Health Canada is proposing to cut several federal cannabis reporting obligations, a change the department estimates would create about $19.0 million in annualized net benefits across affected reporting parties.
The proposal was published in the Canada Gazette, Part I on Sept. 26, 2026, and would amend the Cannabis Tracking System Order.
The proposal would narrow federal cannabis tracking, not end it
The Cannabis Tracking System Order has required reporting on cannabis movement since 2018 to support federal oversight of the legal supply chain. Its purpose is to help prevent cannabis from being diverted to illegal markets and to prevent illegal cannabis from entering the legal market.
Health Canada says the proposed amendments would keep high-level supply chain tracking in place while removing data fields the department considers unnecessary for that purpose. In practical terms, the proposal would reduce monthly federal reporting from lower levels of the distribution and retail system while keeping reporting for federal licence holders and wholesale destination tracking.
The amended order would still apply to holders of federally issued licences for cultivation, processing, and sale for medical purposes when those licences authorize cannabis possession. It would not apply to federally issued cannabis drug licences, industrial hemp licences, research licences, analytical testing licences, or sale-for-medical-purposes licences that do not authorize cannabis possession.
What would change for reporting parties
For federal licence holders, the proposal would consolidate cannabis reporting classes. Health Canada says federal licence holders currently report on 11 classes of cannabis products and 14 classes of unpackaged cannabis. The proposed schedule would reduce that structure to seven cannabis classes, plus a residual category for other unpackaged cannabis.
The proposal would also combine certain inventory additions and reductions into broader categories. Returns to a federal licence holder, for example, would no longer be reported separately from cannabis sold or distributed to that licence holder domestically. Book value reporting and licensed-site capacity reporting would also be removed.
Federal licence holders would no longer have to report provincial or territorial location for intra-industry sales, medical sales, or sending and delivering cannabis products directly to consumers for non-medical purposes. Wholesale sales or distribution to private distributors and retailers would still need to be reported by provincial or territorial location, which Health Canada says would preserve visibility into retail-destined inventory.
The proposal would repeal Cannabis Tracking System Order reporting requirements for public provincial and territorial bodies, such as Crown corporations or ministries, and for provincially and territorially authorized private distributors and retailers. Health Canada says provinces and territories would remain responsible for overseeing cannabis distribution and retail within their jurisdictions.
One reporting detail would be added. Federal licence holders would have to specify the reason for inventory additions or reductions reported under the category “any other reason.” Health Canada gives examples such as unpackaging a cannabis product or correcting rounding differences.
Health Canada estimates large savings, with some system work first
Health Canada’s cost-benefit analysis estimates total incremental benefits of $135,069,175 in present value over 10 periods from 2027 to 2036, or $19,230,812 in annualized value. Those figures are reported in 2025 constant dollars and discounted at 7%.
The proposal also carries implementation costs. Health Canada estimates $1,146,401 in present value costs for the department, mostly tied to updating forms, guidance, web pages, internal processes, and the Cannabis Tracking and Licensing System. Federal licence holders are estimated to face $382,259 in present value costs, mainly to review the amended requirements, update internal systems, and specify reasons for inventory changes reported as “any other reason.”
After costs are counted, Health Canada estimates the proposal would generate a net benefit of $133,540,516 in present value, or $19,013,165 in annualized value.
For federal licence holders, the department estimates average savings of 378 hours annually, with an average annual value of $14,161. For a standard processor, the estimate rises to 439 hours and $16,466 annually. For a micro licence holder conducting both cultivation and processing, the estimate is 395 hours and $14,820 annually.
The retailer and distributor impact is more direct. Health Canada estimates a provincially or territorially authorized private retailer would save an average of 69 hours, or $2,274, each year because it would no longer have to submit reports under the federal order. A public provincial or territorial body would save an average of 1,137 hours, or $48,644, annually.
Under the small business lens, Health Canada estimates 3,500 small businesses would be affected. The department puts net benefits for affected small businesses at $110,033,722 in present value over 10 periods, or $15,666,327 in annualized value. On a per-business basis, that works out to an estimated $31,442 in present value, or $4,477 in annualized value.
The timing depends on the reporting party
If finalized, the repeal of reporting requirements for public provincial and territorial bodies and provincially or territorially authorized distributors and retailers would take effect when the final order is published in Canada Gazette, Part II.
The changes affecting federal licence holders would take effect Jan. 1, 2028. Health Canada says the delayed date would give licence holders time to update tracking systems and protocols.
That timing matters for operators with internal compliance databases, inventory systems, point-of-sale feeds, or ERP workflows tied to existing Cannabis Tracking and Licensing System fields. The proposal reduces the amount of data to be reported, but it also expects revised categories, changed fields, and updated validation before federal licence holders see the reporting relief.
The oversight tradeoff
Health Canada’s rationale is that some current reporting is either too detailed for high-level federal tracking or duplicated elsewhere in the supply chain. The Canada Gazette notice says one federal licence holder commented during earlier engagement that public provincial and territorial reporting of inventory additions was redundant because federal licence holders already report those details.
The proposal leaves other federal controls in place, including record-keeping, inspections, compliance verification, and enforcement tools under the Cannabis Act. Health Canada says ministerial authorities to require information from provinces and territories, including private distributors and retailers, would also remain available.
Consultation is open until Nov. 10
The consultation opened Sept. 26 and is scheduled to close Nov. 10, 2026. Health Canada is seeking comments from current and potential licence holders, industry associations, First Nations, Inuit and Métis organizations, provinces, territories, municipalities, and provincially or territorially authorized distributors and retailers.
The Canada Gazette notice says interested persons may make representations within 45 days of publication and are strongly encouraged to use the online commenting feature on the Canada Gazette website. Comments submitted through the prepublication process will be posted online after the consultation closes, subject to the Gazette’s terms of use.
Because the proposal is still at the Canada Gazette, Part I stage, the amendments are not final. Feedback received during the consultation can still affect the final order before any publication in Canada Gazette, Part II.
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