Legal cannabis is coming to Canada. What will the packaging look like?
On April 20 2016, the Liberal government formally announced their plans to legalize cannabis for medical and recreational use. On that day, Federal Health Minister Jane Philpott said in a speech to the United Nations that Canada would introduce legislation in the spring of 2017 to “…keep marijuana out of the hands of children and profits out of the hands of criminals.” In June 2016, a panel appointed by Minister Philpott consulted with Canadians to create a regulatory framework for legal access to cannabis. This consultation period culminated in a report released in November 2016, titled Framework for the Legalization and Regulation of Cannabis in Canada. This report became the basis for the final legislation.
So why are we talking about cannabis in Graphic Arts Magazine? One word: PACKAGING. Like most consumer products, packaging will play a crucial role in marketing cannabis to the consumer. New multi-billion dollar consumer markets don’t crop up every day; legalized cannabis in Canada presents a huge opportunity for packaging suppliers.
The aim of this article is not to pass moral judgement or examine cannabis’ societal impacts; these topics have been and will continue to be examined by much more qualified parties. This article will focus on packaging only; specifically, what packaging for cannabis products will look like as a controlled substance in a federally regulated environment in Canada.
At the time that this article was submitted for publication (April 3, 2017), final legislation in Canada for marijuana has not been released. Final legislation is expected to be announced in the week of April 10, 2017. This means that by the time you read this article, cannabis legislation will have been announced. This article will highlight some important cannabis packaging regulations that packaging suppliers should look out for in the final legislation.
Canadian market overview
A recent study by Deloitte titled Recreational Marijuana: Insights and Opportunities, anticipates that legalized recreational marijuana could spark a $22.6 billion industry in Canada. The sales of premium cannabidiol products is estimated to amount to $22.6 billion, a figure that would eclipse current sales of beer, wine, and spirits combined.
Deloitte’s report calculates that the base retail market for cannabis alone would be worth $4.9 billion to $8.7 billion annually. The ancillary market, which includes growers, infused product makers, testing labs, and security, is calculated to be between $12.7 billion to $22.6 billion. Deloitte estimates that 600,000 kilograms of cannabis will be required to satisfy the recreational cannabis market each year – far exceeding the current capacity of the 36 producers currently producing cannabis for medical purposes.
In a nutshell, cannabis supply will have to grow in order to meet explosive demand. We are already seeing the effects of growth on all levels of this industry. Cannabis companies are expanding and/or consolidating. In addition, new supplier partnerships are forming, as cannabis companies seek to mimic economies of scale that traditional consumer goods companies enjoy. Those “traditional” consumer goods companies are entering this space as well. For example, from the retail end, Shoppers Drug Mart formally applied in October 2016 to distribute cannabis through their pharmacies.
I should highlight that there is no research which has shown that legalization of cannabis will result in increased usage among the population. In fact, according to a recent survey on student substance use in Washington (Washington State Healthy Youth Survey), cannabis use has remained virtually flat since 2012 – even after the state began opening dispensaries in 2014. The “growth” we are seeing is the conversion of black market sales into legitimate taxable sales. The change of cannabis to a legal industry opens up opportunities for more tertiary companies (e.g. packaging suppliers) to participate.
Currently, the majority of the North American cannabis market consists of many producers, each ordering packaging supplies on their own. One of the reasons that the market remains fragmented is because legalization of cannabis in the United States is regulated at the state level. There is still a grey area that exists in transporting cannabis products across state lines where cannabis is illegal – even if that product is being transported between two states where cannabis is legal. Even with these barriers however, cannabis manufacturers in the United States continue to find economies of scale and in Canada, with legalization of cannabis happening on the federal level, Canadian cannabis manufacturers will hopefully find much less resistance on their path to mass manufacturing. One important caveat is that Canada is still expected to allow each province to control distribution. This means that there may be packaging regulations specific to each province. Provincial control of distribution is similar to how alcohol is currently regulated in Canada.
