As Canadian cannabis laws expand in the coming months, 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 will come into effect on October 17th of this year, with edible 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 edible products, cannabis extracts, and cannabis topicals will be legal on October 17th, 2019. This amendment only extends to licenced territorial and provincial retailers, as well as licenced 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 is “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 will be prohibited in cannabis edible products. While the government will 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 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 processed or stored in the same food processing facility as non-cannabis infused food.
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.
The amendment legalizing the production, sale, and possession of recreational cannabis in Colorado was signed into law on November 6th, 2012. Since 2014, state cannabis sales have exceeded $6.7 billion, with more than $1.5 billion in revenue per year since 2017. The state of Colorado maintains strict regulations on all forms of cannabis products, including edibles. As a result of these regulations, licensing compliance has increased each year, with seizure of non-compliant products declining from 9.2% in 2015 to just 1.9% in 2017.
According to Colorado state law, edibles are defined as “any adult use or medical marijuana product for which the intended use is oral consumption, including but not limited to, any type of food, drink, or pill.” While cannabis flowers and concentrates still make up the vast majority of sales, 6.5% of medical cannabis sales and 13.4% of recreational cannabis sales come from edible products. Studies by the state of Colorado also note a “clear trend toward consumption of non-flower products, such as concentrates and edibles,” as data through 2017 indicates that “non-flower market share continue to increase, now comprising 37.7% percent of the regulated market.”
The research shows that, as more edible products become available and the government continues 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 anticipation of the changing laws, cannabis producers and retailers will need to prepare their businesses accordingly. Waiting to acquire the necessary licensing until the changes take effect in October 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:
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.
The Standard Processing Licence functions much like the Micro-Processing Licence, but with one major difference. With the Standard Processing Licence, 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.
If you wish to develop new edible products and research new recipes, you will need to acquire either 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.
Obtaining A Processing Licence
At Cannabis Licence 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. To learn more about starting or expanding your business, as well as obtaining a processing licence, consult the experts at CLE today.