Health Canada is looking into whether two cannabis companies' sponsorship of a children's charity event last October is in violation of promotion restrictions within the Cannabis Act.
Smiths Falls-based Canopy Growth Corp. and fellow pot firm Halo Labs were among the sponsors of an Oct. 23 event in support of Kids, Cops & Computers for the Merry Go Round Children's Foundation, whose honorary chairman is federal Organized Crime Reduction Minister Bill Blair.
During the annual event called Inspiration Night, held in Toronto, the cannabis companies' logos were used in a poster of sponsors and other materials, according to pictures posted by the non-profit online.
A Health Canada spokesman says the Cannabis Act does not prohibit the sponsorship of a person, entity, activity or facility but that sponsorship cannot be used to promote cannabis and it is prohibited to display a brand element of cannabis.
"We are gathering facts and information about the situation to determine whether there may be an instance of non-compliance with the promotion prohibitions in the Cannabis Act," said Health Canada spokesman Geoffroy Legault-Thivierge in an email.
He added that Health Canada has followed up with the company to ensure it is aware of the promotions prohibitions, and it understands that the Foundation has removed the names of the cannabis companies from the list of sponsors on its website.
Under the Cannabis Act, which came into effect when Canada legalized pot for recreational use on Oct. 17 last year, there are strict guidelines on promotion and marketing. Those include a ban on promotion that is appealing to youth, and sponsorship of people, events or buildings. However, approaches between licensed producers in the months since legalization have varied and some industry players have said that reflects uncertainty on how to interpret murky portions of the act.
The act stipulates that it is prohibited to display, refer to or otherwise use a brand element of cannabis directly, or indirectly, in a promotion that is used in the sponsorship of a person, entity, event, activity or facility. As well, it is prohibited to display the name of a person that produces, sells, or distributes cannabis, sells or distributes a cannabis accessory or provides a service related to cannabis.
Merry Go Round's president Mark Zwicker said at the time of the event, the Cannabis Act was so new it wasn't clear whether brand elements could be used. The charity has since removed the logos from its website, he said.
"It's a grey area and we don't want to do anything that would materially affect the charity... I can assure you that no one that was involved with the charity would have knowingly taken any action that would contravene the act," Zwicker said.
Canopy Growth said it is not prohibited from sponsoring an event as long as cannabis is not promoted.
"There was no promotion of Canopy's donation," stated spokeswoman Caitlin O'Hara. "The only public mention of Canopy Growth's corporate donation was the company's logo on the charity's donation page and logo placement at the event itself, which was a private event."
Halo Labs and Bill Blair did not immediately respond to requests for comment.
The sponsorship portion of the Cannabis Act does have some "grey areas," such as whether a holding company would be subject to the sponsorship restrictions, said Ottawa-based lawyer Trina Fraser.
"In and of itself, it is not a producer or distributor of cannabis, its subsidiaries are... I think there is still some greyness around that," she said.
However, the act says it is prohibited to use a trademark or brand name slogan that evokes or is reasonably associated with cannabis, said Toronto-based lawyer Matt Maurer.
"Even if Canopy is the parent company, using their name is a brand element because it is associated with cannabis, that's what they do.... There's an argument to be made on both sides."
When reviewing regulated activities under the act, Health Canada considers each situation on a "case by case-basis," said Legault-Thivierge.
"A range of factors including, but not limited to, the purpose of any promotion, its content, its context, and its intended audience would be assessed when enforcing the prohibitions on promotion in the Cannabis Act," he said.