Cannabis Legalization in Canada

Medical cannabis was first legalized in Canada in 2001, allowing patients to grow their own or buy from the government. In 2013, the Canadian government passed the Marijuana for Medical Purposes Regulation (MMPR) to shift the medical cannabis system to a commercial model. In April 2014, the MMPR officially replaced the previous Marijuana Medical Access Regulations. With the new law, Canada established a licensing program that allowed authorized producers to produce and market dried or fresh cannabis flower, and cannabis oil, to Canadians with the required medical documentation.

Announcing recreational cannabis legislation in April 2017, Canadian Prime Minister Justin Trudeau fulfilled his campaign promise to seek the full legalization of cannabis. Recreational cannabis came to be legal in Canada on October 17th, 2018, and Canada became the second country in the world to fully legalize cannabis, after Uruguay. The main regulatory documents are the Cannabis Act and the Cannabis Regulations which cover both the recreational and medical cannabis markets.

The legislation divides the responsibilities of regulations between the federal and provincial governments. Ottawa regulates production, including licensing producers and ensuring the safety of the country’s cannabis supply. It is the responsibility of the provinces and territories to oversee distribution and sales.

Canadian Cannabis Market

The federal legislation, along with strict regulations:

• allows adults to possess up to 30 grams of legally-produced cannabis;
• allows adults to grow up to four cannabis plants per household;
• sets the minimum age for purchase and use at 18 years of age, with the option for provinces to increase the age limit;
• enables a regulatory regime for the licensed production of cannabis, which is controlled by the federal government;
• enables a regulatory regime for the distribution and sale of cannabis, which is controlled by the provincial government; and
• establishes new provisions to address drug-impaired driving, as well as making several changes to the overall legal framework to address alcohol impaired driving.

Starting Oct. 17, 2019, edibles, topicals and extracts were allowed to be legally sold. Packages of edibles are permitted to have no more than 10 milligrams of THC, while extracts and topicals cannot exceed 1,000 milligrams of THC.

On March 12, 2025, cannabis regulations in Canada were amended through the “Regulations amending certain regulations concerning cannabis (streamlining of requirements)” and the Order Amending Schedule 2 to the Cannabis Act which came into force on that day. Other amendments through the “Order Amending the Cannabis Tracking System Order (Cultivation Waste)” came into force on April 1, 2025. The main changes were allowing different types of cannabis products, such as flower and a pre-roll, to be sold in the same package; increasing maximum grow surface area and maximum annual dried cannabis possession limits for micro businesses and nursery licensees; easing physical security measure requirements for certain licenses; and reducing record-keeping and reporting requirements. The summary of all the changes made by these amendments was published by the government of Canada.

Cannabis Licenses in Canada

1. A cultivation (micro, nursery, standard) licence allows you to grow cannabis indoors and outdoors by cultivating, propagating and harvesting. The following grow surface area and harvest limits apply to micro and nursery licenses:

• • Micro-cultivator: Up to 800 square meters.
  • Nursery: Up to 200 square meters for growing flowering and budding cannabis plants and up to 20kg of harvested flowering heads at any time.

2. A processing (micro and standard) licence allows you to process harvested cannabis and industrial hemp. Industrial hemp is a cannabis plant that has a low concentration of THC (0.3% or less) in flowering heads and leaves. This licence doesn’t allow you to grow cannabis. Micro-processor licensees are allowed to possess up to 2,400kg of dried cannabis in a calendar year.
3. A sale for medical purposes licence allows you to sell or distribute packaged and labelled cannabis to registered clients for medical purpose.
4. You need a cannabis licence to import or export cannabis. You can only import or export cannabis for medical or scientific purposes. You’ll also need to apply for an import or export permit (for each shipment) to import cannabis into Canada or export cannabis to other countries.
5. There also Analytical testing licence, Research licence and Cannabis drug licence.
6. To operate a retail store and sell recreational cannabis, you must apply for a cannabis retail licence in your province.

As of February 2026, there were 908 federal license holders, including 736 licenses for cultivation, 581 licenses for processing and 299 licenses to sale (medical) cannabis. Among those licensed to cultivate cannabis, 53% were micro businesses.

According to Statistics Canada, total retail cannabis stores count hit a new high of 3,332 in 2023, representing an increase of 165 stores from the first half of 2022. In 2024, there were around 3,600 retail stores in the country, with 60% of Canadians living within 10 km of a cannabis store. As of June 2025, there were 3,761 retail stores in Canada.

Canadian Cannabis Fees and Taxes

Cost recovery for the regulation of cannabis includes four fees:

• Application screening fee: recovers the costs associated with screening new licence applications ($4,040 for standard licence applicants and $2,023 for micro and nursery licence applicants);
• Security clearance fee: recovers the costs associated with screening, processing, and issuing or refusing security clearances ($2,041);
• Import/export permit fee: recovers the costs associated with screening, processing, and issuing or refusing to issue an import or export permit for medical or scientific purposes ($754); and,
• 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.

Taxes:

There are two points of imposition of duty on cannabis products produced in Canada. A flat-rate duty is imposed when cannabis products are packaged. An ad valorem duty is imposed when the packaged cannabis products are delivered to a purchaser.

The adjustment rates for the additional cannabis duty required when packaged and stamped cannabis products are delivered to a purchaser in a listed specified province are the following:

• Alberta, 16.8%;
• Nunavut, 19.3%;
• Ontario, 3.9%;
• Saskatchewan, 6.45%.

Manitoba has opted out of the provincial share so only the federal part of the duty rate applies.

It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.

The Government of Canada has a helpful page explaining the imposition, calculation, and payment of duty on cannabis products.

Cannabis Legalization in Canada Infographics

How Can Cannabusinessplans Templates Help Start or Grow Your Cannabis Business?

The majority of cannabis licensing programs require the submission of a business plan as part of the application for a cannabis license. Even if it is not mandated by law, a business plan is essential for securing funding and assisting an applicant in understanding how much money it will take to start a cannabis business and how much profit it could make.

A well-structured business plan can make all the difference in helping you demonstrate your proposed cannabis business’ compliance with regulations and its operational viability.

Our complete cannabis business plan template package is everything you need to create a professional business plan for a cannabis business with expert financials and projections. A complete cannabis business plan template package includes:

• Excel Financial Model: change variables and immediately see the impact, break down operational and capital costs, know how much it will take to get into the business and the potential profits.
• Word Business Plan: value proposition, market analysis, marketing strategy, operating plan, organizational structure, financial plan and more.
• PowerPoint Pitch Deck: provide a quick overview of your cannabis business plan.

Cannabis Retail Business Plan Sample (Ontario)

Cannabis business plan templates for other countries are available at cannabusinessplans.com.