Canada may still be far from CBD legalization

Those looking to break into the cannabis market with cannabinol products may have their hands tied for the foreseeable future as some lawyers predict a lengthy delay in CBD legalization.

During a panel discussion hosted by the Ontario Bar Association last week, Lewis Retik, a partner at Gowling WLG, said that although the Cannabis Act opened the door to the legal recreational cannabis market in Canada, the use of cannabinoids in over-the-counter products, such as cosmetics, is still prohibited without a licence.  

In 2018, the Cannabis Act removed cannabis from the Controlled Drug Substances Act and now regulates its production, distribution and sale through rigid market regulations.

However, CBD, a phytocannabinoid present in cannabis and thought to have little psychoactive effects, continues to be listed under the Prescription Drug List. Retik said that although this classification effectively prohibited them from being considered a natural health product, Health Canada took an extra step and specifically exempted them from the Natural Health Products Act in 2018.

In order to change the classification of CBD as an over-the-counter or natural health product, not only must an application be filed for a switch that proves the compound can be safely regulated in a different classification, Retik said, Health Canada must also amend the NPH regulations. Given the momentous delays the federal government is experiencing in similar requests, the wait time could be anywhere around five, six or seven years, absent political intervention, Retik said.

“The practical reality of it is, I feel like it’s going to be a long shot,” Retik said. “While it’s possible they are going to amend the natural health product regulations to remove CBD from the exclusion factors, that doesn’t happen often and it’s not an easy thing to do.”

Trina Fraser, co-managing partner at Brazeau Seller Law and head of their CannaLaw group, also sat as a panelist and said that she is a little more optimistic about the future of CBD products’ entry into the legal market.

“There is such a pervasive, illicit market of CBD products that it puts pressure on the regulator,” Fraser said. “There is obviously a very high level of demand for these products and when you don’t provide the channels for the legal sale of products that are in high demand, guess what, the illicit market will step in and fill it for you.”

Fraser said that the World Health Organization has recently recommended de-scheduling CBD because “it’s not intoxicating” and has very little or no potential for addiction or problematic use.

Peter Simeon, partner at Gowling WLG, said that the movement of the CBD and hemp industry in Europe and the U.S. may influence the Canadian government to make similar changes.

“We’ve seen an explosion of the CBD market in the U.S. and in other countries, and everybody kind of envisioned the same excitement for CBD here in Canada,” Retik says. “It’s just been a little bit curtailed because we don’t have access to over the counter sales like natural health products would have allowed us to do, so that begs the question of if and when the federal government will revisit that.”

The Canadian government has proposed a plan to regulate the licensed sale of other cannabis products including edibles, drinks, extracts and topicals, which is expected to come into force by Oct. 17, 2019. Products will be subject to specific guidelines that limit the amount of THC, a psychoactive component of cannabis, as well as other compounds such as alcohol and caffeine. Restrictions are also proposed to prevent any of the products from making health or cosmetic claims, as already in place with cannabis in general.

“This whole industry is very dynamic and fast-moving, Fraser says. “Although we’ve kind of passed that legislation mark, there is still so much ahead of us as far as regulatory development and evolution, that you know it’s not going to remain static, that’s for sure.”