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August 18, 2017 Mr. Bill Casey, MP Chair, House of Commons Standing Committee on Health House of Commons Ottawa, Ontario K1A 0A6 Re:

via email: hesa@parl.gc.ca

Bill C-45 – Written Submissions

The Cannabis Trade Alliance of Canada (CTAC) is a trade organization established to represent a broad range of cannabis industry participants. CTAC advocates for the creation of an inclusive framework for small-scale growers, craft farmers and producers of high quality product who desire access to testing, regulation, and legal distribution. Like large commercial brewers and small craft breweries, the two can exist simultaneously in an open market. Small, independent farmers and artisans, whether or not they are currently involved in the cannabis industry, want to be given a fair opportunity to participate in Canada’s emerging regulated cannabis economy. The objective of any new legislation should be to allow legitimate businesses the opportunity to participate in the supply chain distribution of Canada’s newly legalized cannabis economy. Canada should aim to create a diverse, competitive, and sustainable cannabis sector. CTAC has been reaching out to government, recommending policies to assist the drafting of regulation and legislation, and encouraging government to leverage the existing knowledge base of the cannabis industry to create an inclusive, sustainable and transparent legalized structure. Creating a Safe, Inclusive and Responsible Production System There currently exists a large unregulated market for recreational (adult-use) cannabis. Small Canadian businesses employing Canadian workers make up the largest portion of the existing cannabis infrastructure. Most of Canada’s cannabis is currently produced by craft farmers, mom and pop types, or entrepreneurs from complimentary industries, the evidence showing the vast majority of which are otherwise law-abiding citizens. Some of the many skilled and reputable positions include: breeders, propagators, producers, harvesters, processors, laboratories, infused product makers, distributors, transporters, hydroponic and other retailers, healthcare professionals, caregivers, patients, biologists, pathologists, research scientists, biochemists, social scientists, engineers, and tradespersons constitute the fabric of the existing cannabis industry. Establishing a legalized regime which is inclusive, sustainable and transparent, will encourage participation and discourage people from operating and supporting the unregulated market, and from having to compete against it. The most efficient way to impede the illicit-market is to provide these existing market players (and their products) an opportunity to participate in a new and more regulated economy, transitioning into the emerging legitimate market, without fear of injustice or persecution. Licensing should not impose barriers that are arbitrary and overly restrictive. If government regulations are too strict and excludes existing industry participants, or, if the regulations make it unnecessarily difficult for adults to obtain legalized cannabis, the existing unregulated market will continue without regulation or oversight.

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Legalization provides an opportunity for evidence-based regulation through the use of rigorous studies about “what works”, as well as using the best available scientific research and systematically collected data. Supporting harm reduction policies would require including existing producers into the legal market and assuring that their products are tested and regulated, to ensure that the marijuana consumed by adults is safe. Different aspects of the cannabis industry require different forms of licences as they have different potential for public harm, criminal activity, and taxation. Having separate licensing categories also creates more opportunities for small businesses to participate instead of enabling a small group of large companies to dominate the market. This promotes economic stability by keeping small sustainable businesses viable and increases participation in the legal market, and away from the illicit market. CTAC encourages a licensing structure which grants more – and more varied - licenses to increase the quantity and variety of the available supply chain. Licensing - Classes (Categories) CTAC is pleased see mention of “classes” or “categories” of producers in the licensing framework, which are in-line with the recommendations previously put forward by CTAC through the Task Force consultation. If properly implemented, this will lead to the creation of a viable inclusive industry, so long as there is flexibility to allow for a diversity of participants. CTAC recommends separate licensing categories for the following industry segments: Nursery (Clone Production and Genetic Propagation) •

Producing good quality genetics requires seeding, plant sexing, phenotype selection, and then cloning or tissue culture which together can take up as much resources such as space, equipment, energy, labour, and supplies as the growing, harvesting, and curing of flower itself

Providing nurseries with their own licensing category would provide the opportunity for companies that wish to focus on providing starting plant material for producers with specific cultivation and extraction needs without some of the burdensome security requirements that may not be necessary for production of plants without cannabinoids.

