Cannabis: The Different Licence Classes and Subclasses in Canada

Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (the “Cannabis Act”) came into force on October 17, 2018, resulting in significant changes to Canada’s cannabis legal landscape. Indeed, the Cannabis Act legalizes access to and use of cannabis for recreational and adult use. It also describes the federal government’s role as a supervisor of licensing, regulation and compliance for the various actors within the cannabis industry.

For ease of reference, “cannabis”, under the Cannabis Act, is defined as:

• any part of a cannabis plant, including the phytocannabinoids produced by, or found in, such a plant, regardless of whether that part has been processed or not;

• any substance or mixture of substances that contains or has on it any part of such a plant;

• any substance that is identical to any phytocannabinoid produced by, or found in, such a plant, regardless of how the substance was obtained.

It however does not include:

• a non-viable seed of a cannabis plant;

• a mature stalk, without any leaf, flower, seed or branch, of such a plant;

• fibre derived from a stalk referred to above;

• the root or any part of the root of such a plant.¹

There are several licence classes for cannabis under the Cannabis Act and the Cannabis Regulations, namely for:

• cultivation;

• processing;

• sale

• analytical testing;

• research; and

• importation and exportation.

The present article will provide a brief overview of each of the aforementioned licence classes and their respective subclasses, if any, relating to this rapidly expanding sector.

1. CULTIVATION

   1. Standard Cultivation

A standard cultivation licence may particularly authorize its holder to:

• possess cannabis;

• obtain dried and fresh cannabis, cannabis plants and plant seeds by propagating, cultivating and harvesting cannabis;

  • there is no limit on the amount of cannabis that could be obtained under a standard cultivation licence;

• obtain cannabis by altering its chemical or physical properties by any means, the whole for testing purposes;

• sell and distribute dried and fresh cannabis, cannabis plants and plant seeds to, notably, other licensed cultivators (other than a nursery licence holder), processors, researchers, analytical testers within the industry;

• send and deliver cannabis plants and plant seeds to nursery licence holders;

• sell and distribute cannabis products that are cannabis plants and plant seeds to licensed sellers;

• send and deliver cannabis products that are cannabis plants and plant seeds to a purchaser of products at the request of a licensed seller; and

• conduct ancillary activities such as drying, trimming and milling cannabis.²

1. 2. Micro-Cultivation

A micro-cultivation licence allows for the same activities as a standard cultivation licence, however its holder is limited to a plant surface area that does not exceed 200m2, which includes multiple surfaces such as surfaces arranged above one another.³

1. 3. Nursery

A licence for a nursery may particularly authorize its holder to:

• possess cannabis;

• obtain cannabis plants or plant seeds by cultivating, propagating and harvesting cannabis;

• obtain cannabis by altering its chemical or physical properties by any means, the whole for testing purposes;

• sell and distribute cannabis plants and plant seeds to, notably, other licensed cultivators, processors researchers and analytical testers within the industry;

• sell and distribute cannabis products that are cannabis plants and plant seeds to licensed sellers,

• send and deliver cannabis products that are cannabis plants and plant seeds to a purchaser of products at the request of a licensed seller; and

• conduct ancillary activities such as drying cannabis.

A holder of a licence for a nursery is limited to:

• for cannabis plant seed production, a total surface area of no more than 50m2, which must contain all the parts of budding or flowering cannabis plants; and

• a maximum of 5kg of flowering heads harvested from such plants, except for plant seeds.

It is important to note that such licence holder must destroy the flowering heads (except for the cannabis plant seeds), leaves and branches of the budding or flowering plants within 30 days of harvesting them.⁴

Standard cultivation, micro-cultivation and nursery cultivation may be conducted indoors or outdoors.

2. PROCESSING

   1. Standard Processing

A standard processing licence may particularly authorize its holder to:

• possess cannabis;

• produce cannabis by means other than cultivation, propagation or harvest (i.e. production of cannabis derivatives);

• sell and distribute cannabis to, notably, other processors, researchers, analytical testers and cultivators within the industry;

• sell and distribute cannabis products to licensed sellers; and

• send and deliver cannabis products to a purchaser of products at the request of a licensed seller.⁵

1. 2. Micro-Processing

A micro-processing licence allows for the same activities as a standard processing licence; however its holder may not produce cannabis by synthesis.

