Overhauling Cannabis in Canada: Breaking News
As the CEO of Cannabis Compliance Inc, I am thrilled to announce these changes with regards to the medical cannabis program in Canada. Within the last few days, we have received many readiness letters from Health Canada, which have been a surprising turn of events.
Essentially, what all of this means, is that from the time an application is submitted, we could be looking at closer to 6 months before Health Canada is willing to issue a licence for cultivation. Compared to the historical 1.5 to 2 years, this is a game changer. Given that they are going to be reviewing security clearance in parallel with the quality assurance, regulatory and security requirements, this means that if a company files their application and builds out immediately, potentially they could be issued a licence to cultivate – without an inspection – within 6 to 8 months.
What all of this means, of course, is that applicants should no longer postpone their buildouts and renovations. Previously, the regulatory delays were always the significant factor in the timeframe of achieving a licence. Today, however, it means that the buildout/readiness are the determining factor in achieving a licence.
In order to achieve a cultivation licence now, an applicant has to attest to being compliant and demonstrate that their facility is built and ready to go. This could be provided, in theory, with photos and videos of the facility. In comparison to the last 3 years, this means that a cultivation licence is relatively straightforward to achieve.
However, the crucial part is being operationally compliant. Achieving the cultivation may be more straightforward, but the cultivator must be fully compliant in order to achieve the sale licence. CCI has the right expertise – demonstrated LP experience – to provide on-site SOP refinement and training on the operational requirments for running a commercial cannabis facility. In this way, CCI will replace Health Canada’s role for the pre-licence inspection, and our firm will provide applicants with peace of mind about compliance.
Please let us know if you have any questions, but for the time being please know that CCI is actively expanding our capacity and expertise, to accommodate these changes. Having said this, over the next few months we will have limited resources for this next short-term hurdle, and we will need to respond to clients on a first-come, first-serve basis.
I will also suggest that Health Canada is opening the door for imports from foreign markets, which our firm is actively qualifying for our Canadian clients. Canada is in desperate need of supply.
Brian Wagner, CEO
On May 6, 2017, Health Canada released a statement on improving the licensing of production of cannabis for medical purposes.
“Effective immediately, Health Canada is implementing the following measures:
- Increasing the Department’s capacity to review and process applications;
- Undertaking some stages of the review of the application concurrently;
- Permitting licensed producers to manage production on the basis of their vault capacity;
- Authorizing longer validity periods for licenses and security clearances in accordance with the regulations; and,
- Streamlining the review and approval of applications to modify or expand an existing production facility for licensed producers with a record of good compliance with the ACMPR.”
These measures focus on three things: (1) building Health Canada’s institutional capacity in reviewing applications and processing licenses; (2) streamlining the process to fast track license issuance; and, (3) increasing production capacity while maintaining compliance and ensuring high quality product.
STREAMLINING THE PROCESS
The new process not only reduces the stages by conducting the detailed review and security clearance concurrently, but also fast tracks the issuance of the licenses by removing the need for a prelicense inspection.
Previously, there were 7 stages to become a commercial licensed producer. These are (1) Application received; (2) Preliminary Screening (3) Enhanced Screening (4) Initiation of Security Clearance Process; (5) Application Review; (6) Prelicensing Inspection; and, (7) Licensing.
The new process includes the following stages –
- Intake and Initial Screening
- Detailed Review and Initiation of Security Clearance Process
- Issuance of Licence to Produce
- Introductory Inspection (as cultivation begins)
- Pre-Sales Inspection
- Issuance of Licence to Sell
Intake and Initial Screening
Applications are screened for completeness against the 34-point checklist of Health Canada. Complete applications will be assigned an application number and then further screened based on their proposed business plan, Security Clearance Application Form and record-keeping methods pertaining to security, Good Production Practices, inventory, and destruction methods.
Two things to highlight –
- This stage combines Stages 1 to 3 (e.g. application receipt, preliminary screening and enhanced screening) from previous process emphasizing the need for complete and high quality applications; and,
- Inclusion of proposed business plan as criteria for screening applications to demonstrate the capability and expertise of the applicant to operate within the cannabis space as required by the ACMPR.
Health Canada also stated on their website that: “If an application is not complete, depending on the information that is missing, applicants may be contacted by Health Canada to obtain the missing information or the application may be returned to the applicant.”
Detailed Review and Initiation of Security Clearance Process
The detailed review and security clearances for all PICs and board of directors identified will now happen concurrently. At this stage, the application will now be reviewed to ensure that –
- information submitted complies with regulatory requirements;
- the issuance of a license will not to public health, safety or security;
- there are proper procedures in place to safeguard against diversion or illicit activity; and,
- there are no other grounds for refusal.
The review stage will focus on physical security measures, Good Production Practices, Packaging, Labelling and Shipping Requirements, Import and Export permit (if applicable) and Security Clearance. With the security clearance process happening concurrently, the number of personnel that are undergoing security clearances should be taken into consideration to ensure the timeliness of the processing.
Issuance of Licences and Inspections
The streamlined process removes the need for a PreLicensing Inspection (PLI). A license to produce can now be issued provided that (1) based on the paper-review the application demonstrated that all regulatory requirements, (2) security clearances passed; and (3) there is a functional building at the site. This new change fast tracks the ability of the producer to commence their operations and set-up for cultivation.
The first inspection occurs when the LP is ready to start cultivation of their first batch. Upon being notified that cultivation will begin, Health Canada will schedule an inspection to verify that all ACMPR requirements are met specifically physical security, record keeping practices and GPPs. The introductory inspection will determine if the LP can continue, identify areas for improvement in the quality management system and security master plan. In addition, this inspection will confirm that activities identified in the license are being carried out.
The second inspection occurs when the LP is ready to sell. The LP must pass the Pre-Sale Inspection to prior to any sales activity. This inspection verifies whether the LP complies with GPP requirements related to sales, packaging, labeling, shipping and receiving. Upon passing the Pre-Sales Inspection, a license to sell will be issued.
INCREASING PRODUCTION CAPACITY, AMENDMENTS AND COMPLIANCE
Production capacity will now be managed according to vault or safe capacity. Also, the low value cannabis waste products can now be stored in a secondary secured storage area. These two changes have the following implications –
- The LP has the flexibility to increase growing capacity while operating to meet inventory limit of vault or safe. This way the LP can build a higher security level vault and have a modular buildout for growing capacity. The vault or safe has more room to store finished product since waste will be stored separately.
- Each facility must have a minimum vault capacity for licensee holdings worth $250,001 (Level 7 for Region 1 and 2).
- Inventory management, traceability, production rotation, vault storage conditions will become more stringent and the LP’s QA Management System must demonstrate that these requirements are met.
Amendments to the existing license will provide the LP authorization to expand and/or modify their facility or scope of activities. In efforts to streamline the amendment process and facilitate the focus on increasing production capacity, the physical inspection of the site modification will occur during the regular facility inspection provided that (1) the LP has a good compliance record; and (2) the modification or expansion is straightforward and falls within an existing security perimeter. A strong QA Management System, a solid business plan and expansion plans are crucial to ensure amendments align with these provisions. More emphasis is being made on the importance of a good compliance record of the LP. The good compliance record impacts the duration of validity periods of licenses and security clearances, and the ability of the LP to acquire quicker authorization to make amendments to the existing license.