The medical cannabis industry in Canada and in many states within the U.S is growing faster than any industry segment in recent years.
Despite this fact, many have stated that there will be a supply-demand imbalance once Cannabis is legalized in Canada and we are to expect significant shortages in supply.
U.S States that have legalized Cannabis for Adult-use have seen this phenomena occur in recent times. In Canada, adult use or recreational cannabis could raise prices for medical cannabis patients. Recreational or adult- use legalisation has a few strong and impactful effects on cannabis pricing—where on the one hand it lowers prices due to greater supply, demand and competition, on the other, it also competes with the medical cannabis market for resources, which could result in lack of supply and higher prices for medical cannabis products and in turn patients. Medical Cannabis patients in Canada are truly nervous about this fact coupled with the taxation element which the government is currently planning to add to medical cannabis.
The challenge to importation however is that cultivation, manufacturing and trade of cannabis is governed by international law including the UN International Drug Control Conventions (Single Convention on Narcotic Drugs; Convention on Psychotropic Substances; Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances) as well as relevant national frameworks and health department regulations which all have language in them to ensure that any trade between members who are signatory to these treaties is limited to occur for scientific or medical purposes only.
Until recently, only a couple of countries had any significant cannabis export industries. Lift has reported previously that Canada has become the ultimate exporting hub for companies across the globe to obtain medical cannabis products for use by patients.
Health Canada provides for importation and exportation of cannabis on a case by case basis. In fact, the department itself has had changing views on the import and export of Cannabis, which is evident from the statements published on their website:
Under the MMPR (Effective: April 1, 2014- August 24, 2016):
“The department does not support facilitating a regime premised on servicing global demand given the associated public health, safety and security risks. For the above reasons, importation and exportation would be permitted under very limited circumstances, such as, importing starting materials for a new Licensed Producer or exporting a unique marijuana strain for scientific investigation in a foreign laboratory.
“The import and export provisions operate in the context of Canada's international drug treaty obligations. As such, they are not a vehicle for supplying cannabis to foreign markets where recreational use is legal.
"Any licensed party who chooses to submit an import or export permit application should expect these to be assessed in view of this bulletin, taking into account relevant considerations including:
- Canada's obligations under international treaties;
- Whether the application is consistent with the relevant provisions in the MMPR or the NCR;
- For export permits, whether the country of final destination has issued an import permit;
- Risks to public safety and security including the risks of diversion."
Under the ACMPR (Effective: August 24, 2016):
“Licensed producers are permitted to engage in the import or export of seeds, plants, or dried marihuana if they have obtained an import or export permit from Health Canada. The import/export permit framework is similar to that for other controlled substances and is intended to maintain control over the movement of controlled substances, consistent with Canada’s obligations under international conventions on the control of narcotic drugs and psychotropic substances.”
With 82 licensed producers currently licensed, the question as to whether Health Canada will permit for bulk importation of medical cannabis or not from countries that have recently introduced federally legal medical cannabis regimes such as Netherlands, Jamaica, Colombia, Israel and others is one that is looming.
Today, Namaste Technologies announced (through its wholly owned subsidiary CannMart—a late-stage applicant under the ACMPR) that it is entering into an LOI with an Israeli-based licensed producer to import (once licensed) “high quality medical cannabis from industry- leading countries like Israel.”
Health Canada will need to make this decision on importation based on several factors, the top of which is ascertaining that the quality of the product being imported into Canada meets the same strict Good Production Practices (GPP) criteria, and they must be satisfied that no unauthorized pesticides were used in the cultivation of product to ensure that it meets the same strict testing standards imposed onto Canadian licensed producers as defined under the ACMPR.
The only other insurance that medical cannabis patients in Canada don’t face a shortage is for Health Canada to mandate that existing licensed producers fulfill medical demand first or they be required to carve out a certain amount in terms of production capacity via licensing to ensure supply for medical patients on an ongoing basis in a recreational or adult use marketplace.
- Deepak Anand
Featured image by Mark.
Deepak Anand is the Vice President of Government Relations at Cannabis Compliance Inc. Mr. Anand previously acted as the Executive Director for the Canadian National Medical Marijuana Association (CNMMA), and he was an Adjunct Professor at Kwantlen Polytechnic University (KPU). Most recently, Mr. Anand was the Vice President of Business Development for Zenabis.