CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
CHFA WEST 2019
WHAT YOU NEED TO KNOW
ABOUT CBD REGULATIONS

PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
                                        This presentation is not legal advice
February 22, 2019
CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
AGENDA
    •   What is cannabis and how to market it
    •   Understanding industrial hemp and the CBD regulatory
        framework
    •   CBD as a possible Natural Health Product
    •   Questions

The content of this presentation is provided for general information purposes only and does not constitute
legal or other professional advice or an opinion of any kind. Participants are advised to seek legal advice
by contacting legal counsel regarding any specific legal issues. Participants are encouraged to consult the
Cannabis Act and the applicable Regulations, and any other legislation that may apply to them or their
activities, such as any applicable provincial or territorial legislation.

2                                                   This presentation is not legal advice
CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
PART 1: WHAT IS
    CANNABIS AND
    HOW TO MARKET IT

    PRESENTED BY:
    LEWIS RETIK, PARTNER

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
WHAT IS LEGAL CANNABIS?
•   Recreational Cannabis:
       Until O c tober 17, 2018 “ c annabis , its preparations and derivatives ” were “c ontrolled s ubs tanc es ” under the
        Controlled Dr ugs and Subs tanc es Ac t (“CDSA”) and “narc otic s ” under the Narc otic Control Regulations

•   Industrial Hemp:
       Sinc e 1998, the Indus tr ial Hem p Regulations have authorized the produc tion, pos s es s ion, im port and s ale of low -
        T HC c annabis f or indus tr ial us e via a s ys tem of lic ens ed, perm its and authorizat ions

       Indus trial Hem p Regulations wer e updated to ref lec t new c annabis regim e ef f ec tive O c tober 17, 2018

•   Medical Cannabis:
       Legal ac c es s to dr ied c annabis f or m edic al purpos es was f irs t perm itted in 1999 us ing CDSA ex em ptions

       Marihuana Medic al Ac c es s Regulations (2001): pres c ription - bas ed ac c es s to c annabis f or m edic al purpos es ; hom e
        produc tion or pur c has e gover nm ent s upply

       Marihuana f or Medic al Pur pos es Regulations (2013): c om m erc ial s ale of c annabis f or m edic al purpos es

       Ac c es s to Cannabis f or Medic al Purpos es Regulations (2016 - 2018): lic ens ing regim e f or c om m erc ial indus try; hom e
        produc tion

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
WHAT IS LEGAL CANNABIS?

    •    The Cannabis Act (the “Act”) removes “cannabis, its preparations and
         derivatives” from the CDSA to provide legal access to cannabis for recreational,
         industrial and medical purposes

    •    Controls and regulates the production, distribution, promotion and sale of
         cannabis

    •    Persons 18+, subject to additional provincial restrictions, can legally:
               •     Possess a total of 30 g of dried cannabis or equivalent in public
               •     Distribute up to 30 g of dried cannabis or equivalent to other adults
               •     Cultivate, propagate or harvest a maximum of f our cannabis plants per
                     household f or personal use, licensed seeds or seedlings f rom licensed
                     suppliers
               •     Purchase limited amounts of cannabis f rom retailers authorized by the
                     provinces and territories
               •     Consume cannabis in locations authorized by local jurisdictions
               •     Make legal cannabis -containing products at home, such as f ood and
                     drinks, provided that dangerous organic solvents are not used in making
                     them

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
CANNABIS REGULATIONS
    •    On July 11, 2018, the Cannabis Regulations w ere finalized to support the coming into force of the Act

    •    Provide additional regulation w ith respect to commercial activities:
             Licensing (f or cultivation, processing, research, medical cannabis, cannabis drugs, analytical testing)
             Security
             Quality
             Product standards
             Packaging and labelling
             Retention of documents
             Reporting and disclosure

