How Canada’s legal pot rules could change in 2021

·5 min read
BROOKLYN, NEW YORK  - APRIL 14: A recreational marijuana smoker indulges in smoking weed on April 14, 2020 in the Bushwick section of the Brooklyn borough of New York City. As some smokers turn to smoking weed to ease their stress during the coronavirus pandemic, some doctors are warning that cannabis can cause airway inflammation that could cause complications should a user become a victim of COVID-19. (Photo by Bruce Bennett/Getty Images)
(Photo by Bruce Bennett/Getty Images)

Health Canada wants to know how the public feels about how cannabis is sold, labelled, and researched. Industry experts expect the feedback to prompt a mild relaxation of rules for packaging and possession of infused drinks, leaving more controversial topics like advertising to a broader review of the Cannabis Act in 2021.

The federal health agency issued a 30-day call for the public to comment on a host of cannabis-related issues on Dec. 11. The request is open-ended, but specifically asks for feedback on product labelling, small-scale cultivation, non-therapeutic research, and how possession limits are applied to products like drinks. The consultation comes ahead of a full review of the federal legislative framework for legal pot in Canada set to begin no later than Oct. 17, 2021, the three-year anniversary of recreational legalization.

Michael Armstrong, a Brock University business professor who studies Canada’s legal cannabis market, has been critical of the limited information producers are allowed to include on their packaging. Currently, labels must display THC and CBD content. Facts about other cannabinoids and terpenes are optional. Health Canada wants to know if it should require more information, and if doing so would help consumers choose the right products for their needs.

Armstrong believes producers should be allowed to include a paragraph of information, similar to what appears on the back of a wine bottle, that would spell out what kind of flavour and high to expect. He said the regulator would need to ensure the messaging does not include medical claims, such as promises to improve sleep or relieve anxiety. He blames the limited information on packages for the prevailing consumer focus on simply THC content and price.

“It’s in the public interest to let producers talk to consumers and explain the attributes of their product,” he said in an interview. “If automakers could only advertise horsepower and torque, they’d mostly sell muscle cars.”

Another rule Armstrong expects Health Canada to be receptive to changing is the equivalency rates for cannabis possession. The 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 of Canopy Growth’s (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 more potent “shots” and powders that can be bought in much greater quantities.

“Whether you compare it to the rest of the cannabis space or you compare it to alcohol, it’s a flawed concept,” chief executive officer David Klein told Yahoo Finance Canada in June.

While an equal regulatory playing field with alcohol has long been the goal of many in the industry, some doubt that regulators will allow it, given the health and societal effects of booze.

“Health Canada has always said that in their opinion alcohol policy has largely been kind of failed public policy,” said Deepak Anand, chief executive officer of Materia Ventures and a longtime commentator on cannabis regulations.

“Some in the cannabis industry are asking for parity with alcohol, and the regulators are saying they don’t want to regulate it that way. I think that’s where a lot of the industry’s concerns and frustrations are stemming from.”

Health Canada’s consultation notice also hinted at potential changes for micro-cultivators, micro-processors and nurseries – licences for small-scale producers. The agency wants to know if the lesser regulatory burden for these types of producers is appropriate given their scale, and if the current framework puts smaller growers at a disadvantage compared to larger peers.

Another subject of the consultation is “non-therapeutic research with cannabis involving human participants.” Questions posed by Health Canada focus on who should be allowed to participate, the types of cannabis and dosages used, and how adverse reactions should be reported. The agency is also seeking feedback on allowing license holders to produce their own cannabis test kits, and produce and sell cannabis reference standards.

Ryan Greer, co-chair of the Canadian Chamber of Commerce’s National Cannabis Working Group, is cautiously optimistic that consultation between Health Canada, the public, and stakeholders in the industry will result in mutually beneficial regulatory changes.

“The fact that it’s 30 days, and taking place over the holidays is a little odd,” he said. “I’m hopeful that this doesn’t mean that they already have a good idea of what they want to do, and genuinely want feedback.”

He expects Health Canada will largely stick to its harm reduction-first strategy, as opposed to focusing on improving the economic health of the industry. The issue of regulations aimed at ensuring public safety holding back the sector’s growth as it fights competition from the illegal market is often discussed at the chamber’s online roundtables held ahead of the Cannabis Act review.

“Health Canada, and they would say this themselves, is not in the business of facilitating growth,” Greer said.

Anand and Armstrong agree, and do not anticipate sweeping changes anytime soon. Armstrong expects the more difficult questions facing the industry, such as advertising and celebrity endorsements, to be addressed in the government’s review of the Cannabis Act.

“Anything controversial, I think, will get put off,” he said.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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