Cannabis Administrative Monetary Penalties: How Health Canada Scores Your Violation

A single compliance slip can now cost a licensed cannabis producer up to one million dollars. Under Part 10 of the Cannabis Act, Health Canada can issue an administrative monetary penalty, often shortened to AMP, without going to court and without proving that you meant any harm. For many licence holders, the first time they study this framework is the day a Notice of Violation arrives. By then the options are narrow and the clock is already running.

This guide explains how Health Canada decides whether to issue a cannabis administrative monetary penalty, how it scores the violation to reach a dollar figure, and what you can do when a Notice of Violation lands. It also shows where disciplined quality assurance and compliance work make the difference between a four-figure penalty and a six or seven-figure one.

Executive summary

Health Canada's administrative monetary penalty framework turns a compliance failure into a scored, calculated fine. The score comes from four factors, and your compliance history is the first of them. The practical lesson is that the work you do before an inspection, not after a Notice of Violation, decides most of your exposure.

• The maximum penalty is one million dollars per violation under section 111(1) of the Cannabis Act.
• Penalties are scored, not tiered. Four factors produce a cumulative score that maps to a dollar range.
• Due diligence is not a defence. Section 119(1) removes the argument that you tried your best.
• You have three responses to a Notice of Violation: pay, request a compliance agreement, or request a Ministerial review.
• Compliance history is the first scoring factor, so unresolved findings and weak corrective actions raise every future penalty.

What are administrative monetary penalties under the Cannabis Act?

What they are: administrative monetary penalties are financial penalties that Health Canada can impose directly on a person or company for contravening the Cannabis Act or its regulations. Why they matter: they do not need a criminal charge or a court hearing, so they can be issued quickly and the penalty is calculated by a formula. What to do: treat every regulatory requirement as enforceable, because almost any contravention outside the criminal provisions can trigger an AMP.

The framework is set out in Part 10 of the Cannabis Act (S.C. 2018, c. 16). Section 111(1) sets the maximum penalty at one million dollars per violation, and section 111(2) confirms that the purpose of a penalty is to promote compliance, not to punish. Importantly, the AMP framework does not apply to contraventions of Division 1 of Part 1 of the Act, which are criminal offences dealt with through the courts. For everything else, from promotion rules to record-keeping and reporting, an AMP is on the table.

How Health Canada scores a cannabis violation

What it is: a point-based assessment that converts the circumstances of a violation into a number. Why it matters: two companies that break the same rule can receive very different penalties, because the score, not the rule, sets the amount. What to do: understand the four factors and manage the ones you can control before an inspection ever happens.

Under subsection 112(3) of the Cannabis Act, Health Canada assigns points across four factors and adds them into a cumulative score. The table below shows each factor and the points that can be assigned.

The Act also allows for any other prescribed criteria, but at present none are prescribed, so these four factors are what count. The lowest possible cumulative score is 1 and the highest is 16. Notice that the first and third factors are squarely within your control. A clean compliance history and documented efforts to fix a problem both pull the score down, which is where a capable Quality Assurance Person and tested standard operating procedures earn their keep.

From score to dollar figure: the penalty ranges

What it is: a published table that maps the cumulative score to a dollar range. Why it matters: a two-point swing in your score can move the penalty by tens of thousands of dollars. What to do: use the table to see how much a single avoidable factor is really worth.

There is no row for a score of 15. Because the factors can only take the values shown, a cumulative score of 15 is mathematically unattainable, so the top band jumps from 14 to 16. Remember that the penalty is per violation. Where Health Canada finds more than one violation, the amounts can be issued together, and a company can face a combined total well above any single range.

The Notice of Violation process and your three options

What it is: a formal notice that states the alleged violation, the penalty, and how and when to pay. Why it matters: your response, and the deadline you meet, shapes the final amount and whether the violation becomes part of your record. What to do: read the notice carefully, diarise the deadline, and choose your response with advice, not in a panic.

