Canadian Cannabis Business Licence Information

Legislation Overview

The legal cannabis market in Canada is regulated according to the provisions of the Cannabis Act, which sets out a strict legal framework for controlling the production, distribution, sale and possession of cannabis across the country. The Cannabis Regulations (SOR/2018-144) and Industrial Hemp Regulations (SOR/2018-145) set out the specific requirements of this legislation. Below you can find details of these requirements.

Note that these regulations replace previous licensing systems such as the Access to Cannabis for Medical Purposes Regulations (ACMPR).

Who Needs a Licence?

Not everyone in Canada needs a licence to grow cannabis. If you grow for your personal use under the Cannabis Act; or are authorized under the Act to produce your own cannabis for medical purposes; or are authorized as a designated grower for someone else; there is no requirement to acquire a cannabis business licence.

Hemp and hemp byproduct producers are licensed under a separate regime, and more information can be found here. https://www.canada.ca/en/health-canada/services/publications/drugs-health-products/industrial-hemp-licensing-application-guide.html

However, if you plan to cultivate, produce or package cannabis products, licensing under the Act is required. You must also apply for a CRA cannabis licence for both medical and non-medical (recreational) purposes. Packagers must register also for the cannabis stamping regime at the same time as licensing. Register for the cannabis stamping regime.

Licences are valid for a maximum of 2 years,

Eligibility

To apply for or renew a cannabis licence, you must meet all of the following conditions:

  • You are not the subject of a receivership of your debts
  • You have not failed to comply with any Act of Parliament (other than the Excise Act, 2001) or of a provincial or territorial legislature that deals with the taxation or control of alcohol or tobacco, or any regulations under it in the past 5 years
  • You have not acted to defraud her Majesty in the past 5 years
  • Each individual involved must be at least 18 years of age
  • Have a valid business address in Canada
  • Provide a list of all premises that will be cultivating, producing and/or packaging cannabis products
  • Have sufficient financial resources to conduct your business in a responsible manner
  • Hold a valid licence/permit from Health Canada issued under the proposed Cannabis Act
  • Provide a business plan (including a business industry overview, operating plan, financial plan or source of funds, and a sales and marketing plan)
  • Provide acceptable security to cover one month of cannabis duty liability(minimum of $5,000 and a maximum of $5 million)
Security Requirement

The minimum amount of security required for licensees who are only cultivating and/or producing cannabis products would be $5,000. The maximum security amount would be $5 million for cannabis licensees who package cannabis products.

For a new cannabis licence application, security would be calculated as:

(estimated number of grams to be used to produce cannabis products that will be sold over the first 12 months x $1 per gram) ÷ 12 months

For a renewal application, security would be the highest amount of cannabis duties payable for a calendar month in the previous 12 calendar months.

If you have specific questions on how to calculate the security amount, send an email to cannabis@cra-arc.gc.ca or call 1-866-330-3304.

Standard Cultivation Licences

Standard Cultivation Licence holders are allowed to possess and engage in a wide-range or activists around cannabis, including both indoor and outdoor production. Additionally, these licence holders are authorized to possess and obtaining dried or fresh cannabis, cannabis plants, or cannabis seeds through breeding, cultivation and harvesting. As well, Standard Cultivators may sell and distribute dried cannabis, fresh cannabis, cannabis plants or seeds to the holders of other licence types, and to Provincial/Territorial bodies authorized to distribute cannabis, and conduct ancillary activities (e.g., drying, trimming, milling, etc.)

It is possible to apply for a standard cultivation licence, even with a proposed plant surface area of less than 200 square metres but standard cultivation requirements will apply in this case.

Micro-Cultivation Licences

Micro-cultivation licence holders can engage in all of the same activities as Standard Cultivation Licence holders, including both indoor and outdoor production. Similar to the Standard licence, Micro-cultivation licence holders are also authorized to possess and obtaining dried or fresh cannabis, cannabis plants, or cannabis seeds through breeding, cultivation and harvesting. They are also authorized to sell and distribute dried cannabis, fresh cannabis, cannabis plants or seeds to the holders of other licence types, and to Provincial/Territorial bodies authorized to distribute cannabis, and conduct ancillary activities (e.g., drying, trimming, milling).

The main difference with the Micro-Cultivation Licence is canopy space, as these growers are limited to a surface area under 200m2 (including multiple surfaces such as surfaces vertically arranged).

Standard Processing Licences

Standard Processing Licence holders are authorized to possess non-synthetic cannabis, and produce cannabis products, but are allowed no involvement with growing. They may sell and distribute cannabis to other licence holders (processors, analytical testers, researchers, cannabis drug licence holders) including micro-cultivators or standard cultivators the following: dried cannabis, fresh cannabis, cannabis plants, or cannabis seeds; cannabis produced for the purposes of testing that is necessary to determine the chemical characterization of cannabis, such as a reference standard.