    •    Regulate medical cannabis:
             Access to cannabis f or medical purposes
             Drugs containing cannabis and cannabis drug/device combination products (additional Food and Drugs Act and
              Food and Drug Regulations requirements)

    •    Does not regulate the production of industrial hemp (new Industrial Hemp Regulations promulgated)

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
REGULATED CANNABIS
    •    Under the Act, cannabis is:

               “Any part of a cannabis plant, including the phytocannabinoids produced by, or f ound in, such a plant, regardless
                of whether that part has been processed or not […]”;

               “Any substance or mixture of substances that contains or has on it any part of such a plant”; and

               “Any substance that is identical to any phytocannabinoid produced by, or f our in, such a plant, regardless of how
                the substance was obtained”

    •    Expressly exempted:

               Non-violable seed of a cannabis plant or a mature stalk without any leaf , f lower, seed or branch (and f iber f rom
                such a stalk) and the root (or any part of the root) of such a plant.

               Industrial Hemp Regulation exemptions enable natural health products and consumer products containing
                low THC (10 µg/g or less) industrial hemp derivatives (e.g. hemp protein, hemp seed oil, cosmetics, etc .)

    •   IMPORTANT:

            Health products containing phytocannabinoids (e.g. THC & CBD) and duplicates of phytocannabinoids are regulated
             as prescription drugs.

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
LEGAL SALE OF CANNABIS

    •    Classes of cannabis legal for sale include:
             Dried cannabis

             Cannabis oil

             Fresh cannabis

             Cannabis plants

             Cannabis plant seeds

    •    Anticipated legal sale after October 17, 2019 (subject to regulatory
         amendment):
             Edibles containing cannabis (solid and liquid)

             Cannabis extracts

             Cannabis topicals

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
NEW CLASSES OF CANNABIS - THC LIMITS

     1.   Edible cannabis: a limit of 10 mg of THC per discrete unit and per package.
          •   For example, a package could contain one discrete unit of edible cannabis that contains 10 mg or two
              discrete units that each contain 5 mg.

     2.   Cannabis extracts: a limit of 10 mg of THC per discrete unit intended to be ingested or for nasal,
          rectal, or vaginal use, such as a capsule. And, a limit of 1,000 mg of THC in a single package.
          •   For example, a package could contain 100 capsules of an extract that each contain 10 mg; or 200
              capsules of an extract that each contain 5 mg.

     3.   Cannabis topicals: a limit of 1,000 mg of THC per package.

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CHFA WEST 2019 WHAT YOU NEED TO KNOW ABOUT CBD REGULATIONS - PRESENTED BY: LEWIS RETIK, LAURA GOMEZ, AND DR. JON -PAUL POWERS
CATEGORIZATION OF CANNABIS PRODUCTS
                Non-Medical                                         Medical                                              Health Products with Cannabis
                (Cannabis Act)                                      (Cannabis Act)                                       (Cannabis Act &
                                                                                                                         Food and Drugs Act)

                •    Limited classes initially                      •    Same limited classes as non-                    •    No restrictions on product classes
                •    Health care practitioner                            medical                                              that may be approved under FDA
                     authorization not required                     •    Health care practitioner                             (e.g., dosage forms for
                •    No pre-market review for safety                     authorization required                               prescription drugs)
                     and efficacy                                   •    No pre-market review for safety                 •    Practitioner oversight
                •    Quality and security requirements                   and efficacy                                    •    Pre-market review for safety,
                     under Cannabis Act                             •    Quality and security requirements                    efficacy and quality under FDA
                •    Cannot make health claims                           under Cannabis Act                              •    Manufacturing subject to quality
                                                                    •    Cannot make health claims                            and security requirements under
                                                                                                                              the FDA and Cannabis Act
                                                                                                                         •    Can make health claims, if
                                                                                                                              authorized

     Health Canada, “Health products containing cannabis or for use with cannabis: Guidance for the Cannabis Act, the Food and Drugs Act, and related regulations” (July 11, 2018)