Cannabis products derived from pest-free and disease-free plants are the biggest factors in ensuring a safe supply chain for consumers.

Nurseries or starting plant material providers will play an important role in supporting a viable cannabis industry. Nurseries produce immature (vegetative) plants which do not contain the psychoactive properties found in mature (flowering) plants, & have less value. Nursery production doesn’t need same stringent security requirements or inventory control as needed for growers and processors.

This would also allow flower producers the ability to focus their resources on flower production (i.e. Grower). Many flower producers do not want male plants anywhere in their facility for fear that some of the pollen could get in to their HVAC system and ruin their crops by pollinating the female plants and causing them to produce seeds instead of cannabinoid enriched flowers.

It is important to note that some small-scale flowering might need to be conducted by nursery operators as part of the phenotype selection or breeding processes. After separating the male seedlings from the female ones, each of the females are put into flowering to select which of the phenotypes are suitable before going into cloning or tissue culture. This could be done in partnership with a Grower, on their own by applying for the appropriate size Grower license, or by having a square footage allowance for flower production as part of the Nursery license. The space needed to do this phenotyping is not significant, could be 15% or less of the square footage of the facility.

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Grower / Cultivator (Flower Producer) •

License for growing, cultivating, harvesting, trimming, drying, curing and packaging and selling cannabis. Farming / Agriculture

Processor •

License converting cannabis into cannabis extracts, concentrates and cannabis-infused products

Processors require much less space, less labor, only a fraction of the utilities and very little odor control in comparison to cannabis growers

Processors that do extraction and refining have very different inventory tracking needs than a cannabis grower. Processors require much less space, less labor, only a fraction of the utilities and very little odor control in comparison to cannabis growers.

Laboratories •

Third-party testing laboratories are a critical component of the cannabis supply chain, and the licensing structure for laboratories should fall directly under the Cannabis Act.

Current problem with the current prohibition policy: cannabis products making their way into consumer’s hands are not properly tested.

As cannabis use expands and more products enter the marketplace, laboratories to analyze the available products are needed.

Ensuring purity, efficacy, and consistency of a finished product prior to release to the consumer is a crucial step in the supply chain process when considering public health.

Changes to regulations should encourage the use of biologicals in place of chemical pesticides.

CTAC recommends creating a cannabis monograph for testing labs be commissioned. The problem that currently exists worldwide in cannabis testing is lack of consistency. Labs all use different standards, different equipment, different assumptions, leading to vastly different testing results. This poses a real challenge to businesses and to product safety.

Retailers (Dispensaries) •

Canada needs a diverse jobs base. CTAC advocates for government regulated, privately-owned cannabis retail outlets. Creating either a monopoly or oligopoly with respect to distribution is not needed to properly control cannabis access. It is important to recognize that Cannabis retailers create private sector jobs and serve Canadian communities by offering safe, accessible spaces where consumers can obtain in-person advice, view, and purchase a wide range of available cannabis options.

To control cannabis access in Canada CTAC recommends commissioning a centralized inventory control software that all cannabis businesses are forced to use such as Metrc which is used by state governments to track all cannabis transactions in Alaska, Colorado, Oregon, Michigan, and Maryland.

Resellers (Wholesalers) •

Licensed wholesale distribution allows sale of tested and quality assured cannabis products to licensed Processors and to any licensed Retailer (Dispensaries). This ensures a competitive market place, variety, and a consistent supply of product.

Licensing Fees and Disposition of Applications: CTAC is pleased to see that the administration of the framework is through cost-recovery to government (Cannabis Act, s.142) as well as mandating the disposition of applications within a certain timeframe under s.61(1). These are in-line with the recommendations previously put forward by CTAC through the Task Force consultation. For the various licensing categories, CTAC recommends that licensing fees be in the form of a schedule (sliding-scale) that imposes a greater fee for premises with more square footage and could also be varied for those that www.sustainablecannabis.ca


