Cannabis And Cost Recovery: The Fees You May Or May Not Have Known About

Cannabis And Cost Recovery: The Fees You May Or May Not Have Known About

January 21, 2019 By

On April 13, 2017, the future of cannabis in Canada changed as we now know it. On this date, the Government of Canada introduced Bill C-45, known as the Cannabis Act, in the House of Commons. The introduction of Bill C-45 meant that, if passed, cannabis would be legalized on a federal level, removing it from Schedule 2 of the Controlled Drugs and Substances Act. Throughout the legislative process, the Government of Canada held a consultation titled “Consultation on Proposed Approach to the Regulation of Cannabis”. The purpose of this consultation period was to “solicit public input and views on a proposed approach” to the regulation of cannabis. Some time has passed since the Cannabis Act was first introduced to parliament and since the consultation period ended. Bill C-45 has now made its way through the legislature and finally received Royal Assent on June 21, 2018. The Cannabis Act, as many of you may already know, comes into force on October 17, 2018.

On July 12, 2018, the Government of Canada initiated another consultation period and released a second consultation paper related to cannabis. This paper, however, wasn’t to solicit public input and views on cannabis. This consultation (which ends August 13, 2018 and can be accessed here) is geared towards the cannabis industry itself and focuses on the proposed approach to cost recovery for the regulation of cannabis. According to the Government of Canada, “cost recovery is based on the principle that the general public should not bear the cost of government activities where private parties gain the main social or economic benefit.” The purposes of the consultation is to “propose a set of fees to recover the costs of activities undertaken by Health Canada, supported by the Canada Border Services Agency, the Royal Canadian Mounted Police, Public Safety Canada and the Public Health Agency of Canada, to regulate and strictly control access to cannabis.” The fees proposed by the government would apply to cultivators, processors, nurseries and sellers of cannabis for medical and non-medical purposes. Certain exemptions in the proposal also exist such as for research, industrial hemp and health and natural health products containing cannabis.

The four proposed fee categories are as follows:

  1. Application Screening Fees
  2. Import/Export Permit Fees
  3. Security Screening Fees
  4. Annual Regulatory Fees

Below you can find a high-level overview of the description of these fees, who they apply to, and their cost:

Application Screening Fees

This fee is associated with the costs associated with the intake, screening, acceptance or rejection of new applications for certain licensed activities. These fees are applicable to all new applications related to the following licences and authorizations: nursery, standard and micro-cultivation, standard and micro-processing and sale of cannabis for non-medical purposes. The fee for standard cultivation, processing and sale for medical purposes is $3,277 per application. The fee for micro-cultivation, processing and nursery application is $1,638 per application. These fees are not applicable to the research, industrial hemp, analytical testing license categories as well as health and natural health products containing cannabis, renewals or amendments to existing licences.

Import/Export Permit Fees

This fee is associated with the screening, processing and issuance or refusal of an import or export permit of medical or scientific purposes. This fee is applicable to persons that are licensed or permitted to conduct activities with cannabis who are looking to obtain an import or export permit for medical or scientific purposes. The fee is $610 per permit request and is non-refundable for those requests that are refused. This fee is not applicable to import/export requests for industrial hemp.

Security Screening Fees

This fee is associated with the screening, processing and issuance or refusal of a security clearance. This fee is applicable to each individual required to possess a valid security clearance. It should be known that this fee applies to both the processing of a new security screening request and the renewal of an existing security clearance. The fee is $1,654 per security screening request and is non-refundable for those requests that are refused.

Annual Regulatory Fees

In order to recover the costs of the cannabis regulatory program that are not covered under one of the three fees mentioned above, Health Canada is proposing to implement an Annual Regulatory Fee. The fee would be payable when a licence is originally granted and then annually for as long as the licence is held. From the consultation document, “Establishing this fee requires two steps. The first is to establish the cost base of the regulatory program across the federal government. The second is to allocate those costs to the regulated industry.”

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