Modifications to Health Canada's licensing application requirements represent a significant new burden to hopeful license applicants.

On May 8, 2019, Health Canada issued a statement identifying significant changes to the Federal cannabis licensing process. While a significant number of licenses have been issued in the last three years, Health Canada has identified substantial issues with the license application process, including applicants not having fulfilled the requirement to construct a regulatory-compliant facility in time for what would otherwise be a license approval.[1] To rectify this issue, and others, the following changes have been made.

Upon submission of their application via the Cannabis Tracking and Licensing System, all new applicants must now have a completed facility that meets all regulatory standards within the Cannabis Act and Cannabis Regulations. Formerly, applicants needed only to have been "in the process" of building out their facility at the time at which they submitted their application. This gave the applicant time to continue with capital raising and/or construction and preparation of their site and business model, which had aligned well with the lengthy time periods associated with Health Canada review of applications.

Site Evidence Package

To fulfill the new readiness requirement, a site evidence package must now be submitted to Health Canada electronically on a USB device.[2] The package must contain visual evidence of completion and functionality of the respective facility. The site evidence package must include: [3]

  • guided video tour of the entire site, both inside the facility and the exterior areas being utilized, highlighting all perimeter security measures, operation and storage areas;
  • photographic overview of each side of the defined perimeter;
  • visual recording device footage from all visual recording device feeds that capture an individual walking around the perimeter and footage from operations and storage areas; and,
  • footage showing the entire physical barrier for the site and all storage areas.

Good Production Practices

In addition, Health Canada now requires evidence of good production practices ("GPP") to be submitted with an application for cultivation, processing and sale for medical purposes (with possession) licenses.[4] However, applicants applying for analytical testing, research and sale for medical purposes (without possession) licenses are not obligated to fulfill the GPP requirement.[5] Together with the visual site evidence package for completion of the facility, comparable visual evidence is required to demonstrate compliance with all necessary GPPs. In completing the site evidence package, the following GPP evidence must be submitted:

  • guided video tour of entire site highlighting all GPP features of the building for both operation and storage areas;
  • close-up images of the surfaces (walls, floors, ceilings and joints) in all areas demonstrating compliance with section 84 of the Cannabis Regulations; and,
  • video of an individual demonstrating the production process flow and moving through the different areas of the facility.

Though an actual copy of the standard operating procedures ("SOPs") need not be submitted, applicants are now required to provide a list of SOPs and summaries of same.[6] The list must be provided along with the organizational security plan and detail the procedures that will be implemented to address the four priority areas identified by Health Canada.[7] These areas include security clearances and adverse information about employees, physical security, security awareness and training, and record keeping, reporting and testing.

Applicants in the Queue

For license applications that were in the queue[8] prior to the changes that occurred on May 8th, Health Canada will be reviewing each application for compliance and will be communicating individually with each applicant to notify same of deficiencies, if necessary. Where changes are necessary, the applicant will be required to attend to the new requirements before the application will be reviewed in detail. Upon completion, the application will be placed back in the queue in priority based on the original date of application. If the application satisfies the regulatory requirements, a status update letter will be sent notifying the applicant that there are no concerns.

Outlook

These new Health Canada requirements represent an additional burden for what has historically already been a cumbersome and costly process. While in the past, applicants were able to submit their applications in the midst of raising capital for the purpose of completing their build-outs, they must now be in a position of operational readiness prior to submission.

If you are a license applicant or prospective license applicant who has questions about, or would like assistance with, the impact of the changes to the licensing requirements, Miller Thomson's Cannabis Group would be pleased to assist you. For more information on how the new licensing process impacts cannabis market participants, please contact Robert Graham.

[1] Health Canada, Statement from Health Canada on changes to cannabis licensing Government of Canada (8 May 2019), online:

[2] Cannabis Licensing Application Guide, Section 7.1.1

[3] Ibid, Section 6.8, Table 13 and Table 14

[4] Supra note 2, Section 6.9

[5] Ibid

[6] Supra note 2, Appendix D

[7] Ibid

[8] Supra note 1

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.