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process (based on the solvents and pressurized equipment used). A fee structure should be balanced so that it is modest enough for small businesses to afford, and sufficient enough for cost recovery for government to organize, implement, deploy and administer the new legalized regulatory structure. Licensing fees would include funding for application processing, inspections, and enforcement. Security Clearance Process CTAC advocates for a clear, transparent, and accountable security clearance process. This is important to provide a level playing field for businesses and investors across the country. Whether intended or not, the security clearance process under the current ACMPR is unjust, open to abuse, and discriminates against individuals with alleged and speculative ties to the current cannabis infrastructure or those involved in predecessor Medical Marihuana Access Regulations. Section 62 of the Cannabis Act is a completely arbitrary tool which allows the government with full authority to deny any current or future application based on a belief, without presenting any facts or evidence. It would also appear that individuals have no recourse or means to address and arbitrate those accusations. Canadians should expect more clarity and transparency – section 62 is a closed-door approach. How can business people be expected to invest into an industry without clear expectations? •

Reasons for refusing a security clearance should not be vague or based on opinions and conjecture, and rather, should be based on facts, evidence and the law. Further, rules should not exclude those whose only crime was getting caught doing something Canada will now be making legal.

We urge government to look at the alcohol, wine and beer industries, as well as US states that have legalized cannabis, for guidance; in those industries, where background and criminal records checks must accompany any application for licensing but where the criteria are clear and concise.

If Canada is to be a global leader in legalized cannabis (medical and recreational), CTAC believes the single biggest success factor will be the ability to be practical on security, to incentivise the best talent to participate in the regulated market, and to put the highest focus on quality assurance. The industry will attract the best players and the best practices with this approach. Extracts, Oils, Concentrates & Derivative Products Consumer demand for alternatives to smoking dried marijuana is driving the fastest growing category of cannabis products: cannabis extracts, also known as ‘concentrates’. The move towards extract-based products supports public health policies that provide for safer and more discreet alternatives to combustion-based methods of cannabis consumption. CTAC is concerned that the government might severely under-estimate the size of the market, the extracts market in particular, including the CBD market, which could lead to extreme supply shortages.1 Based on consumption trends from the US, and assuming full legalization (medical and recreational) in 2018, a Mackie Research Capital Corporation report predicts that cannabis oil consumption in Canada is expected to grow from 284L in 2015 to 562,613L by 2020 (198,000% growth) versus dried marijuana consumption of 6,388 Kg in 2015 to 110,034 Kg in 2020 (1,600% growth).2 Edibles, tinctures, topicals, sprays, capsules and vape pens are just a few of the diverse array of cannabis concentrate products being sought after for medical and recreational use. Cannabis extracts can produce markedly unique psychoactive and therapeutic effects depending on their specific and unique composition. Allowing access to unique cannabis formulations and methods of administration is a critical consideration for patients and consumers who may have challenges in smoking or who require select cannabis compounds but not others. Cannabis is a complex natural product, it is not simply one substance and shouldn’t be treated as such necessarily. www.sustainablecannabis.ca


