In this issue:
- New Guidance for Temporary Marketing Authorization for Caffeinated Energy Drinks
- Province of Manitoba Enacts Franchise Legislation
- Don't Have Any Trade-marks? Think Again. Trade-marks for Manufacturing Businesses
- Sanctions Update - Burma (Myanmar)
- United States Munitions List
- Good News, OK News, In the Automotive Sector
- Toxic Substance Reduction Plans Due December 31, 2012
- New Faces/New Look
New Guidance for Temporary Marketing Authorization for
Caffeinated Energy Drinks
By: Joel Taller
On March 29, 2012, Health Canada released its long awaited category-specific guidance document on Temporary Marketing Authorization (TMA) for Caffeinated Energy Drinks (Energy Drinks). The guidance document outlines the TMA process that will be used to transition energy drinks from a natural health product (NHP) to a food which would be regulated accordingly. The guidance document provides details regarding the eligibility criteria for participation in the current TMA process for energy drinks, compositional criteria, permitted labelling, advertising and claims, as well as research and reporting requirements.
Although the guidance document is restricted to the specific requirements for energy drinks, it is relevant for all companies with food-like NHPs, given that energy drinks will probably be just the first product category to transition to foods from NHPs;. Health Canada has been holding off on licensing many food-like NHPs such as vitamin waters, gums and bars in order to develop a strategy to transition these types of products over to foods. Likely within the next few weeks, other food-like NHPs will be re-classified as foods based on Health Canada's assessment of their related consumption patterns, history of use and marketing. This long-awaited regulatory shift has already begun with certain NHP licence holders and applicants receiving notices that their products have been re-classified as foods. This will continue as Health Canada continues the process of classification of products at the food-NHP interface.
1. Temporary Marketing Authorization Letter (TMAL) Process
The transition of food-like NHPs to foods will begin with the issuance of Temporary Marketing Authorization Letters (TMALs), a mechanism built into the Food and Drugs Regulations (FDR) that allows Health Canada to issue a temporary authorization for the sale of a food that is determined to be safe but not compliant with the FDR's requirement for information in support of a regulatory amendment. With respect to the transition process, the timelines and requirements vary depending on the market access of the product and the status of its Product Licence Application (PLA).
2. TMAL Eligibility Criteria
In order to be issued a TMAL as an energy drink, products must contain caffeine, must be water-based and in beverage form. Currently, products such as powders, syrups and shots, or products that are dairy- or juice-based, will not form part of the transition. Products must meet the following specific criteria outlined in the guidance document with respect to the quantity of certain ingredients that may be added to the energy drink:
- Caffeine - must contain a minimum of 200 ppm (mg/L) caffeine to be classified as an energy drink. Cannot contain more than 400 ppm (mg/L) caffeine, with a maximum amount of 180 mg per single serve container and per serving of 500 mL for multi-serve containers;
- Taurine - cannot contain more than 3000 mg/day;
- Vitamins & mineral nutrients - if added, must provide 5 per cent of the -daily value and cannot exceed maximum levels outlined in guidance document;
- NHP ingredients - quantities based on NHPD monographs or other authoritative sources. It is possible that certain NHP ingredients may be considered novel food ingredients and will require pre-market assessment prior to being authorized for use in food products. A novel food notification involves demonstrating that a substance has a history of safe use as a food at levels that are similar to those expected or intended as a result of consumption of the food product. The review of the novel food submission would occur concurrent with the life of the TMAL.
- Prohibited ingredients - alcohol, folic acid and Vitamin A (retinol). See guidance document Appendix for additional prohibited ingredients; and
- Food additives, flavours & colours - must comply with FDR and guidance document. See guidance document Appendix for prohibited ingredients.
Please note: This list is not exhaustive: the guidance document and FDR should be consulted for details and other requirements.
