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Executive Summaries Sep 25, 2018

Obtaining a Cannabis Producer Licence

Beginning on October 17, 2018, recreational cannabis will be legal in Canada. In order to meet the regulatory requirements for authorized cannabis producer or grower, entrepreneurs will have to be familiar with the key steps in the process.

The bill introduced by the federal government over a year ago, now the Cannabis Act, will remove cannabis from the list of prohibited drugs and create a new licensing scheme. The federal government has jurisdiction over cannabis production while the provinces have free reign to legislate in respect of cannabis distribution and use.

The date on which the federal bill will come into force is now known: October 17, 2018. Entrepreneurs will therefore need to be well prepared in order to expedite the process of obtaining a licence and meet all regulatory requirements. The following are some of the key steps to complete.

1. DETERMINE THE TYPE OF PRODUCER LICENCE TO APPLY FOR

  • Standard cultivation: For producing, selling and distributing dried or fresh products and for cultivating plants and/or seeds.
  • Micro cultivation: Permits the same activities as a standard cultivation licence in a surface area of no more than 200 m2.
  • Nursery: For producing, selling and distributing plants and/or seeds to other production licence holders, all activities to be carried on in a surface area of no more than 50 m2.

2. CREATE A CTLS ACCOUNT

The Cannabis Tracking and Licensing System ("CTLS") is the primary platform created and administered by Health Canada for licensing cannabis producers.

The first step to be completed by an entrepreneur is to create a personal user account: an individual who wishes to apply (for themself or for someone else) must first register on that platform on the Health Canada website by providing basic information (name, email address, telephone number, etc.). After applicants register and create an account, they will be provided with an access code by Health Canada.

3. APPLY FOR A SECURITY CLEARANCE

Before a licence application can be submitted to Health Canada, certain people (identified below) must also create their own accounts in the CTLS and be granted a security clearance, which consists of an authorization issued following a review by the Minister that is intended to ensure that cannabis will not be diverted to an illicit market or for the purpose of unlawful activities. The persons subject to this verification are:

  • Directors and officers of a corporation
  • Partners in a partnership
  • Responsible person (licence holder, if an individual)
  • Head of security
  • Master grower
  • Any individual in a position to directly control the applicant (50% of the voting shares of a company)

4. CREATE A CORPORATE PROFILE

Every applicant that is not an individual must also create a corporate account with which all accounts of persons for whom a security clearance is requested will be connected.

Certain information relating to the corporation, including its legal name and certificate of incorporation and incorporation number and the identity of its parent corporation(s), must be disclosed at the time the corporate account is created.

5. APPLY FOR A LICENCE

In order to submit a complete licence application, an entrepreneur must make sure that the information listed below is provided and the following requirements met:

Details of the site relating to the place where the cannabis production is to take place:

  • Canadian address, with latitude and longitude
  • location certificate of the site
  • description of surrounding zoning
  • aerial view of the proposed site and surrounding lots
  • description of the rooms, buildings and outdoor areas

Site personnel

An applicant must also identify qualified individuals in each of the following positions:

  • Person responsible for the licence
  • Head of security
  • Master grower
  • Quality Assurance Person

Site ownership and consent

If an applicant is not the owner of the site to be used for producing cannabis, a consent form containing (i) the full address of the site, (ii) the class of licence applied for, and (iii) a declaration by the owner consenting to the activities applied for must be duly completed and submitted at the same time as the application.

Notice to local authorities

Before submitting an application, an applicant must make sure that (i) the local government, (ii) the fire department, and (iii) the municipal police force where the applicant wishes to grow cannabis are notified and must provide a copy of the notices via the CTLS portal.

Presentation of a physical and organizational security plan

The regulations governing cannabis cultivation contain quite a few requirements relating to the preparation and implementation of security measures at the applicant’s business and the incorporation of those measures at the cultivation site. The following is a non exhaustive list of the physical security measures that must be arranged:

  • Physical barriers around the perimeter of the site, the operations area and the storage area
  • Access control system
  • Record of entry and exit
  • Visual monitoring and recording devices
  • Intrusion detection system

Information showing how the listed measures will be incorporated into the business must be submitted in a physical security plan at the same time as the producer licence application.

An applicant must also submit an organizational security plan that includes the following:

  • A summary of the hours of work and role/responsibilities of the Head of Security
  • A list of persons who hold a security clearance
  • A description of the security training for employees of the applicant

Good production practices

The regulations governing cannabis production refer to good production practices ("GPP") to be followed by an applicant during the cannabis production and compliance with which must be demonstrated at the time of application, using a Good Production Practices Report. The GPP include provisions for Standard Operating Procedures (SOPs), pest control, storage and distribution.

Establishment of a system for record keeping and monitoring operations

An applicant must also include a description of their system for record keeping and monitoring operations, and provide the name of the system and a copy of the user’s manual.