What does the future hold for cannabis importing into Canada?

Posted by Cory

The Canada Border Services Agency released a Customs Notice yesterday regarding the Excise Taxes that will apply to importations of cannabis products. Similar to alcohol, the rates vary by province and can be found on the Department of Finance’s website. These excise taxes are largely a formality at the moment (few parties can legally import cannabis), but they do suggest some dramatic changes to Canada’s import policy regarding cannabis products.

Please find our questions to importing Cannabis after Oct. 17 below:

Who can import Cannabis?

At this stage, only licensed producers with a valid Health Canada permit can import Cannabis products into Canada for commercial use, which has been the case since licensing started.

Under this regime, licensed growers must provide the details of their order to Health Canada, and then wait for the permit to be issued (which can be a long wait). Once issued, the permits must be used before they expire, and only at the port of entry described on the permit.

These permits are also only issued for seeds or other small amounts of cannabis. The importing of bulk quantities of cannabis is still not permitted.

For details on what exactly is required to import, please read here.

Can individuals import Cannabis?

Per D19-9-2, individuals may import cannabis for their own medical use, but only where and when regulations authorize it. Other exemptions can be granted on a case by case basis if a scientific or medical purpose exists and the exemption is granted in advance.

Even travelling across provincial borders could pose problems, as the CBSA has stated: “If you transport cannabis or products containing it across the border, regardless of quantity, and even to or from jurisdictions that have legalized cannabis, you could face prosecution”

What does the future hold for Cannabis importing?

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It seems inevitable that Canada will approve and accelerate the processing of import requests for bulk orders of cannabis, and many licensed growers are already invested in offshore production. One factor preventing this is that other countries will only permit the exportation to Canada to take place if the cannabis is for medical purposes, which would add conditions to re-selling for recreation. Even if that hurdle is overcome, bulk imports will still be subject to Health Canada approval as well as other controls, such as an annual quota system or provincial permits.

For an example of what a quota system would like like, we can use dairy and textiles, which are controlled by Global Affairs: permits are issued using online software, and are available until a specific amount (i.e. 100,000 kgm) is met each year. After that, imports are still permitted, but at a much higher rate of duty, which helps shelter the domestic industry (jobs!) from too much competition.

An alternative would see the provinces take control, as is the case with alcohol. Currently, for a company to import alcohol, they must first order from the appropriate provincial agency (i.e. the LCBO or SAQ). The provincial agency then submits the order to the foreign supplier and controls the shipment and pricing. It is hard to see provinces not fighting for something like this, as it means additional revenue and control.

 

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For individuals and travellers, they will also likely be able to import small amounts in the future for recreational use, but will probably be obliged to pay hefty provincial markups as is currently the case with alcohol (this effectively makes importing large amounts impractical).

Read More:

The CBSA’s official memoranda regarding cannabis importing is available on their website.