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KEY CONSIDERATIONS
     •   Licensing
            Sale and Distribution:
                 • Provincial/Territorial authorization required
                         ‾      Patchwork of 12 different regimes with varying degrees of public/private involvement
                 • Medical cannabis sale requires federal licence
                 • Business-to-business distribution and sale authorized among licensees
            Cultivation and processing cannabis and cannabis products:
                 • Federal licence required but facilities subject to municipal restrictions
                 • Micro-processing and micro-cultivation licences available
            Research and Analytical Testing:
                 • Federal licence required for R&D
                         ‾      Health Canada’s stated policy is that licensees are be permitted to research within the scope of another licence (e.g. cultivation) but this is not
                                found in the legislation
            Cannabis Drug Licence:
                 • For drugs containing cannabis
     •   Security Requirements
     •   Good Production Practice and Record Keeping Requirements
     •   Import and Export
            Federal authorization required to import and export cannabis for medical or scientific purposes
            No import or export of recreational cannabis

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ADVERTISING, BRANDING AND PROMOTION
 •   Cannabis Act:
        Unless authorized by the Act, no promotion of cannabis, cannabis accessories and services related to cannabis
        Informational or Brand-preference promotion – permitted by persons authorized to produce, sell or distribute cannabis and must be:
         •     In a communication addressed and sent to a person who is 18 years of age or older
         •     In a place where persons under 18 years of age are not permitted by law
         •     In a telecommunication where the person responsible of the content of the promotion has taken reasonable steeps to ensure that
               such promotion cannot be accessed by a young person
         •     In a prescribed place
         •     In a prescribed manner

          Brand element promotion permitted on things that are not associated with or appealing to persons under 18, or that are associated with a
           way of life that includes glamour, recreation, excitement, vitality, risk or daring
          Brand element includes a brand name, trademark, tradename, distinguishing guise, logo, graphic arrangement, design or slogan that is
           reasonably associated with, or that evokes,
                         (a) cannabis, a cannabis accessory or a service related to cannabis; or
                       (b) a brand of any cannabis, cannabis accessory or service related to cannabis.

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ADVERTISING, BRANDING AND PROMOTION

      •   Promotion limited at point of sale (price and availability)

      •   Permitted informational/brand-preference promotion cannot be
          accessible by or appealing to persons under 18

      •   Prohibited to display a brand element or name of cannabis
          producer, seller etc, as part of the name of the facility or
          otherwise, if the facility is used for a sports or cultural event or
          activity

      •   Sponsorship and giveaway restrictions

      •   Additional provincial restrictions

      •   Packaging and labelling restrictions

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ADVERTISING IN BRITISH COLUMBIA

     •   Under the Cannabis Control and Licensing Act and associated regulations:
         •   A person who markets, advertises or promotes cannabis must not allow a minor to take part in
             those activities
         •   An unlicensed person must not promote cannabis for the purpose of selling it
         •   A person must not market, advertise or promote any place as a place to consume cannabis or to
             spend time after consuming cannabis.
         •   Unless authorized to sell cannabis in BC, a person must not use any words, phrases, designs,
             domain names or other branding elements or indicia that could indicate that the person owns or
             operates a business that sells cannabis.
         •   The Cannabis Licensing Regulations create a Marketing Licence which authorizes the licensee to
             promote cannabis from Licensed Producers to licensed cannabis retail stores.

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ADVERTISING IN ONTARIO

     •    In addition to Federal restrictions and prohibitions, the Registrar's Standards for Cannabis Retail Stores contains additional
          requirements for retailers in Ontario:
              Licensees must have signage clearly identifying their business on the exterior of the authorized store.
              Language and images on exterior signage may not:
               ‾     communicate information about the price or distribution of cannabis or cannabis accessories

               ‾     appeal to young persons

               ‾     contain testimonials or endorsements

               ‾     depict a person, character, or animal, whether real or fictional

               ‾     present cannabis or a cannabis accessory in a manner that associates it with or evokes a positive or negative emotion or image of a way of life
                     such as one that includes glamour, recreation, excitement, vitality, risk, or daring

               ‾     promote cannabis or cannabis accessories in a way that is false, misleading, or deceptive

               ‾     be associated with medicine, health, or pharmaceuticals

               ‾     associate consumption of cannabis with driving a motorized vehicle, or with any activity that requires care and skill or has elements of danger.

