Canada proposes hike in purchase limit for cannabis drinks, but low THC cap to remain

Image of Truss Beverage products

Cannabis beverages from Truss, a joint venture between Hexo Corp. and Molson Coors Canada. (Photo courtesy of Truss Beverage Co.)

Canada’s federal government is seeking public input on proposed regulations that would effectively increase by more than eightfold the amount of cannabis beverages consumers could purchase at any one time.

But some experts argue the planned changes don’t go far enough in addressing the lackluster performance of the products.

The current “equivalency rates” for cannabis possession limits in Canada mean an individual can possess up to 30 grams of dried marijuana in public but only 2.1 liters (71 ounces) of cannabis-infused beverages – or about five standard-sized cans.

That ratio, however, apparently was a mistake.

Health Canada now says the proposed rules “would correct an unintended consequence of the current equivalency, which restricts the possession and sale of beverages to a greater extent than other forms of cannabis.”

The proposed change to the regulations, published late Friday, would increase the quantity of cannabis beverage equivalent to 1 gram of dried cannabis.

That, in turn, would effectively increase the public possession limit for beverages to 17.1 liters – or 48 standard-sized beverage cans.

Industry officials have lobbied the government for years to overhaul the equivalency table contained within the federal regulations, often blaming the rules for poor beverage sales.

The new rules, however, would not change the maximum limit of 10 milligrams of THC per container.

‘Underwhelming’ changes

Interests representing large cannabis producers, who have long touted the potential of beverages, hailed the planned changes while others greeted the news with skepticism.

The Cannabis Council of Canada, a business group representing licensed producers, welcomed the proposed changes, calling them “timely and consequential.”

“The proposed amendment very effectively eliminates the distortion and will provide more opportunity for Adult Canadian cannabis consumers to sample and consume the broad and growing array of innovative cannabis beverages,” the business group said in a statement, referring to the planned changes to the beverage equivalency rate.

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Cannabis Council head George Smitherman noted that this set of proposals stems from consultations launched in December 2020 and is not part of a mandatory review of the 2018 legislation. That review was supposed to have begun months ago.

But Mitchell Osak, president of Toronto-based Quanta Consulting, noted that the vast majority of the market will not be affected by these proposals.

“The proposed changes couldn’t be more underwhelming,” he wrote.

“While any liberalization is welcome, this is a snail’s step. To wit, beverages represent less than 2% of total legal cannabis consumed in Canada.”

Beverages selling slowly

Sales of cannabis-infused beverages have underperformed industry expectations.

Beverage sales amounted to only 39.3 million Canadian dollars ($31 million) through the first nine months of 2021, according to the latest Statistics Canada figures, a far cry from the half-a-billion-dollar annual market foreseen by accounting firm Deloitte.

By quarter, cannabis beverage sales in 2021 were:

  • CA$10.9 million in the first quarter.
  • CA$12.7 million in the second quarter.
  • CA$15.7 million in the third quarter.

Health Canada said there is no evidence the proposed changes allowing consumers to buy more cannabis beverages could lead to those products becoming more popular among consumers – but the agency didn’t rule out the possibility.

“This change may result in changes in consumer preferences, leading to cannabis beverages becoming a more popular cannabis product; however, there is no evidence to support that this change to equivalency and the corresponding impact on consumer preferences would occur,” the health department noted.

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More proposed amendments 

Other proposed amendments aim to create a more robust research climate in Canada.

One effect of the upcoming regulations will be that more marijuana produced in Canada would be available for nontherapeutic cannabis research with human participants, the government said.

Under the proposed changes, researchers would be allowed to use Good Production Practices (GPP)-compliant cannabis rather than solely relying on Good Manufacturing Practice (GMP)-compliant cannabis. A relatively small percentage of cannabis is produced according to GMP standards – generally for export.

“The barriers to research using commercially available cannabis products may have the potential to affect the climate for cannabis research in Canada,” according to the government’s announcement.

The proposed regulatory amendments would exempt nontherapeutic cannabis research involving human subjects from the clinical trial requirements under the Food and Drug Regulations, “where that research is conducted under a cannabis research license issued under the Cannabis Regulations.”

“Health Canada recognizes the need to fill the knowledge gaps for cannabis and the need to continue to support Canadians in making informed decisions,” according to the document.

The consultation period is 45 days, until April 26.

The proposed changes are available here.

Matt Lamers can be reached at mattl@mjbizdaily.com.