Health Canada Report Paves Legal Pathway For CBD

Health Canada recently published a long-awaited report that experts say provides a regulatory pathway to expand the country’s cannabidiol (CBD) market.

CBD — Delta-9 THC’s chemical cousin — is a hemp-derived ingredient that can be converted into products with a variety of types and formats such as oils, gummies, capsules or topicals. It cannot produce a THC high and is typically marketed to relieve pain and anxiety, as well as insomnia.

The recommendation stems from a 2019 request by Health Canada to solicit feedback about the potential market for non-prescription health products containing cannabis.

Canadians can currently purchase CBD products through a licensed cannabis retailer or through prescription by a doctor, though the report written by the Science Advisory Committee on Health Products Containing Cannabis, an independent body, lays the foundation for purchasing them over the counter at common local retailers.

The absence of a regulated CBD regime in Canada has created confusion for consumers — fueling an illicit market that supplies unauthorized CBD products Canadians have difficulty finding at licensed dispensaries due to regulatory restrictions hemp faces under the Cannabis Act.

Retailers also have strict limits as to how they can market these products. CBD and other hemp derivatives are subject to the same restrictions as THC-oriented products, “which makes it almost impossible to build brand identity,” said Omar Khan, Senior VP of Corporate & Public Affairs at High Tide Inc.

“It is a bit of an onerous process for somebody who is not a frequent cannabis consumer,” he said. “Opening it up and allowing these products to be sold in broader retail settings I think — and we think — will help translate what is an existing demand.”

A lack of research has stifled the committee’s ability to draw conclusions on guidelines. The report said committee members agreed that “implementing a less complex regulatory framework and providing easier access to quality products to conduct studies would support the research community.”

Studying CBD in Canada currently has strict clinical trial standards and requires research and development licenses under the country’s Cannabis Act.

Sean Karl, a Vancouver-based supply-chain consultant who specializes in cannabis logistics, said that recognition for better ways to study CBD is “really encouraging.”

“We’re excited about potentially kickstarting a significant clinical trial that we had to put on ice because the sponsoring institution’s legal department won’t touch it,” he said.

CBD Is Safe

While the advisory panel concluded that CBD is “safe and tolerable for short-term use (a maximum of 30 days) at doses from 20 milligrams per day to a maximum dose of 200 mg/day,” the report recommended that separate avenues be taken to measure CBD products depending on their form and application.

“I think that the dosing guidelines reflect a fairly cautious deployment of the precautionary principle,” said George Smitherman, president of the Cannabis Council of Canada.

As stakeholders and advocates begin to provide input on the path moving forward, industry interests reflect a range of national and regional groups with varied priorities often based on the products they produce and their positions in the supply chain.

Cory Pala, Director of Investment Relations at CBD-maker Charlotte’s Web (OTC: CWBHF) said that the company — which is based in the U.S. — is “particularly excited” about the recommendation.

Charlotte’s Web cannot export its products to Canada under current law “which is sort of ironic” considering it is federally legal in both countries, he said, so it has partnered with cultivators in the country instead. The new recommendation presents a juncture for the company.

“In the US, we have 2,500 different competitors that have similar products,” Pala said. “But in Canada, we have maybe half a dozen, if that. And so it’s really, really compelling to us as a market opportunity. This is big for multiple reasons.”

Smitherman wonders how local dispensaries in Canada will feel about competing with general retailers.

“I think that there is going to be an articulation of a voice from within the currently regulated landscape that says, hey, this was an important part of my business,” he said. “Maybe it’s not the biggest part of my business, but my business is tough, so what are you going to do to actually make sure that — as this regulatory model evolves — the Canadian dispensary experience can evolve alongside it so that dispensary owners aren’t faced with loss of business in the CBD vertical.”

Such discussions will take place during stakeholder sessions in the coming months.

Despite the hefty task ahead, those with a stake in the process are excited — even if cautiously optimistic — about the future. Health Canada still has to decide on the regulations and figure out whether or not it actually wants to move in that direction before seeking approval from the Canadian government.

“Patience is the call of the day on this one,” Khan said.

Adam Jackson

Adam Jackson covers the cannabis industry for The Green Market Report. He previously covered the Missouri statehouse for The Columbia Missourian and has written for The Missouri Independent. He most recently covered retail, restaurants, and other consumer companies for Bloomberg Business News. You can find him on Twitter @adam_sjackson and email him at adam.jackson@crain.com.


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