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ADVERTISING IN ONTARIO

     •       Licensees may promote cannabis and cannabis accessories within the store only under the following circumstances:
               the promotion is limited to factual information about:
                  ‾   Cannabis or a cannabis accessory and its characteristics

                  ‾   a service related to cannabis

                  ‾   the availability or price of cannabis, cannabis accessories, or a service related to cannabis.

               the promotion focuses on brand characteristics of cannabis or cannabis accessories.

         •    Licensees may not provide cannabis or cannabis accessories free of charge or provide any other thing or benefit,
              including a discounted price, as an inducement for the purchase of cannabis or a cannabis accessory.
         •    Licensees may not accept or request material inducements from Licensed Producers, their representatives, or
              suppliers of cannabis accessories.

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ADVERTISING IN QUEBEC
     •   Cannabis Regulation Act contains additional restrictions and prohibitions that
         go beyond the federal regulations.

     •   In Quebec, the promotion of cannabis is permitted only in:
             Printed newspapers and magazines addressed to a person 18 years of age or older

             On signage inside of a cannabis retail store, which cannot be viewed from outside of such
              store

             On the website of the Société Québecoise du Cannabis (“SDQC”) – the only authorized
              provincial retailer

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ADVERTISING IN QUEBEC
     •   The French (primary) version of the law prohibits direct and indirect “publicité en faveur du
         cannabis” (in English “advertising for the promotion of cannabis”), which suggests that
         prohibitions may extend beyond promotional advertising to any advertising “in favour” of
         cannabis.

     •   No sale of objects with images directly associated with cannabis
            “The operator of a business or a cannabis producer may not sell or give an object that is not cannabis or
             supply such an object as part of an exchange if a name, logo, distinguishing guise, design, image or slogan
             that is directly associated with cannabis, a brand of cannabis, the Société québécoise du cannabis or a
             cannabis producer appears on the object.”

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CHALLENGES & POTENTIAL COMPLICATIONS FOR GROWTH
     •   Limitations on importation

     •   Limitations on trade:
               Inter-provincially
               Internationally

     •   Municipal restrictions on production facilities

     •   Patchwork of inconsistent provincial laws

     •   Challenges for collaborations and joint ventures where licensing is a requirement

     •   Cross-border issues for individuals involved in the legal cannabis industry in Canada

     •   Supply vs. demand for recreational cannabis

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CURRENT TRENDS

     •    Consolidat ion – M&A within the indus tr y

     •    Product Innov at ion – Novel s trains , deliver y, etc .

     •    Inconsist ent Regulat ion – Multi- j ur is d ic t iona l with res pec t to s ale and us e

     •    G lobal O pport unit y – Canadian indus try pos itioned to bec om e global leader in the
          c om m er c ial pr oduc tion of r ec r eational c annabis

     •    Safer and M ore Responsible Consumption – Inc reas ed f oc us on em piric al data and s ound
          evidenc e

     •    New Businesses – Em er ging c om m erc ial opportunities anc illar y to c annabis produc tion and
          s ale

     •    Edibles, Concent rat es and T opicals – W hile not c urrentl y legal f or s ale, m aj or f oc us on
          produc tion of edibles , c onc entr ates , and phytoc annab ino i d c ontaining topic al produc ts

