Article by Globe and Mail
What are the different license categories?When you apply for a license to either grow, sell, or produce cannabis products you must also obtain a general cannabis licence from the Government of Canada. This essentially sets you up for the payment of excises to the Canada Revenue Agency.
NEXT, THERE ARE EIGHT LICENCE CATEGORIES:
I WANT TO… THE LICENSE I NEED TO APPLY FOR IS… THIS ALLOWS ME TO… Grow cannabis on a large scale Standard cultivation – produce dried, fresh, plants and seeds Grow cannabis on a small scale (<200m2) Micro-cultivation license – produce dried, fresh, plants and seeds Grow cannabis for starting material (plants/seeds) Nursery – produce plants, and seeds in an area up to 50m2 Make cannabis products on a large scale Standard processing – manufacture cannabis products Make cannabis products on a small scale (less than 600 kg/year) Micro-processing – manufacture cannabis products Sell cannabis for medical purposes Sale for medical purposes – sell to registered clients Do testing of cannabis Analytics testing – any testing Do research with cannabis Research – do research and developmentSource: Health CanadaThe growing of hemp requires a completely different class of licence, as detailed by Health Canada.
How does the new excise (tax) for concentrates work?Dried flower taxes of $1 per gram or 10 per cent of a wholesale price – whichever is higher – simply will not work in the concentrate world. In the 2019 federal budget, the government announced a different taxation system for concentrates based on potency.
THE NEW RULES:
- Beginning May 1st, 2019 for currently legal ingestible cannabis oils (and cannabis-infused foods, drinks and vape products when they become available in late 2019) producers will pay one cent per milligram of THC in a finished product once that product is sold to a distributor.
- For example: If a producer were to sell a bottle of oil capsules containing 500 milligrams of THC, they would pay an excise tax of $5 on that product.
How large is the black market in Canada?When cannabis for recreational use became legal on Oct. 17, 2018, Statistics Canada began to incorporate the economic activity associated with marijuana into Canada’s national accounts.In the final three months of 2018 Statscan reported that cannabis accounted for 0.4 per cent of GDP for a total of $2.2-billion in economic activity.
OF THAT GDP TOTAL:
- Illegal cannabis: 65 per cent ($1.4-billion)
- Legal cannabis: 35 per cent ($770-million)Statscan says annual household spending on cannabis (expressed in nominal terms) totalled $5.9-billion.
OF THAT HOUSEHOLD SPENDING TOTAL:
- Illegal cannabis: about 80 per cent ($4.7-billion)
- Legal cannabis: about 20 per cent ($1.2-billion)
What are the grey areas in Health Canada’s marketing rules?The Cannabis Act prohibits several traditional advertising techniques such as cannabis product and service promotion, and presenting it in a way that evokes a positive or negative emotion about a way of life that could be seen as glamorous, exciting or daring in order not to appeal to minors.
MANY RULES ARE UNCLEAR, OR EASILY BYPASSED, FOR EXAMPLE:
- Offering price discounts and online product sale announcements are subject to interpretation.
- Online promotional blogs are easily accessed.
- Online age gates in use are easily bypassed without requiring proof of identification.While the act is federally regulated, it is up to provincial governments to determine how cannabis is distributed and sold, and business owners differ in their interpretations about what is permitted.
What’s allowed for stores and grow facilities on First Nations land?Several First Nations state it is their sovereign right to establish their own licensing system on reservation land. While some retail cannabis stores have opened on First Nations land either without licences or with licences issued by their own government, others have opted to do so only after obtaining Health Canada licences. Cannabis producers that opt to grow product on First Nations land without Health Canada permits, however, cannot sell into the federally recognized legal supply chain while stores that do not have federal retail licences cannot buy pot from Health Canada licensed producers.