3. TMA Labelling and Advertising
In order to be issued a TMAL, products must meet (or commit to meeting by December 2013) the specific labelling requirements outlined in the guidance document and the FDR including:
- Nutrition facts table – must appear on label and be compliant with FDR;
- Reference amount – set at 500 mL for energy drinks;
- Serving size – all containers up to 750 mL will be considered single-serving containers; all non-resalable containers will be considered single-serving containers; only re-sealable containers above 750 mL will be considered multi-serving containers for which the serving size will be the reference amount (500 mL);
- Daily consumption limits – recommended maximum number of containers/servings-per-day must not result in total daily vitamins, minerals, amino acids, NHP ingredients or other ingredients that are in excess of maximum limits as set out in the guidance document, monographs or authoritative references (as applicable);
- Caffeine, taurine and NHP ingredient content label declaration - must appear on a per container basis for single-serving containers; must appear on a per serving basis (500 mL) for re-sealable, multi-serving containers. Should immediately follow nutrition facts table or be adjacent to ingredient listing;
- Other ingredient content declarations – quantitative declarations of ingredients other than caffeine must comply with FDR and guidance document as applicable (e.g., artificial sweeteners). Should immediately follow nutrition facts table or be adjacent to ingredient listing;
- "High caffeine content" – statement or equivalent must appear on the product label;
- Caution statements – should appear grouped together, in bold or preferably under a bolded heading, e.g,, "Caution/Attention: Do not consume more than (X) container(s)/servings daily" or "Usage: (X) container(s)/serving(s) maximum daily"; "Not recommended for children, pregnant or breastfeeding women and individuals sensitive to caffeine"; "Do not mix with alcohol";
- Toll free number – should be provided on the product label adjacent to the company name/principal place of business to facilitate reporting of consumption incidents.
- Claims – claims must be in accordance with FDR and guidance document (see section 3.5) as applicable. An exemption from the reference amount requirement may be obtained to enable some products to make "calorie-free" and "sugar-free" claims. Issues arising from these exemptions will be reviewed during the life of the TMAL; and
- Advertising – must be compliant with the Food and Drugs Act and the Consumer Packaging and Labelling Act and their related regulations. For certain media (e.g., television) advertising preclearance may be required by industry-imposed self-regulation mechanisms.
Please note: This list is not exhaustive: the guidance document and FDR should be consulted for details and other requirements.
4. TMA Research and Other Requirements
The purpose of the TMA process is to permit the sale of energy drinks so that Health Canada and the beverage industry have time to gather necessary information such as consumption data and incident reports that will aid government in designing an appropriate food regulatory framework for these products. As such, in order to be issued a TMAL, manufacturers have to agree to:
- Either directly or through trade associations, and in partnership with Health Canada, undertake a series of consumer research projects in order to generate data on the consumption of energy drinks and to report on health-related incidents. While Health Canada will have a hand in designing the framework of these studies, it is shifting the burden and cost of gathering this information to industry; and.
- Withdraw the product from sale if Health Canada determines it is in the public interest to do so.
The decision to transition energy drinks to foods brings Canada in line with other major trading partners such as the U.S. and the E.U., and will provide a framework for the transition of other food-like NHPs to the food regulatory framework. The Food Directorate has worked closely with industry to establish the above criteria and the time frame for industry to transition to the new food labelling, while balancing consumer interest in providing new information on food labels with the impact to the industry in making the above changes. The second step in the transition of energy drinks to foods will begin once analysis of consumer-generated data is completed by Health Canada. It is hoped that regulatory amendments will soon follow.
Province of Manitoba Enacts Franchise Legislation
The grant of franchises in the Province of Manitoba will be subject to regulation as of October 1, 2012, joining Ontario, Alberta, New Brunswick and Prince Edward Island with pre-sale disclosure legislation in Canada.
As a result, franchisors offering franchises in Manitoba will be required to amend their current disclosure document to comply with Manitoba's requirements. Like Alberta, New Brunswick and Prince Edward Island, the Manitoba Franchises Act allows for a "wrap-around" to a pre-existing disclosure document in order to include the Manitoba-specific requirements.
While Manitoba's disclosure regulation mirrors, in many respects, the disclosure requirements in Ontario, Alberta, New Brunswick and PEI, there are some noteworthy differences.
Likely the most unique, and significant, feature of the Act is that a disclosure document can be delivered piecemeal. Although the pre-conditions for such delivery may be more cumbersome than the "one document at one time" delivery requirement expressly prescribed by Ontario, New Brunswick and Prince Edward Island, the ability for multiple deliveries may be useful for many reasons including, for example, if the franchisor's financial statements are not available at the time that a franchisor wishes to initiate disclosure to a prospective franchisee.