As the United States cannabis industry consolidates and Canadian manufacturers enter this space, it is easy to see cannabis manufacturers seeking packaging suppliers who can accommodate longer runs. As stated above however, each province may have specific labelling requirements – similar to alcohol products in retail. We may see a situation where the base packaging (e.g. a pouch) is printed in large quantities, while specific provincial requirements are met through an attached label printed in shorter quantities – again, very much like current alcoholic products.
What types of cannabis products are there? And how are they packaged?
The cannabis industry is beginning to look a lot like other legal consumer goods industries, such as food, tobacco or alcohol. Some cannabis-infused products already look strikingly similar to existing consumer products. In addition to “flower” which is the smokeable leaf that most people commonly associate with cannabis, there are countless cannabis-infused products which range from concentrates (pills, oils), edibles (snacks, meals), and beverages. Below are some examples of cannabis products in the market today:
Flower: This is the smokeable product that is most commonly associated with cannabis. After cultivation, plants are dried, measured, packaged, labelled, and shipped to distributors or individual dispensaries. It is very common to see individual dispensaries receive bulk shipments in crates and separate them at the store level for individual sale. In a way, this is similar to the way that prescription medication is individually packaged and labeled at the pharmacy level. Individual consumer portions of flower are usually sold in pouches, bags and sometimes jars. In the United States, most states have laws which requires medical cannabis products to be contained in UV protected, tamper-evident and child-resistant packaging. We will discuss those requirements later on in this article.
Cannabis-Infused Products: It is estimated that the market for cannabis has a fairly even 50/50 split between flower and cannabis-infused products. It is impossible to list all the cannabis-infused products out there, but anything you can eat, drink, breathe or absorb topically, can probably have cannabis added to it. A short documentary by VICE, available on YouTube, provides a glimpse into the burgeoning cannabis edibles market in Toronto: http://bit.ly/vicetorontocannabis.
Concentrates, Extracts: The two active ingredients within cannabis are THC and CBD. THC and CBD can be extracted as concentrated products for direct use or for infusion into other products (like the ones listed in the cannabis-infused products section above). The explosion of the infused market has led to the rise of extract suppliers; similar to ingredient suppliers for the food industry. Although consumer level products will most likely be dominating headlines, ingredient suppliers will be a big part of the industry and should not be ignored by packaging suppliers.
The variety of potential products presents exciting opportunities for packaging manufacturers, but also adds to regulatory complexity. What exactly is a “cannabis product”? Is it a beverage? Candy? Topical cream? A drug? Or all of the above?
The regulatory framework for cannabis in Canada is expected to borrow heavily from existing packaging regulations. For a primer on Canadian packaging labelling regulations, refer to my previous Graphic Arts Magazine article titled: “Navigating Canada’s packaging regulations” ( http://bit.ly/navigatinglabelling ).
For example, retail packaging for a chocolate bar in Canada must follow regulations stated under the Consumer Packaging and Labelling Act, as well as meet Canadian Food Inspection Agency (CFIA) labelling requirements. A cannabis-infused chocolate bar would most likely be required to follow the same labelling regulations of a food product, in addition to cannabis-specific labelling requirements.
For the chocolate bar example above, however, what if this was a chocolate bar which had medicinal health claims? In that instance, this chocolate bar would be classified as a drug and must follow additional regulations listed under the Food and Drug Act. The big question is whether recreational or medicinal cannabis products will be classified as a drug. Classifying cannabis as a drug will require documented research to back up any medicinal benefits stated. Part of the government’s promise in legalizing cannabis was to promote research into its effects. The government also promises that legislation will remain flexible, in order to accurately communicate the most recent research. This means that even after final legislation is announced, packaging suppliers will have to remain vigilant, in order to stay on top of a potentially shifting regulatory landscape.