They may also sell and distribute to a licensed nursery: cannabis plants or seeds; cannabis produced for the purposes of testing that is necessary to determine the chemical characterization of cannabis, such as a reference standard.

Standard Processors can send and deliver cannabis products to a licence holder that is authorized to sell cannabis for medical purposes or to a  person authorized to sell cannabis under a provincial or territorial Act. They can also send and deliver cannabis products (that are plants or seeds) to the purchaser at the request of a licence holder that is authorized to sell cannabis for medical purposes or to a  person authorized to sell cannabis under a provincial or territorial Act.

Micro-Processing Licences

Like the Standard Processing Licence, the Micro-processing licence allows the possession of non-synthetic cannabis, and the production of cannabis products, but are not allowed any involvement with growing.

Micro-processing Licence holders may sell and distribute cannabis to other licence holders (processors, analytical testers, researchers, cannabis drug licence holders) including micro-cultivators or standard cultivators the following: dried cannabis, fresh cannabis, cannabis plants, or cannabis seeds; cannabis produced for the purposes of testing that is necessary to determine the chemical characterization of cannabis, such as a reference standard.

They may also sell and distribute to a licensed nursery: cannabis plants or seeds; cannabis produced for the purposes of testing that is necessary to determine the chemical characterization of cannabis, such as a reference standard.

Micro-processors can send and deliver cannabis products to a licence holder that is authorized to sell cannabis for medical purposes or to a  person authorized to sell cannabis under a provincial or territorial Act. They can also send and deliver cannabis products (that are plants or seeds) to the purchaser at the request of a licence holder that is authorized to sell cannabis for medical purposes or to a  person authorized to sell cannabis under a provincial or territorial Act.

The main difference between Micro- and Standard Processing is that stand-alone Micro-processors are limited to processing a Maximum of 600kg of dried cannabis (or equivalent) in 1 calendar year. However, if the Micro-processing licence holder also holds a micro-cultivation licence for the same site and the cannabis comes exclusively from that site, this maximum quantity does not apply.

Nursery Licence

Nursery Licence allow for the possession of cannabis, and to obtain cannabis plants or plant seeds by propagating, cultivating, harvesting.

Nursery Licence holders may sell and distribute cannabis plants or seeds to other licence holders (cultivators, processors, analytical testers, researchers, cannabis drug licence holders); to sell and distribute cannabis products that are plants or seeds to a licence holder that is authorized to sell cannabis for medical purposes or to a person authorized to sell cannabis under a provincial or territorial Act.

They can also send and deliver cannabis products that are plants or seeds to the purchaser at the request of a licence holder that is authorized to sell cannabis for medical purposes or to a  person authorized to sell cannabis under a provincial or territorial Act.

Nurseries are limited to a total surface area of no more than 50m2 for seed production, and that are must contain all the parts of budding or flowering plants. They are also limited to a maximum 5kg of flowering heads harvested from plants (with the exception of seeds).

Nurseries are also required to destroy the flowering heads (with the exception of the cannabis plant seeds), leaves and branches of the plants within 30 days of harvesting them.

Sale for Medical Use

This licence allows for the possession of cannabis products, and the sale and distribution of cannabis products in the packaging in which they were sold or distributed to them.

Sales can be to a registered client authorized to use cannabis for medical purposes; or another licence holder – barring cultivators. They are allowed to sell and distribute cannabis products that are dried, fresh, plants or cannabis seeds to micro-cultivator or standard cultivator.

This licence also allows for the sale and distribution of cannabis products that are plants or plant seeds to a licensed nursery and may sell or distribute cannabis products other than plants or seeds to a hospital employee.

It is possible to obtain a Sales for Medical Use licence for a businesses that is never in possession of cannabis, and requirements may differ.

Analytical Testing

Analytical Testing Licence allows for the possession of cannabis, and allows the alteration of the physical or chemical properties of cannabis for the purpose of testing.

All samples of a lot or batch of cannabis must be destroyed within 90 days of the completion of the testing. If testing is not started within 120 days of sample receipt, samples must be destroyed.

Research

This licence allows possession, production, and transportation of cannabis between sites that are authorized by the licence. It also allows for the limited sale of cannabis plants or seeds to a cultivator, another researcher, a cannabis drug licence holder, the Minister, or an exemption holder.

Generally, research licence holders are required to destroy all cannabis in their possession upon the completion of their research project as part of the terms and conditions of their licence.