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COMPLIANCE & ENFORCEMENT – CANNABIS ACT &
     CANNABIS REGULATIONS

     •   It is prohibited to possess and distribute any cannabis that you know is illicit cannabis.
         •    Illicit cannabis means cannabis that is or was sold, produced, distributed or imported by a person prohibited from
              doing so under the Cannabis Act or any provincial legislation

     •   Includes criminal offences, for example:
         •    Possession offences: depending on type of offence, up to 5 years in prison, and no limit on fine, for contravening
              possession limits and possessing illicit cannabis
         •    Distribution offences: depending on type of offence, up to 14 years in prison, and no limit on fine, for distributing to an
              underage person, to an organization, more than 30 grams, or illicit cannabis
         •    Various other selling, importing, exporting, and producing offences

     •   Includes authority to issue Administrative Monetary Penalties for certain types of offences:
         •    Current maximum fine set at $1,000,000 but will be subject to other maximums introduced by regulation and whereby
              offences would be classified as minor, serious, or very serious and would have associated maximum fines for each

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PART 2: UNDERSTANDING
     INDUSTRIAL HEMP
     & THE CBD
     REGULATORY FRAMEWORK

     PRESENTED BY:
     LAURA GOMEZ, PARTNER

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WHAT DO THE INDUSTRIAL HEMP REGULATIONS DO?
     •   The old Industrial Hemp Regulations were promulgated under the Controlled Drugs and
         Substances Act – the old regulations were repealed when the Cannabis Act came into force,
         October 17, 2018

     •   The new Industrial Hemp Regulations operate in parallel to the Cannabis Regulations, both
         promulgated under the Cannabis Act
         •   Licence the sale, import, export, processing and cultivation of industrial hemp plants, seeds and
             grains
         •   Authorize or exempt certain activities that would otherwise be illegal under the new cannabis
             regulatory framework
         •   Specify that only certain varieties of hemp may be cultivated for industrial hemp purposes
         •   Set standards for industrial hemp, THC content, testing, storage…etc.

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WHAT IS INDUSTRIAL HEMP?
 •   Industrial hemp means a cannabis
     plant – or any part of that plant – in
     which the concentration of THC is 0.3%
     w/w or less in the flowering heads and
     leaves

 •   Only seeds of approved industrial hemp
     varieties, THC level lower than 0.3% in
     their leaves and flowering heads, can be
     planted (List of Approved Cultivars)

 •   Industrial hemp also includes the
     derivatives of industrial hemp plants
     and plant parts

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DIFFERENT REQUIREMENTS FOR DIFFERENT PARTS
        Industrial hemp derivatives
         •   Only a product made by processing of the grain of industrial hemp is exempted from the Cannabis Act if
             the derivative or product contains less than 10 µg/g of THC
         •   Derivatives that are considered industrial hemp include e.g. hemp seed oil (oil derived from seed or
             grain) and hemp flour
        Flowering heads, leaves and branches
         •   A holder of a licence that authorizes sale may only sell the flowering heads, leaves and branches of
             industrial hemp to a holder of a licence under the Industrial Hemp Regulations or the Cannabis
             Regulations
         •   Derivatives made by the processing of flowering heads, leaves and branches are not exempted from
             Cannabis Act
        Stalk, fibre & non-viable seeds
         •   Non-viable cannabis seeds, mature cannabis stalks, when those stalks are stripped of their leaves,
             flowers, seeds, and branches, and fiber derived from such mature cannabis stalks, are exempted from
             the Cannabis Act
         •   Fibre from stalks can be used in making paper, textiles, rope or twine, and construction materials

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INDUSTRIAL HEMP DERIVATIVES
     •   Natural Health Products, cosmetics and
         foods can include industrial hemp derivatives
         with a THC content of 10 µg/g or less
         •   e.g. hemp seed, hemp seed oil, hemp seed
             protein
         •   Derivatives must come from the grain of
             industrial hemp, not other parts
         •   Isolated or concentrated phytocannabinoids are
             excluded (i.e. no concentrated CBD even from
             industrial hemp)

