Now that Canadian cannabis laws allow for the production and sale of edibles, cannabis licence holders and retailers will need to adapt their merchandise to meet the growing demand for a wider range of cannabis products. Specifically, the law legalizing the sale of cannabis edibles went into effect on October 17th, with edible cannabis products hitting markets approximately two months later in mid-December. While this may not seem like a significant change at first glance, this will end up having a huge impact on cannabis markets and nationwide sales.
Before we discuss the different types of edibles products and how they will affect cannabis sales, let’s take a look at the new cannabis classes and who they will affect.
Cannabis Edibles Legislation
As a provision of the Cannabis Act, the production and sale of cannabis edibles, cannabis extracts, and cannabis topicals are now legal (as of October 17th, 2019). This amendment only extends to licensed territorial and provincial retailers, as well as licensed processors and sellers of medical cannabis.
The rollout of these products will not be immediate, and it may take several months before a full range of edibles, topicals, and extracts are available to consumers across the nation. This is due in part to strict regulations that the Canadian government plans to enforce on edibles sales. The Task Force on Cannabis Legislation and Regulation hopes this will completely displace the illegal market, keeping the profits out of the hands of criminals. How does the government define these terms? What constitutes edibles, extracts, and topicals from a regulatory standpoint?
Cannabis Act Definitions
The Canadian government defines edibles as products containing cannabis that are “intended to be consumed in the same manner as food.” There are certain stipulations set out in the Cannabis Act regarding the type and amount of ingredients that can be used per packaged product. The following guidelines will apply to all edible products sold in Canada:
Regulations on Edibles
- THC Limits – Every edible unit or package can contain no more than 10 mg of THC.
- Caffeine Limits – Cannabis edibles may only contain caffeine if it naturally appears in the food or drink. For example, a coffee drink naturally contains caffeine, so it would be acceptable to package coffee products as cannabis edibles. However, there cannot be any added caffeine in cannabis edibles, and each product must contain no more than 30 mg of caffeine.
- Alcohol Limits – Alcohol is prohibited in cannabis edible products. While the government does allow for concentrations of 0.5%, these edibles cannot be associated with or marketed as alcohol products.
- Shelf Life – Cannabis edibles must be shelf stable, meaning any products that require refrigeration or freezing to avoid spoiling are prohibited.
- Meat Limits – For the most part, cannabis edibles cannot contain meat. However, there are exceptions for dried meats, poultry, and fish.
- Processing Environment – Cannabis edibles cannot be manufactured, packaged, labelled or stored in the same food processing facility as non-cannabis infused food.
Preventative Control Plan – Any business that wishes to produce cannabis extracts or cannabis edibles must develop and maintain a Preventive Control Plan (PCP), to show how potential hazards to food safety will be managed. You can learn more about PCP requirements right here.
Colorado: An Edibles Case Study
To keep up with these new changes, cannabis producers will need to make the necessary preparations and acquire the proper licensing to legally manufacture and sell cannabis edibles. However, until the amendment goes into effect, it may seem like something of a grey area for an industry that has dealt exclusively with cannabis plants and oils. Thankfully, the state of Colorado in the United States serves as a good example of how cannabis edibles affect sales and the industry as a whole.
ontinues to increase regulations on these products, demand and market share grow accordingly. It is also important to note that, while Colorado legalized edible cannabis from the outset, it did not fully standardize edible sales until 2016. As of October 2016, edible products could be sold in either 10 mg servings or 100 mg packages. Despite these changes, demand for edibles has continued to grow with consumers in Colorado.
Selling Cannabis Edibles Legally in Canada
Though Colorado is a much smaller market than Canada, it provides a snapshot of the potential for future sales of cannabis edibles in Canada. In the wake of these changing laws, cannabis producers and retailers will need to prepare their businesses accordingly. Waiting to acquire the necessary licensing until well after the October 17th start date could put your business far behind the competition.
