Curbing the Cannabis Genetics Bottleneck in Canada
In 2001 Canada released the Marihuana Medical Access Regulations (MMAR), which created the legal framework for the creation, implementation, and upkeep of a federal medicinal cannabis program. Since then this legislation has been reviewed, repealed, and replaced multiple times in order to keep pace with changes in public and professional opinions over issues such as home cultivation for medical purposes.
The passing of Bill C-45, also known as the Cannabis Act, by the Canadian Senate in early-June put into motion the federal legalization of cannabis for recreational purposes. This change, which will come into effect on October 17 2018, is the largest change to cannabis legislation in Canada since the MMAR was introduced.
Later in June, Health Canada published a set of Cannabis Act Regulations to support the incoming Act. The Cannabis Act Regulations form one of four new sets of regulations (the remaining three focusing on industrial hemp, cannabis analytics, and law enforcement response, respectively) that are being adopted by Health Canada as a response to the federal legalization of cannabis. The Regulations serve to outline the changes that will be experienced by the cannabis industry in the wake of legalization, such as the differences in export laws, licensing, production practices and product labeling as a result of the Act.
One of the areas that will change greatly under the new Regulations is the method by which cannabis strains, and consequently cannabis genes, can be introduced and shared in the Canadian cannabis market.
The current state of the Canadian cannabis market
These changes are widely supported by cannabis producers in Canada, who until now were facing the prospect of a “genetics bottleneck” in the cannabis market. Health Canada lists 116 fully licensed cannabis producers across the country, but only 289 dried cannabis products are being sold in the current medicinal cannabis market, despite there being thousands of different strains available through the recreational black market. There was no system in place for cannabis producers to transition these strains into the legal market, and as a result producers were forced to purchase strains from their competitors in order to diversify their products.
The introduction of the Cannabis Act and the associated regulations aims to create an influx of new genetic material into the market, in the process opening up the possibility for creating novel cannabis strains as a result of crossbreeding with the newly legal strains. The primary way the Act hopes to achieve this is by giving cannabis producers the chance to bring their previously illicit strains of cannabis plant and seed to the market in a safe and controlled manner.
Introduction of a new licensing system
The new system contained in the Regulations consists of three subclasses of cultivation license: a nursery license that restricts producers to cannabis plants and prohibits any activities with dried or fresh cannabis, a micro license for small-scale cannabis producers, and a standard cultivation license for larger cannabis farms. New applicants for these licenses will be required to declare to Health Canada as part of the application process whether they possess any illicit strains. Once the application and declaration are accepted, these strains will formally be considered compliant with the law and enter the cannabis market.
Alongside this cultivation license reform, there are also a number of more minor changes that will assist in creating greater genetic diversity in the cannabis market. Cannabis producers will be able to take part in more regulated intra-industry sales as dictated by their license type, with all license holders being able to purchase from nursery and craft license holders. This will allow smaller-scale cannabis producers, many of whom will be entering the cannabis market for the first time under the new licenses, to sell their unique cannabis strains. The way in which cannabis research facilities operate will also be affected by the Act.
Cannabis science research after the act
Those who previously held scientific licenses that allowed the cultivation, gathering, or production of cannabis for scientific purposes will be issued with new research licenses. These research licenses encompass all of the allowances in the old system, and also enable research laboratories to sell plants and seeds to cultivation license holders. It is hoped that this will facilitate the distribution of any novel cannabis strains that are developed throughout the cannabis market, making the strains more widely available to consumers. There is also the potential for the new influx of genetics to lead to important discoveries for the medicinal cannabis community who require strains with very specific properties, so it is essential that research laboratories can access the reformed cannabis market.
The Cannabis Act also allows the issuing of import permits to licensees if they require non-Canadian cannabis material for scientific or medical purposes. This would allow laboratories with research licenses to import strains cultivated abroad for further study and development. Importantly, the Cannabis Act will also make it easier for laboratories and breeders who create new strains with distinct cannabinoid profiles as a result of genetic modification or crossbreeding to register the strain as their intellectual property through the issuing of patents or breeder’s rights certificates.
Levelling the playing field
When the Cannabis Act and associated Regulations come into force on October 17 it will then be seen how many of the black and gray market cannabis producers will choose to enter the legal cannabis market. With the framework in place to help these producers keep their unique strains under the new licensing arrangements, it is hoped that the majority, if not all, of the producers currently operating will make the transition.
The previously illicit cannabis strains that will enter the market with these producers have a real potential to diversify the Canadian cannabis market, both in terms of the development of new medicinal drugs and in a greater variety of choice for recreational product consumers. How these gray market producers react to the introduction of the Cannabis Act could very well shape the face of the Canadian cannabis market for years to come.