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In the last few years, there has been a boost in the use of cannabis-based extracts for medicinal purposes and recreational (social) use. However, the preparation procedure has not been standardized but rather decided by the individual cannabis grower/processor. As cannabis-based products are accepted more for medicinal and recreational uses, standardized methods of analysis must be developed, validated, and harmonized. A case can be made to compare the legal cannabis industry to the microbrew or wine industries. Growers dedicate themselves to breeding diverse genetics and choosing the best hops or best grapes to produce the best product for consumers. Cannabis is very similar. By understanding the various characteristics of the cannabis compounds, specific strains can be cultivated and extracts isolated to formulate proprietary blends of high quality, laboratory-analyzed cannabinoid compounds. Need for Research CTAC fully supports the Task Force Report recommendation that the federal government “Promote and support pre-clinical and clinical research on the use of cannabis and cannabinoids for medical purposes, with the aim of facilitating submissions of cannabis-based products for market authorization as drugs” (pg 6). Draconian prohibition laws must come to an end so that research and innovation can prosper. The need for additional research on the effects of cannabinoids and other cannabis compounds is the single greatest need to incorporate consideration for cannabis extracts into a legalized framework. Scientists have discovered 483 different chemical compounds in cannabis including 104 cannabinoids, over 100 different terpenes, more than 20 flavonoids in addition to other nitrogenous compounds and more common plant molecules.3 (American Herbal Pharmacopeia, 2013). The therapeutic and medicinal effects for the vast majority of these compounds are still unknown. The science of understanding how these work individually and in concert is barely just begun. Sound scientific research begins with clearly identified and controlled variables. When it comes to the study of the effects of cannabis, it is not just a matter of labelling all cannabis as having the same properties and effects. In fact, most of the compounds have no psychoactive effects at all. Extracting, purifying and isolating the active compounds is an essential first step in the myriad research efforts that follow especially as it relates to the development of cannabis-based products for adult-use, and for clinical research and drug trials. As stated earlier, there is no standardized procedure for doing this in a controlled research environment. As cannabis-based products are accepted more for medicinal and recreational uses, standardized methods of analysis must be developed, validated, and harmonized. A legalized framework must consider the research requirements. In addition, there does not yet exist a Pharmacopoeia, monograph or standardized protocol for cannabis extracts. The complexity of cannabis drives the critical need for advanced analysis of the plant’s components and for the determination of the main cannabinoids in cannabis-based natural preparations. Branding, Packaging, Potency & Labelling Securing safe cannabis products for sale and distribution to the public is imperative to the public health interest of Canadians. Proper testing, packaging and labelling, as is done in the wine and beer industries, allows consumers to make informed choices regarding their purchases. Edible products can, and should be properly packaged to ensure they are not especially appealing to children – there is not one determinative factor that makes a product attractive to kids or clearly determinative of a danger to children with respect to cannabis edibles.4 Further interdisciplinary academic collaboration in the areas of psychology, marketing, education and public policy (to name a few) is required to better understand these factors. Cannabis consumers must have confidence in what they are purchasing and consuming. Just as food packaging must display the ingredients and nutritional information; wine, beer and spirits must list the alcohol content; and natural health products must monitor and disclose all ingredients; so too should www.sustainablecannabis.ca


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cannabis products destined for sale possess reliable labeling of their ingredients, and the potency and quantity of active components. This is all part of the regulated supply. In Colorado, lawmakers rejected an initial effort to cap the THC potency of marijuana that consumers can purchase at adult-use cannabis retailers. Capping potency will likely drive consumers to the black market, lead people to attempt to make volatile concentrates at home, creating the risk of explosions, or, more simply, consumers will consume more of the lower-potency product. Overly strict prohibitions on alreadypopular products will only serve embolden the black market. CTAC is strongly opposed to prohibitions on branding and the institution of ‘plain packaging’. Responsible branding and marketing are powerful tools to use against black market product. Restrictions on branding and marketing would give an unfair advantage to black market operators: without factual and informative branded packaging, consumers will be unable to distinguish legal product from low-quality, untested, black market product for cheaper prices. In addition, without branding, smaller legal producers will be unable to differentiate their products from larger, well-financed competitors. Taxation and Pricing It is important to ensure that any taxation structure maintains prices that are comparable to, or lower than, the illicit market. If pricing is not competitive, the unregulated (illicit) market would likely continue to flourish.5 Home Cultivation It is important for the new legalized structure to allow for the personal cultivation and production of cannabis. To restrict the personal production of cannabis in an otherwise legalized environment will have a negative impact on individuals, on the health and safety of those individuals, and on the health and safety of the public at large (by driving the activity back underground and into the black market). If the government intends to remove organized crime from the cannabis trade as much as possible, allowing cannabis to be grown at home should be a central part of the program. If people are allowed to grow their own cannabis, they will have absolutely no incentive to deal with the black market. If home cultivation is not allowed, then many will continue to purchase from the unregulated market. There is something to be said for the trusted relationships that people have built with small scale growers and craft farmers over the many years of prohibition. Limitations on Quantities for Personal Possession Policing possession limits will be a factor, therefore, as with alcohol, there may not be any reason to have possession limits at all. If the regulations are inclusive, then fears of diversion are diminished. Places of Use | Consumption Spaces Government should consider that there are different methods for consuming marijuana that may require different regulations, many of which will have to be determined by the appropriate jurisdiction, usually municipal. Smoking dried cannabis should fall under smoking bylaws, vaping under e-cigarette laws, and consumption of edible products potentially under similar laws as alcohol consumption. However, it is also important to make sure that these regulations for recreational usage do not impinge on the consumption and use of marijuana by medical users.

