Global cannabis trade: A primer on Canadian import/export requirements for cannabis

With the continued trend of liberalization of cannabis laws around the world, global cannabis business opportunities and barriers are changing at a rapid pace. One of the next major steps in the globalization of the cannabis industry is international trade, which will allow cannabis companies to harness the competitive advantage of differing markets around the world. Since legalization, cannabis imports and exports in and out of Canada have been very small, but are increasing rapidly. This Insight provides an overview of international and domestic trade regulation of cannabis in Canada.

International trade regulation of cannabis

International trade in cannabis is governed by three core UN drug control treaties, and more generally by international trade and investment law. The core UN drug control treaties are the Single Convention on Narcotic Drugs of 1961, as amended by the 1972 Protocol (1961 Convention),¹ the 1971 Convention on Psychotropic Substances (1971 Convention),² and the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988 Convention).³ In brief, these UN drug control treaties limit international trade of cannabis to medical and scientific purposes, and set out various import/export measures relating to cannabis for state parties to the treaties to adopt, such as licensing and permitting schemes. More specifically, the treaties provide for the following relating to cannabis trade:

• The 1961 Convention includes cannabis and cannabis resin as a Schedule IV drug (the schedule reserved for the most harmful drugs), and limits the import and export of scheduled drugs to medical and scientific purposes. The 1961 Convention also sets out annual limits on the quantity of imports of drugs governed by such Convention.
• The 1971 Convention includes THC⁴ and its isomers in Schedule II, and prohibits the export and import of THC and related drugs save for medical and scientific purposes.
• The 1988 Convention requires parties to criminalize imports and exports done in contravention to trade permitted under the 1961 Convention and the 1971 Convention.

The treaties guide state party actions, and inform their domestic law and policy on drug control. While recently there has been interest in amending the drug control treaties, notably to allow for exemptions or to permit trade for recreational cannabis, the International Narcotics Control Board, the governing board under those treaties, has not supported such proposals, to date.

In addition to the UN treaties, the World Trade Organization (WTO) and its suite of agreements also governs cannabis trade. This includes all cannabis trade, whether recreational or medical. In brief, all domestic measures related to cannabis—including any restrictions on import and export of cannabis—must be WTO-compliant. Additionally, investments in cannabis operations abroad are similarly protected by investment treaties, which provide protections for foreign investors, and allow for direct recourse to international arbitration in the event investments are treated by the host state in a manner that violates a treaty.

Canadian trade regulation of cannabis

In Canada, international trade of cannabis is governed by the Cannabis Act (Act) and its regulations. The Act governs cannabis, which it defines as:

1. Any part of a cannabis plant, including the phytocannabinoids produced by, or found in, such a plant, regardless of whether that part has been processed or not, other than a part of the plant referred to in Schedule 2 of the Act.
2. Any substance or mixture of substances that contains or has on it any part of such a plant.
3. Any substance that is identical to any phytocannabinoid produced by, or found in, such a plant, regardless of how the substance was obtained.”⁵

Accordingly, the Act regulates both cannabis and other products included within that definition, such as CBD and products containing CBD.

Under the Act, the commercial import to and export from Canada is prohibited unless specifically authorized by regulation, exemption or permit. Consistent with the UN drug control treaties, the Act specifies that licenses and permits authorizing the importation and exportation of cannabis may be issued only in respect of cannabis for medical or scientific purposes. Prior to the Act, the Canadian medical cannabis regime operated under a similar licensing regime, the Access to Cannabis for Medical Purposes Regulation, which included similar trade-related requirements. The Act subsumed the previous regulations when they were repealed in 2018.

To import and/or export cannabis, a license issued by Health Canada is required, as well as import and export permits. Each import or export shipment requires a permit, which, in the case of exports, allows Health Canada to verify that a license holder has provided a valid import permit from the destination country and that the destination country has not exceeded any annual import limits for cannabis. Permits carry an issuance and expiry date, and are only valid for a onetime specific shipment. Consistent with the overall approach of control contained in the UN drug control treaties, Health Canada's general policy is to issue import or export permits in limited circumstances, which include:

• Importing starting materials (e.g., seeds, plants) for a new licence holder;
• Exporting cannabis products to another country that has a legal regime for access to cannabis for medical purposes; or
• Importing or exporting small quantities of cannabis for scientific purposes (e.g., research or testing).

Similar to cannabis, seeds and grain of industrial hemp, a cannabis plant, or any part of that plant, with a concentration of THC that is 0.3 percent or less in the flowering heads and leaves require a license issued by Health Canada. Such licenses authorize the holder to import industrial hemp. Each shipment also requires an import or export permit. Notably, industrial hemp importers can only import seeds of pedigreed status approved and recognized under the Organisation for Economic Co-operation and Development Seed Schemes, or by the Association of Official Seed Certifying Agencies (AOSCA), or grains from countries that participate in the Organisation for Economic Co-operation and Development Seed Schemes or is an AOSCA member.

While this Insight provides a general overview of the regime for the import and export of cannabis, anyone considering trading in cannabis should consider the wide variety of additional regulatory compliance issues related to dealing with cannabis in Canada and abroad. Dentons Canada’s leading Cannabis and International Trade groups will continue to work closely with existing and new industry stakeholders who intend to participate in the import and export of cannabis. For further advice on cannabis and international trade, please contact Eric Foster, Paul Lalonde or Sean Stephenson.

1. There are currently 186 state parties to the 1961 Convention.↩
2. There are currently 184 state parties to the 1971 Convention.↩
3. There are currently 191 state parties to the 1988 Convention.↩
4. THC is tetrahydrocannabinol (commonly known as THC), the principal psychoactive constituent of cannabis.↩
5. Cannabis as defined by the Act does not include: 1. A non-viable seed of a cannabis plant; 2. A mature stalk, without any leaf, ower, seed or branch, of such a plant; 3. Fibre derived from a stalk referred to in item 2; 4. The root or any part of the root of such a plant.↩