22
third party consultant, RavenQuest Technologies, to provide operational oversight in an effort to rectify the situation and re-establish the company’s compliance with applicable laws and regulations. Bonify continues to produce cannabis in hopes that the suspension will be lifted.
Similarly, in September 2018, Agrima Botanicals had its license to produce cannabis suspended with the threat of revocation still looming. The company faces a proposed revocation after Health Canada deemed its response to Health Canada’s concerns pertaining to record-keeping to be unsatisfactory. Agrima was granted additional time to be heard under the Cannabis Act and Health Canada’s decision is still pending.
Penalties and Implications for Licensed Producers
The Cannabis Act prohibits the sale or distribution of cannabis that is known to be illicit. Individuals guilty of such an offence, including officers, directors or agents of a corporation who participated in the commission of the offence, are
subject to fines and potential imprisonment for up to 14 years. Corporations face fines of up to $100,000 or an amount in the discretion of a court of competent jurisdiction. Offenders of unauthorized packaging, labelling or record keeping violations can face fines of up to $5,000,000 and three years of imprisonment.
Health Canada may also decide to suspend or revoke a license issued under the Cannabis Act if the holder of the license contravened a provision of the Cannabis Act, the Controlled Drugs and Substances Act, the Food and Drugs Act, or any regulations made under any of those Acts.
Once Health Canada has issued a notice of violation to the licensed producer detailing the contravention or offence, the person named in the notice may either: (i) accept the penalty in the notice; (ii) if the amount of the penalty is $5,000 or more, request to enter into a compliance agreement with Health Canada; or (iii) request a review of the violation by the Minister. The option to enter into a compliance agreement is not available for offences involving the sale or distribution of illicit cannabis.
Generally, Health Canada will provide the alleged offender with an opportunity to respond as to why the license should not be suspended or revoked, as the case may be. There is insufficient guidance on what actions should be taken due to no such cases having been resolved yet, however, it would seem that an action plan of steps to rectify the non-compliance and ensure that the licensed producer remains compliant is useful. The reasons for a suspension must no longer exist before a license can be reinstated.
As there have been no license revocations to date, the current and ongoing situations relating to Bonify and Agrima will serve as precedents for licensed producers in the cannabis industry as to the stringency of Health Canada’s decisions, what actions should be taken to successfully resolve suspensions, and important measures to ensure continuing compliance.
The Cannabis Law Group at Torkin Manes LLP will be monitoring these cases as they develop in order to better assist clients in understanding their compliance obligations. For more information, please contact our Cannabis Law Group at cannabis-law.ca.