Health Canada issues a Notice of Violation where it has reasonable grounds to believe a violation was committed, and it must do so within six months of becoming aware of the non-compliance. The notice identifies the person, the alleged violation, the penalty amount, and the payment details. Once you receive it, you have three options.

Option 1: Pay the penalty

You can pay the penalty by the date shown on the notice, in Canadian funds, to the Receiver General of Canada. Paying resolves the matter, but the violation still forms part of your compliance history, which can raise the score on any future penalty.

Option 2: Request a compliance agreement

If the penalty is $5,000 or more, you may ask to enter into a compliance agreement. Meeting its terms can reduce the amount you pay. Health Canada may refuse the request, and it may require a security deposit. Entering an agreement means you are deemed to have committed the violation and it becomes part of your compliance history.

Option 3: Request a Ministerial review

You can ask for a review of the penalty amount or of the facts of the violation. The request goes by email to CCU-UCC@hc-sc.gc.ca with a copy of the Notice of Violation and a detailed rationale. A delegated official who was not involved in issuing the notice conducts the review. The Ghost Drops decision below shows that a review can change the outcome.

Why due diligence will not protect you

What it is: a rule that removes the usual defence of having taken reasonable care. Why it matters: you cannot argue your way out of an AMP by proving you tried hard. What to do: put the evidence into prevention and documentation, because that is what lowers the score, not after-the-fact explanations.

Subsection 119(1) of the Cannabis Act states that a person does not have a defence by reason that they exercised due diligence to prevent the violation, or that they reasonably and honestly believed in facts that would have exonerated them. This is a strict liability regime. Where due diligence does help is inside the scoring: evidence that you made all reasonable efforts to mitigate or reverse a problem can hold the third factor at zero, and a clean history can hold the first factor at zero. Diligence changes the number even though it is not a defence to the violation itself.

What Health Canada has actually penalized

What it is: the published AMP decisions that show the framework in practice. Why it matters: the decisions confirm that both high-profile promotion breaches and routine filing failures draw real penalties. What to do: check your own promotion controls and your statutory filings against these examples.

The lesson is that AMPs are not reserved for dramatic cases. A missed report cost two companies $5,000 each. The same discipline that keeps your product composition and your edible allergen and potency controls accurate is the discipline that keeps your regulatory filings on time. Both protect your compliance history.

How to lower your score before Health Canada arrives

What it is: the set of actions that hold the controllable factors at their lowest values. Why it matters: because the score is set at the time of the violation, you cannot improve it after the fact. What to do: build the evidence now, while there is no notice in front of you.

In the mock Health Canada inspections we run, the most common reason a compliance history is not clean is not a dramatic failure. It is a corrective action that was marked closed on paper without any evidence that the fix actually worked. An inspector who sees the same observation a second time reads that as a history of non-compliance, which moves the first scoring factor from zero to two or four. The remedy is a corrective and preventive action system that verifies effectiveness and keeps the evidence, so that a past issue genuinely stays in the past.

Timing matters as well. Because Health Canada must issue a Notice of Violation within six months of becoming aware of the non-compliance, some companies assume an older issue is safe. The six months runs from when the department becomes aware, not from when the conduct happened, so a problem discovered during a later inspection can still be penalized well after the fact. Treat every open finding as live until it is documented and closed with evidence.

• Keep a clean, well-documented compliance history. Close out past findings and keep records of the fixes, because history is the first scoring factor and also protects your licence good standing.
• Run a corrective and preventive action system that actually closes issues, supported by sound good production practices. Documented mitigation holds the third factor at zero.
• Review every promotional item before it is published. The Ghost Drops decision shows how costly a promotion breach can be.
• Track statutory filings, including the key investors report and annual filings, on a compliance calendar so nothing slips.
• Run mock Health Canada inspections so that gaps are found and fixed by you, not scored against you by an inspector.

