Marijuana Business Magazine May-June 2019

May-June 2019 | mjbizdaily.com 75 I nfused product manufacturers will get a crack at selling edibles, beverages, extracts and topicals in Canada when those items likely become legal later this year. But the proposed rules unveiled last December by the country’s health department present multiple challenges, too. Below, Matei Olaru, the CEO of Lift & Co., a Toronto-based, publicly traded cannabis-focused technology and media company that provides consumer insight and data to cannabis businesses, shares his perspective about the demand for infused products in Canada, the barriers to entry and the critical business opportunity for Canadian and U.S. manufacturers. Tell us about the proposed rules for edibles in Canada. Edibles, concentrates and topicals are slated for legal sale in Canada under the Cannabis Act no later than Oct. 17, 2019. Health Canada’s proposed regulations for additional cannabis products are not dissimilar to the cannabis legislation that came into force Oct. 17, 2018, with a focus on protecting youth and responsible use. These regulations include limits of 10 milligrams of THC per package in solid or beverage form, 10 milligrams of THC per unit of ingestible extracts and a max of 1,000 milligrams of THC per package for ingested or inhaled extracts and topicals—as well as regulations around plain and childproof packaging, ensuring that products are not appealing to kids nor mixed with nicotine or alcohol. Canadian licensed producers will have the benefit of a year in legal sales of flower, oils and capsules under similar- ly strict regulations to make decisions with respect to edibles and concentrates. However, this is more burdensome than what we’re seeing in legal jurisdictions in the United States. What are the greatest barriers to entry? Ultimately, this is a new major consumer packaged goods (CPG) industry with very restricted marketing and advertis- ing and a vacuum of market data. As a manufacturer or a brand or a retailer, you’re expected to educate an extremely uninformed consumer base with very few tools. This is a barrier in and of itself. Regulations around food production will pose additional challenges for manufacturers. For example, infused products must be manufactured in a building that is completely separate from all other food production for that company. This will create a barrier at the beginning for smaller entrants with less infrastructure already in place or less startup capital, which will result in fewer options for consumers in the legal market at the beginning. Proposed regulations currently recommend a limit of 10 milligrams of THC per package—not per serving—for edibles and beverages. By comparison, limits in Colorado and Washington state are 10 milligrams of THC per serving, and we know that products in Cana- da’s illegal market have higher potency products. This poses a challenge to bring consumers over from the illegal market to purchase new legal products. What are three critical considerations for manufacturers that want to produce infused products in Canada? First, there are strict regulations. This is an entirely new, distinct type of business. The onset of legalization in October 2018 created a large-scale commercial agriculture business. The legalization of edibles, concentrates and topicals is a monumental evolution from agriculture to true manufacturing, which brings with it tighter standard operating procedures, stricter quality assurance and quality control. Manufacturers need to be aware of the complexity of this category in Canada, both from a regulatory standpoint and also to ensure they are conforming to the Cannabis Act. Second, data will be king. Manufacturers that also are looking to The CEO of Toronto-based Lift & Co. weighs in on the country’s proposed rules governing infused products. The Latest Canadian Intel By Joey Peña