Don’t Expect a Major Rollout of Infused Cannabis Products in Canada Until 2020
Written by: Matt Lamers – Marijuana Business Daily
Infused cannabis products won’t be widely distributed in Canada until 2020, according to one of the leading experts in the field – but business shouldn’t drag their feet on preparations.
Regulatory hurdles and logistical challenges will likely push distribution of most products into 2020, according to Tom Ulanowski, president of Vancouver, British Columbia-based Nextleaf Labs.
Vape pens or some concentrates, such as kief or distillate, may be available in limited quantities this year, since Health Canada is already somewhat familiar with those.
“Although these new regulations may come into force earlier than Oct. 17, we probably won’t see many – if any – of these new products hit the shelves until after January 2020,” he said.
Section 244 of Canada’s Cannabis Regulations requires licensed processors to provide notice of new marijuana products 60 days before making the product available for sale.
“What this means is that despite regulations related to new cannabis products – such as edibles, beverages, vape pens, concentrates/extracts and topicals – coming into force by Oct. 17, 2019, companies will have to give the regulator this advanced 60-day notice to ensure the new product meets the new regulatory requirements,” Ulanowski said.
The 60 days should be seen as a minimum.
Regulators will want to review:
“All of this information takes time to compile and review – and certain products may require site inspections before approval is granted,” Ulanowski said.
After that, the company will have to negotiate terms and logistics with provincial distributors and retailers, which could add more time to the overall process.
“As such, we probably won’t see much product diversity until the second half of 2020,” he said.
But now isn’t the time for companies to procrastinate.
“The clock is ticking. Licensed companies have less than six months to prepare their notices to Health Canada, so the best strategy right now is to make sure the production, quality, marketing and sales teams work diligently to compile the necessary paperwork for submission of this notice as soon as it is possible to do so,” Ulanowski said.
“I suspect that companies that wait to submit their notice may face additional delays, as regulatory resources may be at a premium during the weeks and months after these new regulations come into force.”
A taste of what’s to come
Ulanowski knows what it takes to get a new product to market.
He led a team at Canna Farms – a federal license holder – to bring the first whole-plant cannabis concentrate to market in 2018.
“The entire process took about 3-4 months, with a few rounds of questions/responses and even a site inspection,” he said.
“This was a brand-new product that was never sold publicly on the Canadian legal cannabis market, so there was a lot of due diligence from Health Canada that contributed to this relatively lengthy process.”
The 60-day notice did not apply then.
“The process of getting our kief product approved was quite involved,” he said.
“We had to submit plenty of paperwork and documentation to support our proposal and manufacturing process and ‘prove’ to the regulator that this new product met all requirements under the ACMPR (Access to Cannabis for Medical Purposes Regulations), from inception until packaging and sale.
“We were successful in receiving approval because we were able to provide evidence that our manufacturing, sanitation, packaging, testing, labeling and recordkeeping procedures complied with the applicable regulations and fell within the definition of ‘dried cannabis’ at the time.”
‘Up to them’
There will be no way for companies to shorten or skip the 60-day rule to notify Canadian regulators of new cannabis products.
However, most businesses will need that time to build up inventory and establish sales infrastructure, analysts say, to avoid some of the problems that plague early sales of adult cannabis – namely inconsistent inventory.
“How long it takes them to make products is mostly up to them – other than the license amendment that they would be required to submit,” Health Canada spokeswoman Tammy Jarbeau said.
Health Canada’s control over how long it takes a license holder to get a new product to market includes the 60-day notice and the department setting out the rules and requirements that they must meet, she said.
For dried cannabis, fresh cannabis and oil, it is proposed that a processing license would be required to manufacture edibles, extracts and topicals as well as to package and label these products for sale to consumers.
The final regulations are expected to be released in the coming months.
“Licensed processors must apply to Health Canada to amend their license and demonstrate that they meet all of the regulatory requirements for the new classes of cannabis prior to being able to sell them,” Health Canada noted.
New Health Canada rules
Last week, Canada introduced major changes to the application process that are still reverberating through the industry.
New applicants for licenses to cultivate, process or sell medical or recreational cannabis must have a fully built site at the time of their application, rather than just a plan for completion.
Ulanowski hopes the changes could lead to a more diverse cannabis product landscape in 2020 as new licenses are issued to companies looking to focus on cannabis processing and infused product manufacturing.
“Still, I don’t suspect that this will substantially accelerate availability of these new products in late 2019 or early 2020, given that it still takes many months for Health Canada to review submitted site-evidence packages, schedule a subsequent inspection and issue licenses for both production and sale,” he said.