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REMEMBER…
     ONLY SPECIFIC ACTIVITIES ARE EXEMPTED
                           •    No blanket exemption for industrial hemp

                           •    A plant part, derivative or product made from a
                                derivative must fall within one of the specific
                                exemptions in the Industrial Hemp Regulations,
                                or be exempted from the Cannabis Act
                                altogether, otherwise the Cannabis Act applies
                                •    e.g. hemp seed oil (
CBD – TARGETED AMENDMENTS
     •   On October 17, 2018, upon the coming in force of the Cannabis Act, Health Canada
         implemented two changes targeted at excluding isolated or concentrated phytocannabinoids
         (e.g. CBD) from being sold as a Natural Health Product

        Health Canada added phytocannabinoids to the Prescription Drug List (PDL):
         o   Phytocannabinoids produced by, or found in, the cannabis plant and substances that are duplicates
             of such phytocannabinoids

        Health Canada added phytocannabinoids to Schedule 2, of the Natural Health Product
         Regulations (Excluded Natural Health Product Substances):
         o   Anything referred to in Schedule 2 to the Cannabis Act that contains more than 10 μg/g THC, an
             isolated or concentrated phytocannabinoid or a synthetic duplicate of that phytocannabinoid

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CBD – ADDED TO PRESCRIPTION DRUG LIST
 •   The PDL is a list of medicinal ingredients that, when found
     in a drug, require a prescription to purchase
        A substance or combination of substances is not considered
         to be a NHP if its sale is required to be pursuant to a
         prescription

 •   The PDL includes an exemption for derivatives of cannabis
     exempted under the Industrial Hemp Regulations (e.g.
     hemp seed oil) and anything exempted from the Cannabis
     Act (e.g. fibre from mature stalk)
        Exemption only applies if the product DOES NOT contain an
         isolated or concentrated phytocannabinoid

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CBD – EXCLUDED FROM THE DEFINITION OF NHP
•    Schedule 2 of the Natural Health Products Regulations, lists
     substances that are excluded from the definition of an NHP
        [an NHP] does not include a substance set out in Schedule 2,
         any combination of substances that includes a substance set out
         in Schedule 2 or a homeopathic medicine or a traditional
         medicine that is or includes a substance set out in Schedule 2

•    Schedule 2 includes an exemption for industrial hemp
     derivatives exempted under the Industrial Hemp Regulations
     (e.g. hemp seed oil) and anything exempt from the Cannabis
     Act (e.g. fibre from mature stalk)
        Exemption only applies as long as the ingredient DOES NOT
         contain an isolated or concentrated phytocannabinoid

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PART 3: CBD AS A
     POSSIBLE NATURAL
     HEALTH PRODUCT

     PRESENTED BY:
     DR. JON-PAUL POWERS, PARTNER

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CBD PRESCRIPTION DRUG STATUS

     •   When the Cannabis Act cames into force, the Prescription Drug List was amended to include
         phytocannabinoids produced by, or found in the cannabis plant, including any product
         containing an “isolated or concentrated phytocannabinoid” or a synthetic duplicate

     •   Health Canada has taken a precautionary approach, due to scientific uncertainty and limited
         market experience with phytocannabinoid health products

     •   To be removed from the Prescription Drug List, Health Canada indicates it needs new
         evidence to show that these products can be used safely for the intended therapeutic benefit
         and patient population without a practitioner's oversight

     •   CBD is currently NOT permitted in NHPs, foods or cosmetics. The only route to market
         is currently via the recreational cannabis market or a prescription drug.

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OVERVIEW OF THE NATURAL HEALTH PRODUCTS
     REGULATIONS

     •   In Canada, Natural Health Products (“NHPs”) are a
         subset of drugs

     •   NHPs are governed by the Food and Drugs Act (the
         “FDA”), the Food and Drug Regulations (the “FDR”),
         and the Natural Health Products Regulations (the
         “NHPR”)

     •   A product will be classified as an NHP as a result of
         its composition and representation. This is because
         the definition of an NHP has both a “substance
         component” and a “function component”.