The separation of medical and recreational cannabis presents a unique regulatory situation. It is possible that the exact same cannabis product prescribed by a doctor and sold by a pharmacist, will be simultaneously available in retail. Will a cannabis product sold medically have different labelling requirements than one that is sold recreationally? In the United States, medical cannabis products have stricter guidelines which require tamper-proofing and child-proofing. Medical cannabis products are typically labelled individually with information pertaining to prescribed dosage and usage for the patient.
Current cannabis packaging requirements in the United States
Currently, the following states have legalized marijuana for medical and recreational use: Washington, Oregon, Nevada, California, Alaska, Colorado, Massachusetts and Maine. A number of other states have also legalized marijuana for medical use only. Although cannabis packaging labelling requirements are different between each state, there are a few common mandatory elements:
- Listing of active ingredient (THC and/or CBD) along with amount and percentage.
- Disclaimers, health warnings, usage warnings
- Identification of strain and manufacturer
- Date of cultivation
Almost all states have regulations restricting the marketing of cannabis products to children. For example, packaging graphics cannot appeal to children. This means that a Joe Camel type mascot will probably not be appearing on cannabis branding any time soon. Reinforcing this theme of shielding children from cannabis products, several states also requires that cannabis packaging is UV protected (opaque) and does not show the product inside.
Most states also require that cannabis sold for medical use is contained in resealable, child-resistant packaging. In the United States, packaging must meet ASTM D3475 standards in order to be classified as child-resistant. An example of a childsafe pouch is one made of a tear resistant substrate, along with a zipper which contains a push/pinch opening mechanism.
Another popular requirement is for cannabis packaging to be tamper-evident. For consumers, the benefit is obvious; it is important to know that a product you are purchasing has not been opened or altered after packaging.
Colorado, being one of the first states to check it out for the purposes of and to legalize cannabis for recreational use, also has one of the most developed and thorough regulatory frameworks for cannabis packaging. Colorado recently started an initiative to clearly identify all cannabis-infused products with a universal symbol. The symbol for recreational cannabis products in Colorado is a red diamond square, containing the letters “THC” and an exclamation mark. Medical cannabis products are indicated by a similar symbol, but adds the letter “M” below THC. The difficulty for manufacturers is that this THC warning must be applied not only on package labelling, but directly to cannabis-infused foods by using expensive custom molds, stencils, airbrushing or frosting. For bulk products like granola, or beverages that are impracticable to stamp or mark, manufacturers are limited to just 10 milligrams of THC per package.
The major takeaway from examining cannabis labelling requirements in the Unites States, is that cannabis packaging should accurately describe the contents inside. Packaging graphics must also not promote cannabis to children. If the product is for medical use, the packaging itself must also prevent children from accessing the product inside.
So what will Canadian Cannabis packaging look like?
Below are some major topics that potential cannabis packaging suppliers in Canada should look out for.
Prior to April 10, 2017, Canada already allowed the sale of cannabis for medical use through licensed dispensaries. Licensed producers were required to follow regulations listed under the Access to Cannabis for Medical Purposes Regulations (ACMPR). Much like other doctor-prescribed pharmaceutical products, medical cannabis was required to be individually labelled with a client-specific label, similar to a patient-specific prescription drug label.
Unique to Canadian requirements is that under the ACMPR, each shipment sold to a client needs to be accompanied by a copy of the most current version of the Health Canada document entitled “Consumer Information – Cannabis”. This is a five page document which summarizes known information about the uses and risks of cannabis. Will a multi-page document be required to accompany all cannabis products sold for recreational use in retail (similar to existing over-the-counter drugs)? Or will a condensed list of health warnings printed on package labelling be deemed sufficient to meet these guidelines? Those involved in the creation of packaging graphics should be aware of any health warnings that must be listed on or with cannabis packaging. The amount of space covered by these health warnings may have a big impact on cannabis packaging graphics.
