March 21, 2024

Today the Minister of Health presented to Parliament the final report of the Expert Panel that was tasked with reviewing the Cannabis Act (Act).

Overview
A legislative review of the Act was supposed to occur 3 years after cannabis was legalized in 2018. For various reasons (none of them clear) the review was delayed, and finally commenced one year after its originally scheduled date. After approximately 18 months of rigorous consultation¹ , the Panels’ findings and recommendations were released today (Diplomat met with the Panel on 3 separate occasions).

There are 54 recommendations and 11 observations in the report – though the difference between recommendations and observations are not well-defined, especially because the observations read as recommendations. What is clear is that based on their interim report and this final report, the Panel has become well versed in the environment regarding cannabis in Canada. The Panel is to be commended for their efforts and providing Canadians with a report that provides a clear picture of the issues, challenges and opportunities related to the legalization of cannabis.

Themes

Public Health
The principal objective of the Panel was to examine the Act and its impact on public health. Therefore, it is no surprise that the majority of their findings are related to the rise of cannabis consumption in all age groups (especially young adults). One of the key recommendations the Panel made was that the current measures restricting the limit of 10 milligrams of THC per package of edible products should be maintained given they are troubled by: “…the potential impact on child poisonings, cannabis-related emergency room visits and mental health impacts.”

Research/Regulatory Burden
The Panel did recognize that the government needs to invest more funding into research so that the risks and benefits of cannabis are better understood, leading to a pathway for developing innovative health products. In addition, the Panel noted that the current regulatory burden placed on the industry needs to be further streamlined. This recommendation, however, seems to be contradictory to other recommendations the Panel has made (e.g. Health Canada needs to collect additional information from licensed holders).

Taxes
The panel did urge Finance Canada to review the excise tax model because the underlying assumptions of the model (related to the average price of cannabis) have been widely inaccurate (i.e., the excise tax needs to be lowered to reflect reality). However, the Panel also recommended that taxes be increased on products with higher THC concentrations. Given that a graduated tax regime based on a product ingredient does not exist in any other industry, this is perplexing (e.g., alcohol is not taxed based on the percentage of alcohol in a product).

First Nations, Inuit and Metis/Diversity, Equity and Inclusion
The report recognizes the nation-to-nation relationship the Government of Canada has with First Nations and that there is an opportunity to work collaboratively to design and implement programs and tax regimes so that the needs of these communities can be met. The Panel also made the point that: “At the outset of legalization, there was a missed opportunity to address the harms of prohibition. The Government of Canada has a role to play in encouraging the participation of marginalized and racialized groups in the industry, and to support inclusivity and remove barriers to success.”

Labelling/Packaging
While the Panel concluded that current plain packaging and labelling requirements should be maintained, they did suggest Health Canada: “…allow for the display of certain symbols that convey useful information to the consumer” and that: “Health Canada should revise packaging and labelling rules to allow the use of QR codes on product labels to convey factual information to consumers.”

Medical
The Panel noted that the current medical regime should remain but that it needs to be improved to respond to patient needs. One of the recommendations in this vein is that cannabis for medical purposes should be distributed in a pharmacy environment, allowing patients access to experts who can advise and council them on its therapeutic use.

Our Reaction
It is evident the Panel clearly heard and understood the various issues raised by over 600 stakeholders and managed to provide a series of recommendations that reflects this diversity.

However, the perspective that cannabis is a dangerous product and a significant risk to the health of Canadians remains. To be clear, there are risks with cannabis consumption and Canadians need to be informed of those risks, but it should be placed in the overall context of credible evidence being generated and research being undertaken.

In 2018, Canada undertook a monumental policy decision when it legalized cannabis for adult use. An entire industry was created, product development commenced, research was expanded, and opportunity opened for innovative scientific undertakings. The market is now worth approximately $5 billion annually and generates significant tax revenue for the federal and provincial governments. Yet, while the Panel recognizes some of the issues associated with over-regulation and over-taxation, the majority of the recommendations focus on maintaining the status quo.

Therefore, the concern is that the government will not act on any of the recommendations in the report – and that would be a significant lost opportunity given the current challenges Canadians have in navigating the Act.

¹ The Expert Panel “…met with over 600 individuals from over 250 organizations in nearly 140 meetings.”

For more information, please contact Diplomat Consulting at: hello@diplomatconsulting.com

Ivan Ross Vrána
Managing Partner