Cannabis AMP compliance checklist

• Confirm your compliance history is documented and that every past finding has a closed corrective action.
• Keep evidence of mitigation for any incident, including dates, decisions, and the people involved.
• Maintain a promotional review procedure with sign-off before anything is seen by the public.
• Hold a filing calendar that covers the key investors report, annual reports, and all notifications.
• Give your Quality Assurance Person clear authority and a documented record of decisions.
• Schedule a mock inspection and a corrective action effectiveness review at least once a year.
• Write a Notice of Violation response procedure now, so the first 30 days are planned, not improvised.

Common mistakes that raise your penalty

• Treating due diligence as a defence. It is not one, so leaning on it instead of preventing the problem leaves you exposed.
• Ignoring compliance history. Every unresolved finding sits in the first scoring factor and raises future penalties.
• Signing a compliance agreement without planning for the terms. A breach doubles the penalty and removes the cap.
• Letting routine filings slip. A missed key investors report cost two companies $5,000 each.
• Responding to a Notice of Violation late or without evidence, which forfeits the options that could reduce the amount.

Frequently asked questions

What is the maximum fine under the Cannabis Act for a licence holder?

The maximum administrative monetary penalty is one million dollars per violation under section 111(1). Where there is more than one violation, the amounts can be issued together. If a compliance agreement is breached, the penalty doubles and the one million dollar cap no longer applies.

How does Health Canada calculate a cannabis administrative monetary penalty?

Health Canada scores four factors under subsection 112(3): history of non-compliance, the nature and scope of the violation, efforts to mitigate or reverse it, and any competitive or economic benefit gained. The points are added into a cumulative score, and that score maps to a published penalty range.

What is a Notice of Violation and how do I respond?

A Notice of Violation is the formal notice that sets out the alleged violation, the penalty, and how and when to pay. You can pay, request a compliance agreement if the penalty is $5,000 or more, or request a Ministerial review of the amount or the facts. Act before the deadline shown on the notice.

Does due diligence protect me from a cannabis AMP?

No. Subsection 119(1) states that due diligence is not a defence to a violation. However, documented efforts to mitigate a problem and a clean compliance history both lower the score, so diligence still reduces the dollar amount even though it does not excuse the violation.

Can I ask Health Canada to review a cannabis penalty?

Yes. You can request a Ministerial review of the penalty amount or of the facts of the violation by emailing CCU-UCC@hc-sc.gc.ca with a copy of the Notice of Violation and a detailed rationale. A delegated official who was not involved in the original decision conducts the review.

What is a compliance agreement under the Cannabis Act?

It is an agreement available where the penalty is $5,000 or more. Meeting its terms can reduce the amount you pay, but you are deemed to have committed the violation and it joins your compliance history. Breaching it makes you liable for twice the penalty with no cap.

Do AMPs apply to criminal cannabis offences?

No. The AMP framework does not apply to contraventions of Division 1 of Part 1 of the Cannabis Act, which are criminal offences handled through the courts. AMPs cover the regulatory contraventions outside those criminal provisions.

How MFLRC can help

Most of your AMP exposure is decided long before a Notice of Violation arrives, which is exactly where MFLRC works. We run mock Health Canada inspections to find and close gaps on your terms, deliver corrective and preventive action effectiveness reviews so your fixes hold up, and develop the standard operating procedures and Quality Assurance Person support that keep your compliance history clean. If a notice has already arrived, we help you verify the facts, protect your options, and prepare a compliance agreement or Ministerial review response. We also set up a compliance-as-a-service filing calendar so routine reports are never the reason you are penalized.

Conclusion

Cannabis administrative monetary penalties are calculated, not arbitrary, and two of the four factors that set the amount are within your control. A documented compliance history and clear evidence of mitigation can be the difference between a penalty near the bottom of the lowest band and one that climbs toward a million dollars. The time to build that evidence is now, while there is no notice in front of you. If you are not certain where you stand, a mock inspection and a compliance review will tell you before Health Canada does.

Sources and references

• Health Canada, Administrative monetary penalties under the Cannabis Act (issued 10 June 2025, last modified 8 July 2026).
• Cannabis Act (S.C. 2018, c. 16), Part 10 and sections 111, 112 and 119, Justice Laws Website.
• Health Canada, Updates for cannabis and industrial hemp.