Fair Notice: Federal Court Confirms Need For Disclosure Of All Factors In Regulatory Decision-Making

• Published date: 23 August 2023
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Cannabis & Hemp, Food and Drugs Law
• Law Firm: Torys LLP
• Author: Ms Nicole Mantini, Teresa Reguly and Paul Mohan

Regulatory agencies must often adjust their existing policies and protocols to adapt to emerging markets. During this adjustment period, the stakeholders in the market will have to manage constantly shifting and sometimes vague expectations from these agencies.

In the recent decision in Organigram Inc v. Canada (Attorney General), 2023 FC 1075, the Federal Court considered whether Health Canada breached procedural fairness by failing to notify Organigram Inc. (Organigram), a licensed cannabis producer, about internal policy factors relied upon to reach a final regulatory decision in respect of the classification of Organigram's cannabis products. The Court held that by failing to notify Organigram of part of the basis of the decision, Health Canada breached the requirements of procedural fairness. The result suggests that if a regulatory body is going to render a decision based on internal policies, then it must inform the relevant stakeholders of such policies or risk having its decision set aside.

What you need to know

• Relatively lower level of procedural fairness owed here. While the Court granted Organigram's application for judicial review, it affirmed that regulatory decisions impacting commercial interests tend to require a lower level of procedural fairness than decisions affecting the lives of individuals. In addition, it noted that discretionary decisions pertaining to compliance also tend to engage the lower end of the procedural fairness spectrum.
• All major factors involved in decision making must still be disclosed. Notwithstanding the degree of fairness required, if a regulatory body puts weight on a particular factor in reaching its decision, the stakeholder must be informed about that factor to meet the requirements of procedural fairness.
• The role of notice in addressing procedural fairness. The purpose of notice is to provide the stakeholder with "sufficient information and opportunities to meet the case" against them. The Federal Court found that by not providing information about an important factor, Health Canada denied Organigram a meaningful opportunity to respond to the agency's concerns.

Health Canada's review of the Organigram products

Organigram is a licensed producer of cannabis and cannabis products in Canada. In 2021, it submitted to Health Canada notices for new cannabis products as required by Part 12 of the Cannabis Regulations: namely three flavours of its Jolts lozenges containing THC. The company classified their...