The following conditions are prescribed by the regulations for multiple-part delivery of a disclosure document:
- The statutorily-prescribed risk warnings under Section 3 of the regulations must be provided with the first delivery of disclosure materials provided to a prospective franchisee;
- All information prescribed in Part 1 of Schedule A of the regulations, being background information about the franchisor, its directors, officers and partners, and litigation and bankruptcy history must be provided together at one time;
- The following statement must appear prominently at the top or front of each document that forms part of the disclosure document:
THE FOLLOWING INFORMATION FORMS PART OF THE DISCLOSURE DOCUMENT REQUIRED TO BE PROVIDED UNDER THE FRANCHISES ACT; and
- The prescribed certificate of disclosure must be included with the last part of the disclosure provided by the franchisor.
As such, although disclosure may be provided over time and in any number of documents, the disclosure obligation under the Act is not met until the last document forming the disclosure document is provided. It is on this date that the 14-day disclosure review period begins, during which neither the franchise agreement nor any other agreement relating to the franchise can be signed by the prospective franchisee or consideration paid by the prospective franchisee.
The regulations also require in a number of instances a form of "negative disclosure," a statement that no information is being provided with respect to a specific disclosure item. If, for example, the franchisor does not provide earnings projections or an estimate of annual operating costs, the disclosure document must provide a statement to that effect. A statement must also be made in the disclosure document if training, manuals or other assistance is not offered to the franchisee. The Certificate of Franchisor, the form of which is prescribed by the regulations, requires a supplementary statement if the franchisor is relying upon an exemption from providing financial statements.
Finally, the Regulations expressly permit delivery of a disclosure document by fax, courier or electronic means, which will make providing the disclosure document to a prospect much easier for franchisors.
Although substantially similar to the disclosure requirements in the other provinces, there are many unique elements in the Manitoba Regulations that will require franchisors to modify their current disclosure documents to comply with the new Manitoba requirements.
Don't Have Any Trade-marks? Think Again. Trade-marks for
By: Stuart Ash
Virtually every business that sells goods or services (whether or not the business deals in consumer goods or services) has a trade-mark.
Each year, in addition to thousands of trade-marks filed for use in association with consumer goods like clothing, food and beverage products, and consumer electronics, a similar amount of applications are filed for industrial goods such as chemicals and building materials as well as B2B products like scientific equipment and machine tools, and even commodity goods such as coffee and microprocessors (think Starbucks and Intel). Tens of thousands of applications are also filed each year for trade-marks for use in association with services ranging from financial, retail and advertising services to transportation, manufacturing and construction services.
A trade-mark does not need to be an iconic brand like Apple, Nike or Harley-Davidson, nor does it need to be a made-up word or fancy logo. Almost any name or mark you use to distinguish your business, products and services from the business, products and services of others can be a trade-mark.
Sanctions Update - Burma (Myanmar)
By: Wendy Wagner
On April 24, 2012, Canada eased its comprehensive sanctions against Myanmar (Burma). The sanctions imposed under the Special Economic Measures Act, which prohibited all imports, exports, investment, the provision or acquisition of financial services and the docking and landing of ships and aircraft, have been lifted. The arms embargo remains in place as does the asset freeze and prohibition on dealings with designated persons. It should be noted that exports to Burma without a permit obtained from the Department of Foreign Affairs and International Trade remain prohibited as Myanmar is a country listed on Canada's Area Control List.
United States Munitions List
The United States Munitions List (USML), which controls the export of defence products, is currently undergoing major changes involving the moving of numerous items from the USML to the Commerce Control List (CCL). The CCL is a dual-use list subject to a lower level of control. The Canadian equivalent of the USML is the Defence Production Act, which cross-references to certain groups of items on the Export Control List (ECL). Among the targeted categories are those covering vessels of war, military vehicles, aircraft and related parts, military engines, submersibles, firearms, artillery, ammunition, explosives and toxicological agents. Once the USML overhaul is complete, Canada may apply more stringent controls than the U.S., which could impact competitiveness and diminish the benefits associated with use of the Canadian Exemptions to the U.S. ITAR rules (ITAR Part 126.5).
