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Beyond our borders

This article will examine the legal framework of one of the global aspects of the Cannabis Act: the importation and exportation of cannabis.

Section 11(1) of the Act restricts the importation or exportation of cannabis to or from Canada unless otherwise authorized under the Act. However, import and export is permitted by virtue of section 62 of the Act, which allows for the issuance of licences or permits for the importation or exportation of cannabis.

It is noteworthy that the Act provides that: “Licences and permits authorizing the importation or exportation of cannabis may be issued only in respect of cannabis for medical or scientific purposes or in respect of industrial hemp.”

The Government of Canada has explicitly stated that it does not support facilitating a regime premised on servicing global demand given the associated public health, safety and security risks. It is for these reasons that importation and exportation is permitted under very limited circumstances, such as importing starting materials for a new licensee or exporting a unique strain for scientific investigation for a foreign laboratory.

Permits required for each shipment
Under the regulations, any holder of a federal licence is authorized to import or export cannabis for medical or scientific purposes provided that they obtain a permit for each shipment of cannabis that is imported or exported. The fact that a permit must be obtained for “each shipment” explains in part why the import and export of cannabis from Canada is more limited than many would think.

Grounds for refusal to issue permit
When applying for a permit to import or export, there are a number of grounds upon which the government may rely in determining to refuse to issue the permit. Some of the more notable grounds include the following:

• If the issuance of the permit is likely to create a risk to public health or safety;
• If there are reasonable grounds to believe that false or misleading information or documents were submitted in support of the application;
• If the government feels that it is in the public interest to do so;
• If the government has reasonable grounds to believe that the shipment to which the permit application pertains would contravene the Canadian regulations or the laws of the country of import/export or any country of transit or transhipment;
• If the government has reasonable grounds to believe that the importation of the cannabis is for the purpose of exporting it; or
• If the government has reasonable grounds to believe that the shipment that is being exported would not comply with the permit for importation that has been issued by the country of import.
• If the government is inclined to not grant the permit, Health Canada will usually send an “intent to refuse notice,” either to refuse to consider an application, or to refuse to issue a permit. The notice will generally provide the applicant 30 days to respond, after which a notice of refusal will be issued.

Limited period of validity
In addition to a permit being required for each shipment, there is also a limited period of validity attached to every permit that is granted.

Each permit expires on the earliest of the following dates:

• the date on which the shipment is imported or exported;
• the date of expiry of the permit or the date of its revocation;
• the date of the expiry of the licensee’s license or the date of its revocation; or
• the date of revocation of the permit issued by the competent authority of the country of import/export that pertains to the shipment

Information required
When applying for a permit to import or export, the licensee has to provide a substantial amount of information to Health Canada including the following:

• the name, mailing address and license number of the license holder;
• the name and address of the importer or exporter, as the case may be;
• the port of entry or exit into or from Canada, as the case may be;
• the address of the customs office where the shipment will be delivered;
• each mode of transport used;
• any country of transit or transshipment (if applicable);
• anticipated shipment date, if known;
• description of the cannabis;
• name and address of the exporter;
• intended use of the cannabis;
• brand name, if applicable;
• quantity of the cannabis;
• percentage of THC and CBD by weight of the cannabis; and
• in the case of export, an import permit from the competent authority in the country of import.

A more expansive future
It is noteworthy that the Canadian government has also indicated that the import and export provisions operate in the context of Canada’s international drug treaty obligations. Given that Canada is only the second country in the world after Uruguay to legalize the recreational use of cannabis at the federal level, the countries where cannabis can be imported from, and exported to, are exceptionally limited when viewed within the context of Canada’s international treaty obligations.

Additionally, current supply and demand issues create a domestic climate where there is no political incentive to expand the ability of Canadian companies to import and export cannabis. Domestically, we are in the midst of a supply shortage. Allowing licensees to export large amounts of cannabis would only exacerbate the problem.

On the other hand, allowing for more imports of cannabis would create economic challenges for current domestic licensees who have spent years and many millions of dollars becoming licensed and launching and expanding operations. A flood of imported cannabis from jurisdictions with low production cost, such as Africa, Central and South America, might be a boon for Canadian consumers but could easily put many domestic licensees out of business, costing thousands of people their jobs.

However, we are also currently in the midst of a sweeping wave of liberalization and legalization across the globe. In the not-too-distant future, it is safe to believe that many countries will have legalized cannabis for both medical and recreational purposes. This would lay to rest most of the treaty obligation concerns. Moreover, if history is any indication, Canada will be moving from an era of a domestic supply shortage to an era of oversupply sooner than later.

With the domestic market adequately serviced, loosening the export rules would allow Canadian companies to potentially profit by serving global markets that are just coming on-line and going through their own growing pains.

Matt Maurer is vice-chair of the Cannabis Law Group at Torkin Manes LLP.