Health Canada says it has come up with a plan to ensure the cannabis industry covers the cost of regulation. The government says the proposed fees are designed to recover only the annual costs associated with regulating cannabis, including activities like licensing; compliance, enforcement and inspections; public education; and program management. The fee regime does not include law enforcement costs. “We aim to minimize the costs to Canadians of regulating the cannabis industry without undermining our goal of keeping profits out of the pockets of criminals and organized crime. These fees are reasonable and strike the right balance,” said Bill Blair, Minister of Border Security and Organized Crime Reduction. Proposed cost recovery for the regulation of cannabis includes four fees: An application screening fee, which recovers the costs associated with screening new licence applications ($3,277 for standard licence applicants and $1,638 for micro and nursery licence applicants); A security clearance fee, which recovers the costs associated with screening, processing, and issuing or refusing security clearances ($1,654); An import/export permit fee which recovers the costs associated with screening, processing, and issuing or refusing to issue an import or export permit for medical or scientific purposes ($610); and, An annual regulatory fee: recovers the aggregate costs of administering the cannabis regulatory program that are not covered under any of the other fees (2.3% of cannabis revenue for standard licence holders, or $23,000 if cannabis revenue is less than $1 million, and 1% on the first $1 million of cannabis revenue for micro and nursery licence holders or $2,500 in cases where cannabis revenue is less than $250,000). Licence holders who produce cannabis exclusively for medical purposes are exempt from the annual regulatory fee. To promote a diverse market with both small and large players, Health Canada says it will scale fees according to the size of the business and apply lower fees for micro-scale licence holders. Some classes of licences—namely those for research, analytical testing and hemp production—will be exempt from fees. Those who produce, cultivate and sell cannabis exclusively for medical purposes will be exempt from the annual regulatory fee. See also: B.C. announces updated cannabis rules ahead of legalization day Based on estimates of market size, and the number of licensed producers, the Canadian government believes the fees will allow Health Canada to recover 100 per cent of annual regulatory costs by 2021-22. Health Canada says it is “committing to monitoring its administration of the regulatory program closely to ensure it recovers no more than the regulatory costs and with a view to establishing defined service standards in areas such as the processing of licence amendments.” And, it’s “committing to create a forum to engage with the cannabis industry on the administration of the fee regime and as it develops additional service standards, supporting predictability and transparency.” “Cost recovery is a standard practice across the Government of Canada to support program delivery,” said Ginette Petitpas Taylor, Minister of Health. “It ensures that those who benefit from the new legal market will pay the costs of regulating cannabis, which will reduce the cost to Canadians. We believe that this approach addresses the concerns raised by the cannabis industry, while ensuring that Canadians will not shoulder the costs of cannabis regulation.” The Ministerial Order authorizing cost recovery for the regulation of cannabis and the new fees will come into force on October 17, 2018, in conjunction with the Cannabis Act.
Source: Rising Tide Consultants

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