Good News, OK News, In the Automotive Sector
By: Phil Wolfenden
News has generally been pretty good in this sector for some time. However, Desrosiers Automotive Consultants released their April results indicating auto sales were "still quite respectable" but down 1.4 per cent year over year. Chrysler took the lead once again in Canada, with a sales increase of 3 per cent, while Ford and GM had drops of just over 5 per cent and just under 7 per cent respectively. No doubt sales are still well ahead of the figures of a couple of years ago.
It is always a good idea in this sector to look to the automotive parts companies to gauge the future and in that regard, Martinrea International Inc. came out with its first quarter results showing a marked improvement in revenue year over year of over 70 per cent. Their results, however, do show that the pace began to slow in the first quarter as new programs began to come on line.
The general feeling of the experts is that we will continue to see an improvement as long as the U.S. continues to see even modest job growth patterns.
Toxic Substance Reduction Plans Due December 31, 2012
By: Harry Dahme
Certain classes of facilities designated by regulations made under Ontario's Toxics Reduction Act, 2009 (TRA) will be required, by December 31, 2012, to prepare a Toxic Substance Reduction Plan (TSRP) with respect any "toxic substance" used or created at the facility..
Set out below is a summary of the requirements under the TRA and the required contents of a TSRP.
A "toxic substance" is defined as any substance that must be reported to the National Pollutant Release Inventory (NPRI) for the calendar year, as prescribed by the NPRI notice published annually in the Canada Gazette. The regulations expressly include acetone as a toxic substance and exclude any product containing an NPRI-listed substance that is intended for human or animal consumption if it is produced at a food or beverage manufacturing facility.
A TSRP must be prepared, in respect of a toxic substance used or created, at any facility that:
- Is a manufacturing facility identified by a North American Industry Classification System (NAICS) code starting with 33, 32, or 33, or is a mineral processing facility (NAICS 212) where chemicals are used to separate, concentrate, smelt, or refine minerals from ore;
- Employs one or more persons; and
- Uses or creates any quantity of toxic substance, provided that the NPRI notice for the calendar year requires the owner and operator to provide information in respect of the substance, or in the case of acetone, section 4 of Ontario Regulation 127/01 applies.
2.0 Toxic Substance Accounting
Where an owner and operator of a facility is required to prepare a TSRP for a substance, they must also ensure that for each process that uses or creates the substance, the substance is tracked and quantified. This accounting must show how the substance is created or enters the process, how the substance is transformed or destroyed, and what happens to the substance once it leaves the process.
The regulations require that a host of records be created during the accounting exercise, including:
- A description of every "stage" of the manufacturing process that uses or creates the substance and how each stage is divided into one or more "processes" that use or create the substance;
- Process flow diagrams illustrating how the substance moves through each process and the relationship between each process;
- A record of the tracking and quantification of the substance for each calendar year in which the TRA and Regulations apply;
- A record describing why the quantities of the substance entering or created during the process are not approximately equal to the quantities being destroyed or removed; and
- A description of the methods used to track and quantify the substance in each process and why those methods were chosen.
The owner and operator must ensure that the best available methods for tracking and quantifying a substance are used, considering the technical specifics of the processes, industry standards, economic feasibility, and any methods required to be used for the purposes of meeting other regulatory reporting requirements (such as NPRI). Such methods will generally include continuous monitoring, predictive monitoring, source testing or sampling, mass balance, published emission factors, site-specific emission factors and engineering estimates.
For further information regarding toxic substance accounting, please see the following MOE guidance documents:
- Ontario Toxics Reduction Program – A Guide For Regulated Facilities (PIBS 8695e) at page 9 to 14; and
- Ontario Toxics Reduction Program - Toolkit for Toxic Substance Accounting (PIBS 8498e).
3 Content of TSRPs
The TRA and associated Regulations prescribe detailed requirements regarding what must be included in a TSRP. The content requirements can generally be subdivided into five groups:
Plan objectives: Each TSRP must contain a statement that the owner and operator of the facility intends to reduce the use or creation of the toxic substance at the facility. If the TSRP does not contain this statement, the reasons for its omissions must be explained. TSRPs must also contain a description of the objectives of the plan, including any reduction targets.
Toxic substance accounting information: Each process that uses or creates the toxic substance must be described in the TSRP. Information collected and records produced during the toxic substance accounting exercise, such as the tracking and quantification information and process flow diagrams, must also be included.
