Health Canada Announces the Approach to Cost Recovery for the Regulation of Cannabis

Published: October 8, 2018

Health Canada Announces the Approach to Cost Recovery for the Regulation of Cannabis

The Cannabis Act will come into force on October 17, 2018. The Act aims to keep cannabis out of the hands of Canadian youth and the profits away from criminals and organized crime. Since it introduced the legislation, the Government of Canada has committed to fully recovering the costs of regulating the cannabis industry. Cost recovery ensures that those who benefit from the new legal market will pay the costs of regulating cannabis, which will reduce the cost to Canadians.

The Ministerial Order authorizing cost recovery for the regulation of cannabis and the new fees will come into force on October 17, 2018, in conjunction with the Cannabis Act.

Over the summer, Health Canada held a 30-day public consultation to solicit public input and views on the proposed approach to cost recovery for the regulation of cannabis. The Department received 108 online submissions, 18 written submissions, and 755 form letters. In addition, Health Canada hosted four online information sessions with industry, including those who are or who have applied to be licensed producers, to explain the proposal and to answer questions. The feedback Health Canada received focused primarily on the timing of implementing the proposed fees, the design of the annual regulatory fee, and the desire for additional service standards.

As a result of the feedback, Health Canada has modified the design of the annual regulatory fee to use previous year’s revenue to calculate the fee rather than forecasted revenue. These measures will help moderate the financial impact on the emerging industry in the early years following coming into force of the Act.

In addition, Health Canada is committing to monitoring its administration of the regulatory program closely to ensure it recovers no more than the regulatory costs and with a view to establishing defined service standards in areas such as the processing of licence amendments. The Department is also committing to create a forum to engage with the cannabis industry on the administration of the fee regime and as it develops additional service standards, supporting predictability and transparency.

To promote a diverse market with both small and large players, Health Canada will scale fees according to the size of the business and apply lower fees for micro-scale licence holders. Some classes of licences—namely those for research, analytical testing and hemp production—will be exempt from fees. To support access to cannabis for medical purposes, those who produce, cultivate and sell cannabis exclusively for medical purposes will be exempt from the annual regulatory fee.

The Ministerial Order will be published in Canada Gazette, Part II, on October 17, 2018.

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