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PRODUCT LICENCE REQUIREMENTS

     •   The NHPR require that each NHP receives a product licence before it can be sold in Canada
         (NPN, DIN-HM)

     •   To obtain a product license, a product licence application (PLA) must be submitted to the
         Natural and Non-prescription Health Products Directorate (the “NNHPD”) of Health Canada

     •   The NNHPD must receive sufficient data to allow the evaluation of the safety, efficacy and
         quality of the NHP when used according to the recommended conditions of use

     •   Safety and efficacy of NHPs are largely supported through the following evidence: NNHPD
         Monographs, Traditional evidence, Clinical studies

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CBD EVIDENCE - NHP

     Evidence                               Comments
     NNHPD Monographs                       There are currently no monographs covering CBD and/or Cannabis
                                            (other than Hemp seed, seed protein and seed oil)

     Traditional Evidence                   Not likely applicable to isolated and purified CBD or CBD rich extracts

     Clinical Studies                       Published or otherwise

                  NHP PLAs supported by clinical evidence are considered as class III PLAs (with an associated, and
                  not guaranteed, 210 day review period; 30 day administrative screening, 180 day assessment time)

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EVIDENCE REQUIREMENTS - SAFETY
     •   Must demonstrate the ingredient is safe, at the propose dose, in the respective population, for
         the specified duration of time
         •   e.g. a study in which healthy adults orally consumed 200 mg/day CBD for 6 months without
             significant adverse events would support a PLA for a product providing the same

     •   Use in special/high risk populations (e.g. children, and pregnant and breast feeding women)
         would require clinical evidence collected from the same populations
         •   e.g. a clinical study in adults would not typically support use in children

     •   The duration of the clinical study may affect the licensed duration of use of the product.
         Generally the NNHPD requires clinical studies of a 6 month duration, without significant
         adverse events, to license a product without a specified duration of use (i.e. for chronic use).

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EVIDENCE REQUIREMENTS - EFFICACY
     •   Must demonstrate the ingredient imparts a beneficial health effect

     •   The measure of the effect must be meaningful and statistically significant when
         compared to placebo. In general, the measures should be:
         •    Scientifically recognized/validated
         •    Relevant to the population the product is intended for
         •    Investigator administered

     •   The claim must be consistent with the beneficial health effect and worded in a health context
         •    e.g. a study demonstrating a reduction in knee pain associated with osteoarthritis would not support a claim such as
              “Reduces pain”
         •    e.g. “Reduces biomarker A” vs “Reduces biomarker A, a factor associated with inflammation”

     •   With respect to efficacy, the higher level the claim, the higher level of evidence required for support (e.g.
         antioxidant vs. cardiovascular health)

37                                                                     This presentation is not legal advice
POPULAR CBD CLAIMS
     •    A review of popular news, health and other industry sites reveals a wealth of conditions that purportedly may benefit
          from the use of CBD. Some examples include (and as one site notes “just to name a few”):
          •    Depression
          •    Anxiety
          •    Pain                                        Important Considerations:
          •    Epilepsy                                    • NHPs are intended for self-care
                                                           • NHPs may not be represented as a
          •    Seizures
                                                             treatment, preventative or cure for any of
          •    Cancer                                        the diseases, disorders or abnormal
          •    ALS                                           physical states referred to in Schedule A of
          •    MS                                            the FDA
          •    Arthritis
          •    Headaches
          •    Nausea
          •    Insomnia

38                                                               This presentation is not legal advice
CBD CLAIMS VS REGULATION

                      Claim/Condition                                                  Issue
     Cancer; Acute anxiety; Acute, inflammatory and          Schedule A Conditions
     debilitating arthritis; Depression; Nausea (due to
     pregnancy)

