CBD in Canada: A Closer Look at Hemp’s Complicated Market

CBD in Canada – We often speak about CBD laws in the USA but rarely touch on Canada’s CBD laws. Though most of our clients are US-based like us, many have considered entering the Canadian CBD industry, as well. Unfortunately, it’s extremely difficult to participate in Canada’s legal hemp industry and substantially more expensive compared to the US market.

So, why is CBD in Canada so complicated? And how do Canadian companies operate in such a tightly regulated industry? Let’s take a look.

Buying CBD in Canada Legally

Canadian parliament regulates CBD as a controlled substance and has established rules for its governance via the Cannabis Act. Notably, the Act states that CBD products can come from either marijuana-type cannabis or hemp-type cannabis. It does not distinguish between high-THC and low-THC cannabis products. It does, however, require that product labels list key information like cannabinoid levels and intended product use.

Anyone over 18 can legally buy CBD oil in Canada. However, they can only purchase legal CBD through licensed vendors, most of which local governments tightly control. To be clear, sellers must have valid permits, which are often quite expensive to attain and come with a truckload of compliance issues. These fees add up and much of the cost often passes to the consumer.

Canadian CBD Companies

As mentioned, the Cannabis Act establishes rules by which to govern the production and distribution of CBD sales in Canada. Health Canada oversees these rules, which includes things like how companies can sell the products, where they can sell product, and other basic CBD store operation protocol.

Notably, all CBD products must comply with the Act, which regulates possession, production, distribution, and sale of CBD in Canada. For example, all growers must have cultivation licensing and processers must have processor licensing. However, growers may not process their own product without a processing license.

There are two cannabis cultivation licenses in Canada. The first is a cultivation license authorizing the growth of cannabis with various cannabinoid levels. The second is an industrial hemp license which only allows growers to cultivate cannabis varieties that produce less than 0.3 percent THC. The latter is significantly harder to manage, though. As such, most Canadian cannabis farmers opt for a cultivation (marijuana) license instead.

Please note: Hemp oil, which comes from pressed hemp seeds, contains virtually no cannabinoids at all. Consequently, hemp oil products are exempt from the Cannabis Act unless infused with cannabinoids.

Grey Market CBD in Canada

Rumor has it that Canada might decouple CBD from THC relatively soon, though not until late 2022 or 2023 at the earliest. When this happens, the legal CBD market will flourish when the industry shoughs some of its more restrictive regulations. In the meantime, much of Canada’s CBD market seems to operate in a grey area, usually via e-commerce platforms. And, unlike the regulated market, grey market CBD in Canada is also pulling a profit.

To be clear, much of Canada’s grey market CBD products come from hemp, whereas most of the regulated industry extracts their product from intoxicating marijuana-type cannabis. And, because the country taxes THC products so much higher, grey market hemp CBD may be a preferred business solution for some.

Interestingly, the Canadian government doesn’t seem to be cracking down on grey market CBD in Canada, either. This is not to say that illegal CBD businesses face no repercussions, but it does highlight an important consideration: If the government won’t shut down unregulated CBD businesses, it is because they don’t consider them threatening? Perhaps it’s because they know CBD will be its own industry soon enough, anyway.

So, while legal cannabis companies try to make their way into a tightly regulated Canadian CBD industry, grey market vendors are already establishing themselves as industry leaders. By the time CBD decoupled from THC (and thus legalized), these businesses will already be poised to dominate CBD in Canada.

CBD in Canada; Closing Thoughts

The Canadian CBD market is brewing beneath the surface, and will no doubt explode as soon as the Canadian government decouples it from THC. Until that happens, many businesses wanting to sell CBD in Canada have taken to the grey market. This, of course, means that CBD product quality will vary greatly between distributors. Fortunately, many of those distributors already adhere to regional CBD hemp standards (even if that region is in the wrong place for now).

Have you been thinking about selling CBD in Canada? Contact us to learn how we can help.