As the countdown begins to the legalization of recreational cannabis in Canada, provinces and licensees alike have been busy speculating on the acceptable parameters relating to product packaging and labelling under the proposed Cannabis Act regulations. On Monday March 19, 2018, Health Canada answered the speculation with a plethora of product labeling requirements as part of its report summarizing the findings of its consultation on the proposed regulations under the Cannabis Act. The stated purpose for releasing the findings of the consultation document was to help licensed producers, provinces, territories and others prepare for the coming into force of the Cannabis Act. At the moment, most, if not all licensees have established their marketing and branding strategies for the recreational cannabis market. The information summarized in this report may, at the very least, require some adjustment to the branding strategy and, in the worst of cases, require a new marketing or branding strategy altogether.
Overall, the report provides positive affirmation for Health Canada's proposed regulatory framework, namely in respect of the following elements:
Licenses and permits - Respondents expressed support for the proposed licensing system and the corresponding regulatory requirements for each category of license, including micro-cultivation and micro-processing licenses to help facilitate the participation of small-scale producers in the cannabis industry.
The approach to providing continued access to cannabis for medical purposes - Respondents supported the maintenance of a distinct system (under the Access to Cannabis for Medical Purposes Regulations) that would continue to enable individuals who have the support of their healthcare practitioner to access cannabis for medical purposes.
The requirements with respect to security clearances - 45% of respondents agreed with the proposed requirements, while 35% disagreed, split as to whether the proposal was either too burdensome for the industry or too relaxed. However, a strong majority of respondents agreed that individuals with histories of non-violent, lower-risk criminal activity should be able to obtain a security clearance and participate in the legal cannabis industry, something Health Canada has stated it will consider in preparing the draft regulations.
The regulations surrounding cannabis products - A strong majority of respondents were supportive of the government's proposal not to restrict the type of product forms that the cannabis industry would be able to manufacture and sell, within permitted product classes, including dried cannabis, cannabis oil, and cannabis plants and seeds. Many respondents also urged the government to permit the sale of a range of product forms, including cannabis edibles and concentrates, immediately upon coming into force of the proposed Cannabis Act, citing the need for the legal cannabis industry to be able to offer the same diversity of products as are currently available through the illegal market. Nevertheless, the Health Canada report stated that necessary regulations addressing edibles and other cannabis concentrates will be put in place within one year following the coming into force of the Cannabis Act in order to allow time for the development of specific regulations to address the unique risks posed by these product classes.
The product packaging and labelling requirements: What is most striking about the summary is the government's response to industry stakeholders, who were nearly unanimous in stating that, in order to prepare products that are compliant with the packaging and labelling rules in time for the coming into force of the legislation, they needed certainty as soon as possible as to what the regulations would require.
The release of the labeling and packaging requirements provide a clear set of requirements with which to comply. Among the recommendations, Health Canada has set out the following requirements for the product branding elements:
- only one other brand element (in addition to the brand name) may be displayed. This element could include, for example, a slogan or logo. If it is a text element, the font must be no larger than the font of the health warning message, and must be a single, uniform colour. If the brand element is a graphic, image or logo, it would be required to be no larger than the standardized cannabis symbol;
- it would be prohibited to display any other image or graphic;
- label and package backgrounds would need to be a single, uniform colour (inside and outside);
- it would be prohibited to use any fluorescent or metallic colours;
- colours must contrast with the colours of the standardized cannabis symbol and the background of the health warning messages;
- labels and packaging may not have any coating (e.g. may not be glossy), embossing (raised or recessed relief images), texture, foil, cut-outs or peel‑away labels;
- any over-wrap must be clear; and
- it would be prohibited to include any insert in a package.
Moreover, the federal government has furthered its public health-driven approach by setting standards regarding placement of information, health warning messages, the introduction of a standardized cannabis symbol, and detailed labelling requirements for fresh and dried cannabis and cannabis oils.
Nearly half of the report is directed towards the branding and labeling of recreational cannabis products. This is likely a welcome relief to provincial retailers, who until now, were unsure of which products they would be permitted to stock. For current licensees, the additional requirements may be somewhat of a proverbial "wet blanket", in that they seem to remove any leeway towards attractive packaging and incorporate the labelling requirements imposed on both tobacco products and medical cannabis all at once. Given the number of licensees that have already initiated their recreational branding strategies hoping to cash in on the goodwill once recreational cannabis is legal, it will be interesting to observe the extent to which this summary will cause a behaviour change amongst licensees who are not yet subject to these regulations.
As always, Fasken's cannabis team is available to answer any specific client questions and help guide your business in this dynamic and ever-changing industry.