- Newly published recommendations will move Canada closer to allowing broader retail sales of CBD products.
- “Unlike in other jurisdictions such as the United States or United Kingdom, all products containing CBD are subject to the same rules as psychoactive cannabis products.”
- For entrepreneurs looking to take part in the exciting growth of the Canadian CBD industry, be prepared for a burdensome start. Producers and manufacturers must follow the exact same licensing, permitting, and testing requirements as for psychoactive cannabis products.
In the U.S., CBD can be found almost everywhere — from drug stores and gas stations to grocery stores and even in some boutiques, CBD’s rapid growth can be seen on shelves all across the nation. Meanwhile, the market has been slow in Canada due to government policies, but progress is being made.
Laying the Groundwork for More Accessible CBD
Experts say newly published recommendations will move Canada closer to allowing broader retail sales of CBD products. While these items are currently available through a prescription from a physician or at licensed cannabis stores, recommendations recently published by the Science Advisory Committee on Health Products Containing Cannabis lay the groundwork for introducing them over the counter at pharmacies, or through other retailers like health stores.
The report follows a 2019 consultation by Health Canada seeking feedback from cannabis users and health products industries about the potential market for non-prescription health products containing cannabis. The report lays the groundwork for insurance to pay for CBD products.
“CBD products in Canada are currently governed under the Federal Cannabis Act. This means that, unlike in other jurisdictions such as the United States or United Kingdom, all products containing CBD are subject to the same rules as psychoactive cannabis products,” Omar Khan, SVP of Corporate and Public Affairs at High Tide, said. “As such, consumers can only access them through licensed retail cannabis stores, unless they are a participant in Canada’s medical cannabis program, which requires referral by a physician or nurse practitioner. Additionally, like psychoactive cannabis products, CBD is subject to very strict marketing and advertising restrictions. All of this has combined to make it more difficult for regulated CBD products to reach their sales potential in Canada.”
A Growing Desire for CBD
The good news is that the federal government seems poised to reclassify CBD products under the natural food products umbrella. This would remove them from the purview of the Cannabis Act and make them accessible to consumers through retail channels other than just licensed cannabis stores, according to Khan. This should help Canadian CBD brands reach a wider audience.
“The demand for CBD products in Canada is strong, with projections that the market could grow to $2 billion if regulations were changed to regulate CBD as a health product. In addition, the demand is forecasted to grow by seven percent yearly. As Canada was the first G7 country to legalize adult use of cannabis at the federal level, policy makers took a conservative approach to legalization. As time has passed, these same policymakers seem to now understand that CBD products should be treated differently than psychoactive cannabis products. I think that as CBD is reclassified as a natural food product with an accompanying loosening of marketing rules, consumer demand will increase significantly.”
Strenuous Processes for CBD Businesses
For entrepreneurs looking to take part in the exciting growth of the Canadian CBD industry, be prepared for a burdensome start. Khan says since the provisions within the Canadian Cannabis Act are stricter than those found in the U.S. Farm Bill, it is more difficult to start a CBD business in Canada than it is in the U.S. Therefore, producers and manufacturers must follow the exact same licensing, permitting, and testing requirements as for psychoactive cannabis products.
“These regulatory requirements, in addition to the high taxes imposed on CBD products and recreational distribution channels being limited to retail cannabis stores whose primary revenue stream is psychoactive cannabis products, make it difficult for a CBD-focussed business to be successful in Canada,” Khan said. “This is a notable contrast to the situation in the U.S., since the 2018 Farm Bill had the effect of legally differentiating derivatives of hemp, including hemp-derived CBD, from mariijuana.”
As a result, the regulatory burdens, taxes, and limitations on recreational distribution channels are all lower for CBD in the U.S. This has allowed hemp-derived CBD companies in the U.S. to find more success. According to Khan, High Tide’s subsidiary, NuLeaf Naturals, has been able to develop a robust presence both online, selling direct to consumers, as well as through hundreds of grocery and other stores across the country. None of this, particularly NuLeaf’s reach to consumers, would currently be possible in Canada.
The Future of CBD in Canada
“With strong and clear recommendations on CBD from Health Canada, I see Canada’s CBD market being a viable option for both consumers and businesses. By ensuring that CBD products are safe, efficacious, and of high quality, consumers will be able to trust their products and find health benefits. Currently, Canadian regulations have been a huge barrier to the CBD market’s growth, and we look forward to seeing clear guidance later this year,” Khan said.