• Niche Canada

Striking the Right Regulatory Balance

Developing a strong regulatory framework is critical to ensuring the safe transition to legal cannabis. But, are Canada’s Licensed Producers being unnecessarily over-regulated? And, could this lead to a thriving black market or empty shelves come 2018 due to a lack of supply?

These are some of the questions being asked as the country navigates its way towards legalization next year.

One example being highlighted is the regulation that requires a Licensed Producer to have a Responsible Person in Charge (RPIC) or an Acting RPIC (A/RPIC) - someone security cleared by the RCMP - present in every area where cannabis is being handled.

It sounds like a good idea. But, to follow the requirements, LPs currently need somewhere between half of all of their production staff filling these roles to function efficiently. LPs regularly lose valuable work time waiting for these employees to be present in order to proceed with routine, low-risk, day-to-day activities like cleaning, loading packed product on to shippers’ trucks (driven by an employee with no requirement for an RCMP security clearance) or plant health monitoring.

LPs already undergo strict security clearance processes, and control measures are in place and enforced. They undergo a stringent and comprehensive security review, are regularly inspected by Health Canada and have established a strong record of compliance.

Some have argued that with all of the other security provisions in place, having an RPIC or A/RPIC present in each and every room any time activities with cannabis are happening could be unwarranted. Cannabis, especially the plants, are low target for diversion or theft and the potential risk to the general population in an instance of theft or diversion is minimal.

Furthermore, this requirement is not consistent with other controlled substances risk management regulatory instruments. For example, under the Narcotic Control Regulations, Licensed Dealers need only have one qualified person on the premises where activities with narcotics are licensed to occur.

There is the expectation for current licensed producers to scale up production to meet the July 2018 start date for legalization. But, obtaining the current security clearances can take up to six months or longer, which can slow production and therefore impedes the industry’s ability to expand capacity.

So, while enacting health and safety regulations are a very important component of legalization, we could run the risk that some well-meaning regulations are too restrictive and therefore don’t have the desired effect.

The feds have stated they want to curb the black market. But, there is a very real possibility that LPs won’t be able to fill the cannabis demand come July. So, if that happens, who will stock the shelves?

What if the current requirements were modified from having an RPIC or A/RPIC in every room where cannabis activities occur, to having one on site whenever activities with cannabis are taking place?

Security measures would continue to include room entry- and exit-logs and security camera coverage for Subdivision C areas, as well as record keeping requirements for inventory transactions, batch quantity reconciliations, and quarterly inventory confirmations.

Is this a solution that protects health and safety, but doesn’t impede production?

Health Canada is already introducing several improvements to the regulatory regime, with the goal of streamlining the system. Many in the industry are hoping they will re-examine this issue as well.

The government knows it needs to strike the right balance when it comes to regulation, if they are going to achieve their desired goal of increasing production, attracting cannabis consumers to the legal market and curbing the influence of organized crime.