Department of Justice Backgrounder on Promotion, Packaging, Labelling and Display of Cannabis Products

The Government of Canada has been moving quickly on the Cannabis Act. The Legislative Background sheet prepared by the Department of Justice is a very useful tool in navigating and understanding the proposed legislation. It is unclear how the proposed legislation will work with Ontario’s provincial proposal to open 150 stores that will exclusively sell cannabis in the province. Some have suggested that model akin to the LCBO one is the most logical. For now, we must refer to the backgrounder provided by the Justice Department:

The backgrounder states that:

• “promoting cannabis, cannabis accessories (e.g., rolling papers, pipes and vaporizers), and services related to cannabis would be prohibited except in limited circumstances. Subject to the regulations, promotion would be limited to informational or brand preference promotion in certain circumstances such as in a place where young persons are not permitted by law. That is, factual, accurate, information about cannabis products (including ingredients, THC and CBD levels, production methods, use of pesticides and solvents) would be permitted. This would provide the public with the information required to make an informed choice about purchasing cannabis. Information that allows for identification of the brand name and strain name would also be permitted as part of the informational or brand preference promotion.”
• “No false, misleading or deceptive promotion would be permitted, and similarly no promotion through sponsorship, testimonials and endorsements, or using the depiction of a person, celebrity, character or animals would be allowed.”
• “While the proposed Act allows for intra-industry sharing of samples of cannabis or provision of cannabis accessories, it is prohibited in all other circumstances to provide samples of cannabis or cannabis accessories unless specifically provided for in regulations. Incentives for the purchase of cannabis such as the right to participate in a game, draw, lottery or contest, or provision of a service would be prohibited.”
• “For the packaging and labelling of cannabis or cannabis accessories, prohibitions would require similar restrictions as are in place for tobacco sales, including restrictions on packaging or labelling that is appealing to young persons, or including testimonials, endorsements or lifestyle promotion. Labelling and packaging would be prohibited from containing false, misleading or deceptive information, or from using any term, expression, logo, symbol or illustration specified in regulations. The federal government would have the ability to require plain packaging in the regulations.”
• “Unless authorized under the proposed Act, it would be prohibited for a person authorized to sell cannabis to display cannabis or cannabis accessories, or any package or label of cannabis or cannabis accessories, in a manner that could be seen by young persons.”

Retail framework — selling and distributing cannabis; shared provincial and territorial roles:

Unless authorized under the proposed Cannabis Act, minimum requirements for selling and distributing cannabis and cannabis accessories would be as follows:

• Selling cannabis or cannabis accessories would be prohibited if they have an appearance, shape or attribute that could be appealing to a young person.
• Cannabis accessories would be prohibited from being sold to a young person.
• Cannabis could only be sold in categories allowed by Schedule 4 of the proposed Act. Initially, these categories would include dried cannabis, cannabis oil, fresh cannabis, and seeds and seedlings. Additional categories (e.g., edibles) could be added by regulation.
• Cannabis products could not contain ingredients set out in Schedule 5 of the proposed Act (e.g., nicotine or caffeine).
• Recalled cannabis could not be sold.
• Selling or distributing cannabis or cannabis accessories by means of a vending machine or self-service display would be prohibited.

A person could only legally sell cannabis if they are authorized to do so under the proposed Act, or if they have been authorized by a provincial government under provincial legislation that meets minimum federal conditions.^Footnote5 Those minimum federal conditions are that an authorized person cannot:

• sell cannabis that has not been produced by a federally authorized producer;
• sell cannabis to a person younger than 18;
• sell without keeping appropriate records respecting their activities (e.g., promotion activities, etc.) in relation to cannabis that they possess for commercial purposes; or
• sell without taking adequate measures to prevent diversion to an illegal market or activity.

A legal, well-regulated cannabis supply

The proposed Cannabis Act sets out the parameters to create a legal, well-regulated system for the production of cannabis. The Minister of Health would have the power to issue licences or permits for the production of cannabis. The Minister would also have the ability to suspend, amend or revoke those licences or permits when warranted. Grounds for refusing to issue, renew or amend a licence or permit include:

• where issuing, renewing or amending would create a risk to public health or public safety, including the risk of diversion to the illegal  market;
• false, misleading or forged information or documentation was provided;
• an applicant has contravened the proposed Act, the Controlled Drugs and Substances Act or the Food and Drugs Act and their regulations, including advertising, in the past 10 years; or
• if a security clearance in respect of the applicant has been refused or cancelled.

Given federal responsibility for the oversight and licensing of production, requirements in the proposed Act, along with additional requirements set out in supporting regulations, would establish a series of risk-based physical and personnel security requirements for licensees. Requirements would also aim to identify links to organized crime and verify that the cannabis they are producing is not diverted to illegal markets or activities. Requirements would also be established to verify that supply is acceptable from a health and safety point of view.

Further, to provide for responsive oversight of the industry, the Minister would have additional powers. The Minister could order a person with a licence or permit for cannabis related activities to:

• provide further information necessary to address an issue of public health or safety, or to verify compliance or prevent non-compliance;
• conduct further tests and studies to address an issue of public health or safety, or to verify compliance or prevent non-compliance; or
• recall cannabis where necessary to protect public health or public safety.

In addition, the proposed Act would allow for the establishment of a national cannabis tracking system to track cannabis from seed to sale; prevent cannabis from being diverted to an illegal market or activity; and prevent illegal cannabis from being a source of supply of cannabis in the legal market. The proposed Act would set out the authorities for the Minister to disclose to certain persons the information contained in the national cannabis tracking system for purposes such as verifying compliance or preventing non-compliance, or meeting international obligations.

How the new measures would be enforced

The proposed Act would include a range of compliance and enforcement tools, including modern inspection powers, authority to issue administrative monetary penalties, and the ability for police officers to issue tickets for specific offences.

Inspection powers to verify compliance or prevent non-compliance with the proposed Act would be in keeping with similar federal legislation, and would include:

• the power for inspectors to enter a place in which they believe on reasonable grounds an activity that may be regulated under the proposed Act is being conducted, in order to carry out inspections activities such as, opening and examining receptacles and packages; examining labels, promotional materials, records, books, electronic data or other documents; or seizing and detaining anything in respect of which there are reasonable grounds to believe the proposed Act or the regulations have been contravened.
• the power to inspect a residence – in such a circumstance, an inspector would only be able to enter with the consent of an occupant or under the authority of a warrant.