On December 20, 2018, Health Canada released their first draft of regulations[1] for the next wave of legal cannabis products, now known as edibles, extracts and topicals. Health Canada also announced that there will be two months of public consultations as well as nationwide roundtables before the final regulations are established. The Edelman Canada cannabis specialists have spent the holidays pouring over these regulations and thinking about what could change between now and when products will be available this fall.
What are edibles anyway?
Health Canada has defined the three categories of additional cannabis products as:
- Edible cannabis: products containing cannabis that are intended to be consumed in the same manner as food (i.e., eaten or drank);
- Cannabis extracts: products that are produced using extraction processing methods or by synthesizing phytocannabinoids; and
- Cannabis topicals: products that include cannabis as an ingredient and which are intended to be used on external body surfaces.
What we know so far
There are a few standard items within these regulations that won’t change. Standard processing or micro processing licenses will be required for anyone looking to manufacture, package or sell these items to consumers.
Edibles will have the same plain packaging and labeling requirements that are currently in place for existing cannabis products on the adult-use market, which includes the now iconic cannabis symbol, health warnings and a list of THC and CBD content on a child proof package.
What is up for discussion
THC Regulations in Edibles
There will be a maximum of 10 mg of THC per package of edibles. For means of comparison, in Colorado there are limits of 10 mg of THC per serving size, say a single gummy, but a package could contain multiple servings. Many industry insiders have already raised flags that the proposed limit in Canada is much lower than what is currently sold on the black market and creates a wasteful amount of packaging.
Edible Product & Ingredient Regulations
All edible products will need to be shelf stable and not require any refrigeration or freezing. When it comes to topicals, no claims of cosmetic benefits will be possible.
Although naturally occurring caffeine under 30mg will be permitted, allowing for cannabis chocolates and teas, it will limit any cannabis/coffee crossovers. Additionally, no cannabis products can have any added caffeine, likely thwarting the dreams of any cannabis infused energy drinks at this time.
Limits on extracts go even further to prohibit any added sugars, sweeteners or flavours that may appeal to youth, such as dessert or confectionery flavour. This also impacts what you can call the flavour on a label. However, the regulations do not explicitly stipulate what does and does not appeal to children and has left many wondering how can you make a brownie that does not look like a brownie, or a gummy that is not sweet?
Alcohol and Cannabis
The largest market share could go to cannabis infused beverages. A big industry question has been whether cannabis will be a complement to alcohol or a substitute. In this draft of regulations, association with an alcoholic beverage is completely prohibited and products will need to be under 0.5% ABV. Licensed producers, like Tilray or Canopy, who have entered into large agreements with alcohol giants won’t be able to benefit from putting well-known alcohol brands on cannabis infused beverages.
Although companies are advocating for more permissive rules, many are hoping that the restrictions will simply loosen over time.
When will edibles be legal in Canada?
Although it is unclear when the final regulations will be released, edible products will need to be available before October 17, 2019, the one-year anniversary of recreational legalization. Companies only have six months to get licensed and begin producing at a rapid rate. As we saw with the initial rollout, supply shortages were a major obstacle in the first few months of the adult-use market and its effects are still being felt. Although many companies have been doing R&D for years, it is unclear how many products will be prepared to launch in the fall.
Outside of the actual products themselves, marketing within this new branch of cannabis products will be an ongoing challenge. Community forums, reviews, blogs, micro-influencers and super fan customers will be champions of the products and drive much of the word of mouth marketing. It is critical to have a clear understanding of the regulations to ensure that products are marketed in a permissible manner.
What is abundantly clear is the huge demand for edible products. Roughly 6 out of 10 consumers are expected to choose edibles and extracts over other forms of cannabis and the US state markets are already worth billions[2]. There is huge potential for the introduction of edibles, extracts and topicals in the Canadian marketplace.
Have your say on the regulation of edible cannabis, cannabis extracts and cannabis topicals! Deadline for submission is February 20, 2019.
[1]Proposed Regulations Amending the Cannabis Regulations (new Classes of Cannabis) And Proposed Order Amending Schedules 3 and 4 to the Cannabis Act. Health Canada, December 2018(Link)
[2]2018 Cannabis Report. Deloitte, June 2018(Link)
Nina Godard focuses in Financial Communications and Olivia Pineau focuses in Public Affairs.