Furthermore, a micro-processing licence holder may not possess more than 600kg of dried cannabis (or its equivalent) in a year. Such quantity restriction does not apply if the holder of a micro-processing licence also holds a micro-cultivation licence for the same site and the cannabis used for processing comes exclusively from that site.

All processing activities under either a standard processing licence or a micro-processing licence must be conducted indoors.⁶

3. SALE

   1. Licence for Sale for Medical Purposes

A licence for sale for medical purposes may particularly authorize its holder to:

• possess cannabis products;

• sell or distribute cannabis products to registered clients authorized to use cannabis for medical purposes;
• sell or distribute cannabis products to, notably, other licensed sellers, processors, researchers, analytical testers;
• sell or distribute dried and fresh cannabis, cannabis plants and plant seeds that are cannabis products to licensed cultivators;
• sell or distribute cannabis products that are plants or plant seeds to holders of a licence for a nursery; and
• sell or distribute cannabis products, other than plants or plant seeds, to a hospital employee, the whole for the purpose and in connection with the latter’s duties.

It is important to note that the holder of a licence for sale for medical purposes must sell all of its cannabis products in the packaging in which they were sold or distributed to it.⁷

1. 2. Recreational Sale (Provincially Authorized Selling)

Provinces and territories are responsible for determining the specific form of distribution and sale of recreational cannabis in their respective jurisdictions, as well as their supervision.⁸ Indeed, the regulation of cannabis in Québec is defined in An Act to constitute the Société québécoise du cannabis, to enact the Cannabis Regulation Act and to amend various highway safety-related provisions. Under sections 25 and 27 of this act, only the Société québécoise du cannabis (SQDC) may distribute and sell recreational cannabis in Québec through its points of sale or its website.

In contrast, other provinces such as Ontario, Alberta, Manitoba, Saskatchewan and Newfoundland and Labrador have opted for a private recreational cannabis retail model.

4. ANALYTICAL TESTING

A licence for analytical testing may particularly authorize its holder to:

• possess cannabis; and

• obtain cannabis by altering its chemical or physical properties by any means, the whole for testing purposes.

It is important to note that a holder of such licence must destroy all samples of cannabis of a lot or batch within 90 days after completing the testing of the samples of the lot or batch. In addition, if testing of samples distributed is not initiated within 120 days of their receipt, the samples must be destroyed within that period.⁹

5. RESEARCH

A licence for research may particularly authorize its holder to:

• possess, produce, and transport, send or deliver cannabis between the sites that are set out by the licence, the whole for research purposes;

• sell cannabis plants and plant seeds to, notably, other licensed researchers and cultivators within the industry;

• administer and distribute cannabis to a research subject, the whole for research purposes;

• distribute cannabis to, notably, other licensed researchers and analytical testers; and

• distribute cannabis plants and plant seeds to licensed cultivators and exemption holders.

Research licence holders may be required to destroy all cannabis in their possession upon the completion of their research project as part of the terms and conditions of their licence. ¹⁰

6. IMPORTATION AND EXPORTATION

The Cannabis Act states that licences and permits authorizing the importation or exportation of cannabis may be issued only in respect of cannabis for medical or scientific purposes or in respect of industrial hemp.¹¹ A holder of said licence must obtain either an import permit or an export permit for each shipment of cannabis that is either imported exported.

An importation or exportation licence also authorizes ancillary activities such as possession, transfer, transport, sending or delivering of the shipment of cannabis to the extent necessary.¹²

In summary, there are many different licenses that authorize the pursuit and execution of specific cannabis-related activities in Canada. Our legal advisors will be pleased to assist you in the determination of which licence class or subclass, including those described hereinabove, is the most suitable for your needs, as well as throughout the entire application process for such a license, if need be.