Reduction option analysis: Options for reducing the use and creation of the toxic substance must be identified and analyzed for technical and economic feasibility. The regulations require that at least one option be identified from the following reduction methods: materials/feedstock substitution, product design/reformulation, equipment/process modification, spill/leak prevention, on-site reuse/recycling, improved inventory/purchasing techniques, and improved training/operating. If an option from each of these methods cannot be identified, an explanation is required. For each option that will be implemented, the TSRP must contain a description of how the implementation will proceed, an implementation timetable, and an estimate of the amount of the reduction.
Annual cost information: Each TSRP must include an estimate of the direct and indirect annual costs related to the use or creation, release, disposal or transfer of the toxic substance and the estimated cost of the substance being contained in a product that leaves the facility.
Administrative information: Subsection 18(2) of the Regulations provides a list of additional information required, including facility, owner and operator identification information, in addition to other miscellaneous information.
While a TSRP must be developed for each toxic substance used or created at a facility, each TSRP may be incorporated into a single document. This must contain a certification from the highest ranking employee at the facility, stating that he/she has read the plan and is familiar with its contents, and that the plan is factually accurate and complies with the TRA and Regulations. Each TSRP must also include any recommendations, including the rationale for the recommendations, made by the licensed planner, as is discussed below.
4 Planner Recommendations and Certification
Prior to submitting the TSRP, the owner and operator of a facility is required to provide a licensed planner with a draft copy for the purpose of obtaining recommendations. The recommendations are for the purpose of improving all aspects of the TSRP, such as the potential for reducing the use or creation of the toxic substance and the business rationale for implementation. The licensed planner must address any relevant issues he/she identifies, including; potential improvements to the expertise relied on in preparing the TSRP, potential improvements to the toxic substance accounting, unidentified technically and economically feasible reduction options, potential improvements to cost estimates, and the viability of implementation timetables.
Prior to submission of the TSRP, a licensed planner must certify that he/she is familiar with the processes at the facility, that he/she agrees with the toxic substance reduction estimates, and that the TSRP complies with the TRA and regulations.
5 TSRP Summaries and Reports
Where an owner and operator is required to prepare a TSRP, a summary of the plan must also be prepared and provided to the director and made available to the public on the internet. Summaries must be provided to the director, in the case of first version of the TSRP, on or before December 31, 2012. In the case of subsequent versions of the TSRP, the summary must be submitted within 30 days after the TSRP has been amended, or on or before December 31 in the year in which the TSRP is reviewed.
Each summary must include the following information:
- Any targets for reducing the use or creation of the toxic substance;
- A projection of the effectiveness of the TSRP in meeting the objectives;
- Copies of the certifications contained in the TSRP;
- Various administrative information that was included in the TSRP;
- The name of all other toxic substances used or created at the facility for which TSRPs must be prepared;
- A copy of the statement by the owner and operator included in the TSRP regarding the intention to reduce the use or creation of the toxic substance and where no statement is made, the reasoning for not attempting to reduce;
- A description of any reduction options to be implemented, the anticipated implementation timelines and the estimated reduction amounts, or a statement that no reduction options will be implemented with the associated reasoning; and
- A statement that the summary accurately reflects the current version of the plan.
Similarly, where a TSRP must be prepared, the owner and operator must ensure that a report on the TSRP is also prepared. The report must be provided to the director on or before June 1 of each year a TSRP is required. Each report must include the following information, where applicable:
- A summary of the results of the toxic substance accounting, including a comparison to the results of the previous reporting periods (if applicable);
- A description of the effectiveness of any steps taken towards achieving the objectives of the TSRP;
- A description of any amendments made to the TSRP during the reporting period;
- Various administrative information;
- The name of all other toxic substances used or created at the facility for which TSRPs must be prepared; and
- A statement regarding incidents out of the normal course of events, and whether the incident affected the results of the tracking and quantification.
Each report must also include a certification from the facility's highest ranking employee stating that he/she has read the report, is familiar with its contents, understands the information contained in the report to be accurate, and that the report complies with the TRA and regulations.
6 Toxic Substance Reduction Planners
The regulations prescribe a licensing process for licensed planners that includes education, work experience, course work, and testing requirements. As of April 2012, the MOE has not issued any toxic substance reduction planner licenses. Once the MOE begins issuing licences, the MOE website will be updated to include a list of licensed planners and their contact information.
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.