     Epilepsy; Seizures                                      Schedule A Diseases (Synonymous with
                                                             convulsions)
     ALS; MS                                                 Conditions likely deemed outside the realm of self-
                                                             care
     Nausea; Insomnia; Pain; Headache                        Possibly permitted NHP claims

39                                                        This presentation is not legal advice
EVIDENCE REQUIREMENTS - QUALITY
     •   The NNHPD has been requesting the following quality related information as part of
         product license applications including hemp:
         1. Specifications indicating testing and tolerance limits for THC and CBD:
              •   The determination of THC must take into account the potential to convert THCA into THC
              •   The determination of CBD must take into account the potential to convert CBDA into CBD
              •   Testing must be conducted via a validated method (suitable to detect 10 ppm THC and CBD) and competent
                  laboratory as per the IHR
         2.   Documentation must be provided which indicates the specific hemp cultivar (which must be compliant
              with the IHR List of Approved Cultivars)

     •   Should the NHP route become possible, the above would likely be required as part of a
         product license application including CBD.
         1. It remains to be seen what possible CBD source materials would be permitted in a NHP if any (e.g. Hemp
              as per the IHR, Cannabis as per the Cannabis act, etc.)

40                                                             This presentation is not legal advice
SUMMARY
               •   Should CBD be removed from the Prescription Drug List and permitted
                   for use in NHPs:
                   1.   Unlikely to be a blanket removal as some conditions are not appropriate for
                        self care (e.g. L-Carnitine acceptable ingredient in NHPs, remains on the
                        prescription drug list for when sold for the treatment of primary or
                        secondary L-Carnitine deficiency)
                   2.   A product licence (NPN) would be required for sale
                   3.   A product licence application (PLA) would need to be submitted to support
                        the safety, efficacy and quality of the product
                   4.   Claims (efficacy) must be supported by clinical studies, must not be
                        represented as a treatment, preventative or cure for a Schedule A disease,
                        and must be appropriate for self-care

41                                       This presentation is not legal advice
THE CONTENT OF THIS PRESENTATION IS PROVIDED FOR GENERAL
     INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR
         OTHER PROFESSIONAL ADVICE, OR AN OPINION OF ANY KIND.
      PARTICIPANTS ARE ADVISED TO SEEK LEGAL ADVICE BY CONTACTING
          LEGAL COUNSEL REGARDING ANY SPECIFIC LEGAL ISSUES.
     PARTICIPANTS ARE ENCOURAGED TO CONSULT THE CANNABIS ACT AND
      THE APPLICABLE REGULATIONS, AND ANY OTHER LEGISLATION THAT
      MAY APPLY TO THEM OR THEIR ACTIVITIES, SUCH AS ANY APPLICABLE
                 PROVINCIAL OR TERRITORIAL LEGISLATION.

42                                This presentation is not legal advice
QUESTIONS?

43    This presentation is not legal advice
PRESENTERS

                 LEWIS RETIK                                                                                                         DR. JON-PAUL POWERS
                 Partner                                                                                                             Scientific Advisor
                 Business Law                                                                                                        Business Law
                        lewis.retik@gowlingwlg.com                                                                                         Jon-
                                                                                                                                           paul.powers@gowlingwlg.com
                        +1 613 7838849
                                                                                                                                           +1 613 786 0123

                 LAURA GOMEZ                                                                                                         FOOD, NHP & COSMETICS
                 Partner
                 Business Law                                                                                                        LAW NEWSLETTER
                        Laura.gomez@gowlingwlg.com                                                                                   Featuring special Cannabis Editions

                        +1 613 786 0149                                                                                              – to subscribe visit:
                                                                                                                                     www.gowlingwlg.com/subscribe

                                                                                This presentation is not legal advice
gowlingwlg.com    Gowling WLG (Canada) LLP is a member of Gowling WLG, an international law firm which consists of independent and
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