Competition Bureau recommends changing THC limits for edibles, easing pot packaging

Canada’s competitors watchdog is placing its weight behind some longtime hashish trade asks together with easing restrictions on hashish packaging and adjusting limits on how a lot of pot’s psychoactive element will be in edible merchandise.

In a submission to Health Canada and a panel reviewing hashish laws printed Friday, the Competition Bureau positioned altering tetrahydrocannabinol (THC) limits and giving pot firms extra freedoms round packaging and advertising and marketing as a method to enhance competitors.

“The bureau believes that stronger competition in the cannabis industry would help foster innovation and benefit consumers by providing them with increased choice and quality,” it wrote in its submission.

“Importantly, these benefits would serve to further displace illicit market activity and bolster the legal cannabis industry.”

A 2022 survey from Health Canada discovered practically half of the ten,048 respondents who used hashish up to now 12 months bought the substance completely from authorized sources, a rise from 43 per cent in 2021.

Some consider the true share of the illicit market is larger due to the stigma round revealing hashish use.

Pot producers and retailers have lengthy felt THC and packaging modifications would chisel away on the market share illicit sellers have and assist them scale back the hefty variety of layoffs, facility closers and writedowns they’ve taken in recent times to maintain their companies afloat.

Their requires change have grown in current months after Ottawa launched a overview final 12 months of the Cannabis Act, which set buy and possession limits and established security necessities for rising, promoting and transporting the substance.

When legalization laws got here into impact in 2018, it prevented hashish merchandise from being packaged in a method that’s engaging to youths and restricted THC in edibles to 10 mg per bundle. Illicit merchandise typically exceed the restrict.

Stakeholders have advised the bureau rising the restrict to 100 mg “could make edible cannabis products more appealing to consumers, especially those currently sourcing them from the illicit market.”

The bureau urged easing restrictions on hashish promotion, packaging and labelling would additionally give producers extra room to innovate and assist customers make extra knowledgeable buying choices.

To adjust to rules, most pot firms bundle their merchandise in staid, black or white containers devoid of eye-catching branding, which might assist differentiate one product from one other.

The bureau additionally took purpose on the hashish licensing course of and compliance prices, suggesting they be made “minimally intrusive to competition, where possible.”

The course of at the moment requires hashish producers to have amenities practically accomplished — a course of typically costing thousands and thousands — earlier than they will obtain licenses. Then, there are “lengthy and costly” safety necessities and annual regulatory charges.

“By minimizing the regulatory burden of the licensing process and reducing compliance costs, where possible, decision-makers can reduce barriers to entry and expansion, as well as stimulate even more effective competition,” stated the Bureau.

Rounding out its suggestions was a suggestion relating to excise duties, an space exterior of the panel reviewing the act’s purview.

The duties are imposed on merchandise once they’re delivered to patrons. For dried and recent hashish, vegetation and seeds, they quantity to the upper of $1 per gram or a ten per cent per gram price.

For edibles, extracts and topicals, it is a flat charge based mostly on the variety of milligrams of complete THC within the product. There are further duties in Alberta, Nunavut, Ontario and Saskatchewan.

The complete quantity of unpaid hashish excise duties has risen since legalization, the bureau stated. As of September 2022, 66 per cent of licensees required to remit excise duties had an impressive debt with the Canada Revenue Agency, the bureau stated.

“Many stakeholders interviewed by the bureau raised Canada’s excise duty framework — and excise duty rates specifically — as a major barrier to competition in the cannabis industry,” the submission stated.

“These stakeholders told the bureau that the current excise duty regime makes profitability and viability in the industry very challenging.”

Canopy Growth Corp., a Smiths Falls, Ont. hashish firm, welcomed the Bureau’s suggestions, chief government David Klein stated.

He discovered the strategies mirror most of the trade’s pleas.

“Legal producers need to be able to deliver the range of formats and potency that consumers are looking for to compete with the illicit market and support a sustainable cannabis industry in Canada,” he stated in a press release.

“It’s equally critical that restrictions on engagement with consumers be revised to facilitate informed purchasing decisions and we hope government will act swiftly on these recommendations as time is of the essence.”

This report by The Canadian Press was first printed May 26, 2023.