Edibles are coming, but one of the unintended byproducts of cannabis legalization in Canada has been misinformation around their current and future legality. Speculation, unfortunately, has often filled that void.
‘Is cannabis legal as of July 1, 2018?’. ‘No, it’s October 17 now’. ‘Are those dispensaries legal? Police haven’t shut them down yet, so they must be’. ‘That’s because they’re medical clinics, so it’s ok’. ‘Cannabis is now legal, so does that mean edibles, too?’. ‘Edibles will be legal by July 1, 2019?’. ‘No, edibles will be legal by October 17, 2019’. ‘Retail stores are open now, so can they sell me edibles?’.
There are a lot of moving parts – both legally and politically – so it is no wonder that consumers are confused. It is incredibly complicated to legalize a product that has thrived outside of the law for generations, and try to industrialize, commercialize, control, and regulate it, while keeping up with customer expectations and demands. We do not necessarily want the disjointed model of edibles regulation that exists across various U.S. states, but a central theme of most surveys conducted in Canada is that Canadians have a significant interest in trying edibles but that they have little experience consuming them. This can lead to a fog of dubious data, unreliable science and emotional responses.
As of today, regulations for these products still don’t exist. In December, 2018, Health Canada released its draft regulations on edible cannabis, which was followed by a two-month period of public consultations. The window to make submissions on the draft regulations is now closed, and the industry is waiting to see the final laws and what, if any, changes to the draft might be included.
Most observers expect to see the final regulations this summer, with enactment occurring just before the federal election in October. By the time that is done, and regulatory approvals have been obtained for the products by those licensed to produce or process cannabis-infused consumables, it will likely be in early 2020 before we see the first commercial products available for purchase by consumers.
So, while we wait, here are the top items in the draft regulations to watch for:
- CBD – Perhaps the most substantial gap in the draft regulations is the absence of any mention of cannabidiol, or CBD. This cannabinoid does not have the same psychoactive effect as its better-known cousin, tetrahydrocannabinol (THC). CBD-infused foods, beverages, cosmetics and topical items are projected to be category leaders, and multiple high-profile joint ventures and acquisitions among well-known consumer brands in the space have been formalized. Many consumer goods companies are keenly interested in CBD, so keep an eye on how the final regulations address it.
- Processing Facility – Leading up to the release of the draft regulations, industry stakeholders expected that Health Canada would insist on strongly regulating cannabis processing and handling, in order to avoid cross-contamination of other products. Few, if any, expected that an entirely separate production area would, in fact, be required. However, to the chagrin of almost all food and beverage makers, this is precisely what the draft regulations stipulated. This capital-intensive development has led major food industry participants to sit on the sidelines and suspend their efforts to develop cannabis-infused products.
- Dosing - The current proposed limit of 10 milligrams (mg) of THC per unit is reasonable and unlikely to change. However, will the final regulations address the difference between a ‘unit’ and a ‘serving’, as the tolerance from one adult to the next with respect to THC and CBD dosage? A single ‘serving’ of THC (for example) for an average adult can vary substantially; an average adult can well-tolerate 20 or even 25 mg of THC. Will the final regulations stay as currently drafted, or balance existing consumer buying needs while maintaining safety?
- Packaging – While restricting access to too many edibles is a responsible policy objective, should the maximum allowable limits in a single package be increased so that multiple 10-milligram servings of THC can be packaged together? If not, it could lead to a tremendous waste of packaging materials. Will Health Canada still refuse to allow makers to put together several ‘units’ into a container? One obvious example would be snacks, such as cookies or savory treats. As currently proposed, consumer would have to purchase multiple separate ‘units’ to get to what for some might constitute a single ‘serving’.
- Marketing and Branding – The draft regulations impose significant restrictions on the marketing and promotion of edibles, concentrates, and topical products. In an effort to avoid unintended access by children and youth, Health Canada policy tilts toward prohibition as its preferred form of control. It is a cautious approach that addresses the concern; however, it ignores the objective of eliminating illicit sources of cannabis products. If food and beverage companies cannot leverage their (considerable) brand awareness, then their competitiveness will be measurably impacted. It calls out for balance, but we do not expect early changes on the restrictions.
- Refrigerated and Frozen Products – Currently, products that must be refrigerated or frozen while unopened are prohibited. This would preclude a number of edibles products from ever hitting retail, including ice cream, meat, poultry, fish and certain beverages. Stay tuned to see whether the final regulations permit products that are not strictly shelf-stable.
- Labelling – The draft edibles regulations extended restrictions on product labelling that are currently set out for dried cannabis, oils and seeds. While certain U.S. jurisdictions have been much more permissive in respect of allowable product branding, there is no reason to expect Health Canada to lift these restrictions in the final law. Draft regulations also expand the requirements to include a ‘nutritional facts table’ (NFT) on the label, on which the amount of cannabinoids is clearly included with potential sources of allergens and other prescribed information. While prudent, these labelling requirements are not entirely consistent with the Safe Food for Canadians regulations, meaning some harmonization may be needed to permit more consistent labelling for consumers.
- Caffeinated Beverages – Currently, caffeine cannot be added to a cannabis consumable. There is an exception for ‘naturally occurring’ caffeine, such as one would find in a cup of coffee or tea. However, the amount of caffeine cannot exceed 30 mg per serving, effectively limiting products to decaffeinated beverages. (A typical morning coffee contains 100 mg of caffeine.) Will Health Canada recognize the purchasing and consumption habits of regular consumers of caffeinated products and lift this limit? It is unlikely, but infused coffee is projected to be an early offering among THC and CBD beverages, so the industry is watching this one closely.
- Alcoholic Beverages – In an effort to avoid normalizing infused beverages to the same degree as alcoholic beverages, Health Canada has said that the use of alcoholic beverage names (i.e., beer, wine) are prohibited for beverages infused with THC or CBD. This means an entire industry needs to effectively come up with new dictionary words for this class of product, and it will be interesting to watch how creativity flourishes in this respect.
Smoking a joint and consuming an edible yield two very different experiences, and the body processes each differently. Accordingly, Health Canada intends to pursue a policy objective that limits the potency and accessibility of edibles and treats them distinctly from dried cannabis and oils.
But that objective also ought to be balanced against the practical reality of the edibles genie being already out of the proverbial (plain-packaged) bottle, and ensure that the laws are not so restrictive that they push consumers towards the illicit market. We look forward to seeing what the coming months bring.
Brian Sterling is founding partner and President of SCS Consulting, an international management consulting company specializing in strategic issues concerning the food industry, including cannabis-infused products.