Similar to the United States, medical cannabis in Canada prior to final legislation, was also required to be child-resistant. Although the governing agencies which provides child-resistant certification is different between Canada and the United States, packaging that meets the ASTM D3475 (American) standard will usually pass Canadian certification as well. Child-resistant packaging is understandably more costly than comparable non-child-resistant packaging. Packaging suppliers usually require specialized machinery to implement child-safe enclosures into production lines. Potential packaging suppliers should definitely seek out information on child-resistant requirements. Will child-resistant packaging only be required for medical cannabis or all recreational cannabis products as well?
Tamper-proofing requirements should also be considered. With most prepackaged food grade consumer products, tamper-proofing is important for health and safety reasons. Regardless of regulations, from a consumer confidence standpoint it is always beneficial to know that the product you are purchasing has not been opened or altered after packaging. Tamper-proofing can usually be satisfied with some sort of heat seal or sticker, so implementation is usually not as cost prohibitive as child-proofing, but it still adds additional time and labour to fulfillment processes.
Innovations in the physical form and structure of cannabis packaging is an area that I will personally be watching very closely. Cannabis packaging must take into account many different considerations, including: legal requirements (child resistant and tamper proof), fulfillment at different levels of production (manufacturer filled vs. filled at store level), as well as general consumer usage (resealable, smell proof, maintain moisture and freshness, etc.). I am very excited to see the types of innovative packaging that suppliers will create as competition heats up in this space.
The requirements discussed above in this section were all listed in the November 2016 government report titled A Framework for the Legalization and Regulation of Cannabis in Canada. This report was created by the federal task force on Cannabis Legalization and Regulation and was meant to serve as the basis for final legislation. There are several recommendations for cannabis labelling listed in this report, which packaging suppliers should definitely pay attention to when examining final legislation:
Apply comprehensive restrictions to the advertising and promotion of cannabis and related merchandise by any means, including sponsorship, endorsements and branding, similar to the restrictions on promotion of tobacco products
Require plain packaging for cannabis products that allows the following information on packages: company name, strain name, price, amounts of delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD) and warnings and other labelling requirements
Prohibit any product deemed to be “appealing to children,” including products that resemble or mimic familiar food items, are packaged to look like candy, or packaged in bright colours or with cartoon characters or other pictures or images that would appeal to children
Require opaque, resealable packaging that is childproof or child-resistant to limit children’s access to any cannabis product
Additionally, for edibles:
- Implement packaging with standardized, single servings, with a universal THC symbol
- Require appropriate labelling on cannabis products, including:
- Text warning labels (e.g. “KEEP OUT OF REACH OF CHILDREN”)
- Levels of THC and CBD
- For edibles, labelling requirements that apply to food and beverage products
- Require all cannabis products to include labels identifying levels of THC and CBD
- Create a “flexible legislative framework” that can adapt to new evidence
- A flexible legislative framework?
The last point listed in the section above is VERY important. The constant theme throughout Canada’s march to legal cannabis has been the promotion of cannabis research, so that consumers can make informed decisions on usage. Until very recently, scientists who studied marijuana’s potential medicinal properties have had to wade through an enormous amount of federal red tape.
This mandate to maintain a flexible legislative framework may result in a regulatory landscape that undergoes many changes in the initial period. This means that cannabis packaging may require constant updates in order to meet regulatory requirements. As any packaging supplier currently dealing with nutritional labelling updates are aware, there will be challenges associated with such regulatory changes, but also great potential for increased revenue.
Any packaging suppliers looking to capitalize on this emerging multi-billion dollar industry will have to remain vigilant in order to remain compliant and flexible enough to meet frequently changing requirements. One question that packaging suppliers must ask themselves before deciding to enter the cannabis industry: is the potential to become a major supplier for a new multi-billion dollar industry worth the price of admission? Given the potential payoff, cannabis packaging over the next few years may be one of the most exciting segments in the graphic arts industry.