On August 8, 2023, the Federal Court overturned Health Canada’s decision that a cannabis product, Edison Jolts, was to be classified as edible cannabis and not cannabis extract. The Court found that Health Canada had breached the duty of procedural fairness by relying on a product classification factor in an internal guidance document that Health Canada only published after rendering its decision.
Organigram Inc. manufactures Edison Jolts (Jolts), which are cannabis products in lozenge form. Organigram classified Jolts as cannabis extract in notices of new cannabis product to Health Canada. If classified instead as edible cannabis, Jolts would exceed the THC content per immediate container permitted by the Cannabis Regulations.
After initial exchanges, on January 3, 2023, Health Canada issued a Notice of Non-Compliance (NNC) with respect to the Jolts line of cannabis products. The NNC stated that Jolts should be classified as edible cannabis on the basis of three factors: product format, product representation, and public perception. The three classification factors were from a document that had been previously published by Health Canada, namely the Guidance Document: Classification of products at the food-natural health product interface: products in food formats (External Guidance).
On January 6, 2023, Organigram responded, arguing based on the External Guidance that Jolts were not properly classified as a food.
Health Canada’s decision
On March 1, 2023, Health Canada issued a written decision finding that Jolts are properly classified as edible cannabis products. In making this decision, Health Canada considered a fourth classification factor: product sensory and physical characteristics. The fourth factor was from an internal Compliance Promotion Statement (Internal Guidance) that Organigram was unaware of until, two days after issuing its decision, Health Canada made the Internal Guidance publicly available.
Organigram applied to the Federal Court for judicial review of Health Canada’s decision.
The Court reviewed the issue of procedural fairness on a correctness standard.
First, the Court found that, on the basis of the Baker factors, the level of procedural fairness that Health Canada owed to Organigram fell at the lower end of the spectrum. Nonetheless, the Court found that Heath Canada had breached procedural fairness by relying on the fourth classification factor, which was found only in the Internal Guidance and had not been disclosed to Organigram. As a result, Organigram was not afforded a meaningful opportunity to respond to Health Canada’s concerns related to that factor. Moreover, Health Canada’s breach of procedural fairness may have affected the outcome, as the fourth factor “appears to have played a not insignificant role” in Health Canada’s decision to classify Jolts as edible cannabis.
As a result, the Court remitted the matter back to Health Canada for redetermination.
Organigram Inc. v. Canada (Attorney General), 2023 FC 1075