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Minimum Age and Teen Use A minimum age is suitable for purchasing recreational marijuana, however if the minimum age is set too high, this will not stop consumption of marijuana by young adults, only that they will continue to consume unregulated (black market) products. It is important not only to protect youth, but also to listen to youth.6 A minimum age of 18 or 19 is suitable, and if distribution has provincial control, then the minimum age may be set by individual provinces and territories. Parents and guardians educate children from mistaking alcohol for water, prescriptions for candy, and laxatives for chocolate; however, hysteria still abounds around edibles, which do not cause a lethal reaction. The most important key to our new legalized framework regarding teen-use must emphasizes Education and Parental Guidance.7 Medical Cannabis With full legalization, it is critical to not forget patients who have very specific needs with respect to cannabis. Medically authorized persons will require broader access to strains and lower prices, and should not be left dependant on the recreational market for their medical cannabis. For example, a regulated system could include a registry to differentiate bona fide medicinal users (from recreational users) and who could qualify for insurance/tax exemptions and group benefit plan coverage. Issues of cost and access were central to decisions like Allard and the creation of the ACMPR therefore the needs of medical patients should not be forgotten in the recreational market. Summary The government must recognize that normal every day people are producers and consumers of cannabis – cannabis is not a ‘niche’ market. CTAC recommends doing away with prohibitionist language when speaking to the regulation of cannabis, using relevant and progressive talking points on this issue. Examples of these talking points could be setting the bar on quality assurance standards for cannabis on the global stage, investing into effective public education programs, investing into harm reduction strategies, and most importantly investing into research that monitors all facets of the product, its uses, the regulatory regime, and the successes and failures on all fronts. A healthy cannabis industry, like other sectors, is better served by a large number of small, medium and large businesses competing fairly (and regulated/taxed equally) in order for consumers, government and the general public to be best served. Small, independent farmers and artisans, whether they are currently involved in the cannabis industry or not, want to be given a fair opportunity to participate in Canada’s emerging regulated cannabis economy. Thank you for allowing us to provide our input on this important initiative. About CTAC The Cannabis Trade Alliance of Canada (CTAC), is a trade organization established to represent a broad range of cannabis industry participants. CTAC is registered as a not-for-profit corporation under the Canada Not-for-profit Corporations Act under Corporation 953701-5. CTAC is reaching out to government to recommend policies to assist the drafting of regulation and legislation, and to encourage government to leverage the existing knowledge base of the cannabis industry. CTAC is available to be called upon at any time to assist throughout the regulatory review and drafting process. www.sustainablecannabis.ca

1

http://www.cbc.ca/news/business/medical-marijuana-supply-shortages-1.4143023

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2

https://www.theglobeandmail.com/globe-investor/investment-ideas/researchreports/article29573050.ece/BINARY/Medical%20Marijuana_4-8-2016.pdf

3

American Herbal Pharmacopeia, 2013

4

https://www.sciencedaily.com/releases/2016/08/160825141908.htm

5

See the document by the Cannabis Trade Alliance of Canada, dated May 24, 2016: “Cannabis Legalization in Canada: Creating a World-Class Sustainable Industry Through Inclusivity, Transparency and EvidenceBased Policy” at page 11 ‘Taxation Structures’. Online: www.sustainablecannabis.ca/#papers

6

https://news.lift.co/protecting-the-youth-but-not-listening-to-the-youth/.

7

http://www.sciencemag.org/news/2016/01/twins-study-finds-no-evidence-marijuana-lowers-iq-teens

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CTAC HESA Submission  

CTAC's written submission regarding The Cannabis Act (Bill C-45) to the House of Commons Standing Committee on Health (HESA)