Growing cannabis requires starting materials. Cannabis starting materials can be in the form of seeds, clones or mother plants. While there are many sources of starting material, a holder of a Health Canada cultivation license must obtain cannabis starting materials from a legal source and ensure proper documentation is followed.
Prior to the Cannabis Regulations, under the previous cannabis regulatory frameworks, there were only two legal sources for cannabis starting materials. These are intra-industry sales and foreign legal sources. The Cannabis Regulations allow for two additional sources of genetics, depending on whether you are a holder of a newly issued cultivation license or research and development.
- Intra-Industry Sales
Plants and seeds for starting materials can be purchased from other Health Canada licenced holders. These license holders must be authorized to carry out these activities. Before commencing the transaction, proper verification procedures must be performed. The following questions must be answered and included in the verification process to determine if the company is a legal source for cannabis:
- Is the company a federally license holder under the Cannabis Regulations?
- Is the Health Canada license current, e.g. not expired?
- Is the License Holder authorized to possess and sell cannabis plants and seeds?
Within the cannabis industry, a source of cannabis starting materials is considered legal if it was obtained in accordance with the former Access to Cannabis for Medical Purposes Regulations (ACMPR), the former Industrial Hemp Regulations (IHR), the Industrial Hemp Regulations (IHR), the Cannabis Regulations or a provincially or territorially authorized retailer (subsection 62(1) of the Cannabis Act).
- Importing from Foreign Legal Sources
The Cannabis Act allows for the issuance of import permits to licensees, as long as the importation is done for medical or scientific purposes. This allows license holders to bring genetics from non-Canadian jurisdictions for the purpose of starting their own plants and developing new strains. This also allows bring in genetic material for the development of new and unique strains through breeding programs using diverse genetic stock.
It is important to note, that in addition to Health Canada’s import permit and requirements for importing starting material, the license holder must comply with the requirements of the Canadian Food Inspection Authority (CFIA). Licensees must also be aware of protected plant varieties in order to reduce their risk of intellectual property infringement.
- Section 10(2) One-Time Exemption
As a new Health Canada cultivation license holder, Section 10(2) of the Cannabis Regulations provides for a one-time exemption to possess starting materials that were not obtained through intra-industry transactions. This is an opportunity extended to new license holders and must be declared during the license application phase.
Under the one-time exemption referred to above, applicants for cultivation licences (whether standard cultivation licences, craft licences or nursery licences) will be required to submit to Health Canada a declaration of any genetics they possess that were not sourced from entities listed in Section 10(1) of the Cannabis Regulations. The declaration must indicate the quantity of cannabis plants and/or cannabis seeds that will be in your possession on the effective date of your licence. This declaration must also be signed and dated by the responsible person.
The number of cannabis plants and cannabis seeds brought in under a 10(2) declaration and recorded onto the Receiving Record must match the number of cannabis plants and cannabis seeds on the Declaration. There is no opportunity to bring in more cannabis plants and cannabis seeds under a new or supplemental 10(2) declaration once a licence is granted.
- Research License Holders
A cannabis research licence holder is authorized to cultivate cannabis for research purposes, and sell cannabis plants and seeds to holders of a cultivation licence. This provides the opportunity for License Holders to collaborate with research license holders with respect to purchasing starter materials and encourages the development and distribution of new genetics into the Canadian cannabis market.
How CLE Can Help?
We at Cannabis Licensing Experts can help you out in sourcing cannabis materials. Our services include development and review of Standard Operating Procedures with respect to sourcing, verification and receiving starting material, preparation and guidance with respect to Health Canada Starting Material Declaration and importing starting materials.