Depending on the nature of your business, there may be one or more licences that you require in order to take full advantage of the edibles market. So, let’s take a look at a few of the licences that you may need in order to produce and/or sell cannabis edibles:
Micro-Processing Licence
In order to manufacture cannabis-based products like edibles, you will need to hold a processing licence. The Micro-Processing Licence is generally reserved for smaller manufacturers, as it only permits up to 600 kg of dried flower (or the equivalent) to be handled each year. This licence also allows for the sale and distribution of cannabis products to other licence holders or to provincial and territorial retailers. Nonetheless, the Micro-Processing Licence is better for those businesses that do not intend on expanding their market reach in the near future.
Standard Processing Licence
The Standard Processing Licence functions much like the Micro-Processing License, but with one major difference. With the Standard Processing License, there is no limit on the amount of cannabis product your business can handle each year. You can manufacture, sell, and distribute an unlimited amount of cannabis with this licence. However, processing licences do not allow for the cultivation or harvesting of cannabis plants.
Research Licence
If you wish to develop new edible products and research new recipes, you will need to acquire a Research Licence. That said, all licence holders are permitted to conduct research that falls within the purview of their licenced activities. In any case, the Research Licence allows your business to conduct experiments and testing with cannabis plants and related cannabis materials.
A First Look at the Canadian Edibles Market
Though there has been a lot of excitement surrounding the October 17th start date, consumers will still have to wait a few months to see these changes take effect. Edibles are not expected to hit shelves until sometime in mid-December. This is due to regulations set by Health Canada, which stipulates that any new cannabis product must undergo a waiting period of at least 60 days prior to sale. Licensed producers must notify Health Canada two months in advance of any new edible products, making December 17th the absolute earliest that consumers can buy cannabis edibles.
As a result, both licensed producers and consumers will be in a holding pattern for the next few months. Much like the early days of cannabis legalization in Canada, the introduction of edibles will be a relatively slow and methodical process. Nonetheless, analysts predict that edibles will add over $1 billion to business revenue once Health Canada applications are processed and products hit the shelves.
While consumers will have to wait a while for the edibles provision to take full effect, licensed producers and retailers are working tirelessly behind the scenes to prepare for December. In addition to meeting the legal requirements outlined above, licensed producers must develop products that will appeal to the Canadian market. This means that additional research must be done quickly to grow, develop, and market new cannabis edible products to the general public.
Additional Changes to Cannabis Legalization
Most market analysts agree that businesses stand to gain the most from the introduction of cannabis edibles, but edibles are not the only change coming in December. Technically, consumers will see a wide range of new products in the coming months, but they will all fall into three categories: edibles, extracts, and topicals. We have already discussed cannabis edibles at length, but extracts and topicals are both niche markets that do not get as much attention.
What are Cannabis Extracts?
Extracts encompass a wide range of oils, tinctures, waxes, and similar products extracted from the cannabis plant. These are most commonly marketed to those who prefer to use a vaping device to consume cannabis, rather than more traditional smoking methods. While it may take some time for cannabis extracts to gain a strong consumer base in Canada, they tend to be most popular among medical cannabis users.
What are Cannabis Topicals?
Topicals refer to products like lotions, body oils, and even makeup that are made from, or infused with cannabis. Generally, topicals contain higher levels of CBD than many other cannabis-based products. As a result, topicals are commonly used for localized pain relief. Additionally, cannabis topicals do not produce the same psychotropic effects as dry cannabis, edibles, or extracts.
Needless to say, the introduction of cannabis edibles, extracts, and topicals will impact the Canadian markets going forward. Many licensed producers and retailers only specialize in dry cannabis flowers. However, the changing law will likely push these businesses to expand their range of products. More importantly, it will open the door for more entrepreneurs to enter the market while there is still plenty of room to grow.
Obtaining A Processing Licence
At Cannabis License Experts, we provide you with the guidance to plan your business, acquire funding, navigate the legal requirements, and acquire an edibles licence in anticipation of the changing laws. As the Canadian cannabis industry develops, more and more licensed producers will be needed to meet the demands of consumers. Thankfully, if you’re looking to start or grow your cannabis business in Canada, we’re here to help. To learn more about starting or expanding your business, as well as obtaining a processing license, consult the experts at CLE today.
