being very creative in their product brand names using terms like “Night” or “En- lighten” to describe an inference or pos- sible use case. The Right Price A major obstacle for the legal cannabis market right now is that regulations differ from province to province in Canada — and from state to state in the U.S. Canada has not decided to regulate recreational cannabis in the same way it does tobacco or alcohol, from cultivation to final sale. For example, bars are not required to re- port how many bottles they have in their fridges every week. We have yet to see leg- islation for consumption lounges and how those will be framed considering they will have to adhere to the Smoke-Free Act, at least in Ontario, and how special permits will work for festivals and special events. There is still plenty of time to figure this out during the pandemic, and hopefully, by the summer of 2021. The consumers’ behaviour remains just as predictable as the regulators; making a viable business plan has never been so difficult as it has in the wake of legal- ization. The fact that the regulatory pro- cesses are moving in step in the U.S. and on both sides of the Atlantic means that competition will be high, as market dy- namics are unknown and it’s unclear how well even the best-placed players might compete. What has been often spoken about throughout the industry is Health Canada’s protectionist approach to Cana- dian cannabis. To date, there have been minimal instances of approved importa- tion of cannabis and no permits approved outside of medical, testing, or research purposes — ever. Whether the conversa- tion is about CBD, THC, or locations such as the U.S. or Columbia, the only legal way to move those products over the border is from licence holder to licence holder (and certainly not to an individual) and with a Health Canada Import/Export Permit. These permits are transactionally based so each exchange would require its own separate permit. If ever presented with a business opportunity that depends on the scalability of importation or exporta- tion of cannabinoids, do not walk, run. This model does act as a fail-safe to our industry, when the U.S. legalizes federally, which is promising based on recent re- sults from the federal election. And thank- fully, we will likely not see the same crash in prices per gram that the U.S. is seeing, which is pennies per gram in some states, at least not for a few more years. Pharma’s Slow Roll Out With all of the anecdotal evidence from users about the benefits of cannabis, some may wonder why there have not been any Notably, Health Canada has said in a re- cent communication to licence holders that they will not enforce a select section of the provisions until March 31 of next year. Though items three to five are relatively minor changes, enforcement to points one and two are going to have major im- pacts on cannabis processors by way of new labelling and packaging and testing specifications respectively. In addition, the new product notifications that must be submitted to Health Canada invoke a 60-day waiting period — if this needs to be again submitted as some products are reclassified then that is two more months the product will sit on the shelf before hit- ting consumers. Marketing Products Budtenders need to be extremely careful what they say and how they say it. One of the main regulatory issues surrounds packaging and marketing content. Health Canada is very strict on product health claims even where there is significant an- ecdotal evidence to suggest therapeutic benefits. This regulation affects both the license holders and budtenders in retail stores. Patrons looking to sleep better or treat arthritic ailments can only be gener- ally directed to product categories. Even citing an experience of another patron with a similar issue and perceived success is non-compliant and could lead to serious penalties. Still, cannabis-derived products have One of the most, if not the most, significant challenges for a pharmaceutical company entering the cannabis industry remains to be the cannabis licensing process.