Health Canada is reviewing the labelling requirements of cannabis producers amid growing complaints about the potency of products sold by companies such as Canopy Growth Corp. (TSX:WEED)
Smiths Falls, Ontario-based Canopy Growth has been the subject of complaints about its "TWD" brand that displays a flat 20% tetrahydrocannabinol (THC) potency. Aside from price, potency levels are one of the main criteria that Canadian cannabis users consider when purchasing products.
As a result, cannabis producers try to grow plants that yield potency levels above 20%, which is believed to be the preferred minimum potency among Canadian cannabis consumers. Canada's licensed producers currently have more than one billion grams of cannabis collectively stored in inventory, as they believe it is of insufficient potency or quality.
Executives from several producers, such as Tilray (NASDAQ:TLRY) and Sundial Growers (NASDA:SNDL), have frequently stated that low THC potency is a weight on sales, resulting in either sizable inventory write-downs or missed revenue opportunities.
Cannabis companies are required to label the THC and cannabidiol (CBD) content and potency levels on the packaging for each respective lot or batch. However, Canada's cannabis regulations don't set variability limits for THC or CBD for dried flower products.
Health Canada says it is investigating the current labelling requirements of cannabis producers in the wake of the recent complaints.
"All issues and complaints brought to Health Canada’s attention are taken seriously, including any issues with licence holder activities as they relate to the Cannabis Regulations. ?If warranted, after further investigation, Health Canada would take appropriate action to correct any potential non-compliance," Health Canada said in a written statement.
