Challenges in Regulating the North American Cannabisand Hemp-derived Product Market

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Prior to the introduction of the Cannabis Act of 2018, recreational use and misuse of Cannabis was a public health concern in Canada. The United States (US) and other countries have met similar challenges in regulating the Cannabis and hemp markets under a patchwork of laws. Having been an illicit substance, the recreational Cannabis market has carried negative connotations without much consideration to well-established medical marijuana programs in North America. The intention of the Cannabis Act was to provide a comprehensive framework of regulations to protect public health and safety, reduce youth access, improve quality in the supply chain, and deter the illicit market and criminal activities. The market potential for hemp, which is defined as Cannabis containing 0.3% Δ-9-tetrahydrocannabinol (Δ-9-THC) or less, prompted the US Congress and Trump Administration to pass the US Agriculture Improvement Act at the end of 2018. This act, which followed on the heels of Canada’s Cannabis Act, took hemp out of the Drug Enforcement Administration’s hands, provided for crop insurance programs, incentivized farming opportunities, and reduced regulatory risk for retailers of finished products containing hemp-based cannabidiol (CBD). While the introduction of these two landmark Acts in North America has coincided with a boom in the demand for CBD products and propelled a significant increase in the supply chain for hemp flower, there are challenges for the regulating authorities in both countries. Canada regulates CBD differently than the US because cannabinoids, including CBD, are included on the prescription drug list in Canada and therefore can only be associated with health claims as components of medications that have been granted a Drug Identification Number. While some states permit CBD in food products, the US Food and Drug Administration (FDA), which governs interstate commerce, has remained steadfast that such products are not yet legal at this time. The US Federal Trade Commission has used its authority to target manufacturers of CBD-containing food products that do not possess competent and reliable scientific evidence to substantiate marketing claims. Health Canada and US FDA are also facing the unenviable task of implementing an enforcement strategy. Fifteen hundred dietary supplement and food products are already available for sale in the US through e-commerce, and a thriving illicit market threatens to serve the demands of consumers in both countries. Canada has a great opportunity to lead by ensuring consumer confidence, demonstrating quality in cross-border supply chains, and upholding the tenets of the Cannabis Act. If FDA permits CBD in finished products through new regulations, it will foster an even playing field for all finished product CBD manufacturers and retailers. The international Cannabis/hemp trade should be an important topic of conversation in future amendments of the Canada-United States-Mexico Agreement (CUSMA) on North American Free Trade. Active enforcement strategies in the aftermath of new regulations from all North American trading partners, will be paramount to long-term market viability for the Cannabis market.