Inventory management best practices and how to prepare for CTLS Health Canada reporting.
What is Health Canada CTLS/CTS reporting?
In Canada, cannabis producers are regulated by Health Canada. Under the Cannabis Act and regulations, licence holders, cultivators, and processors must submit monthly inventory and sales reports to Health Canada via the Cannabis Tracking and Licensing System (CTLS).
This report is often referred to as a CTLS report or Cannabis Tracking System (CTS) report. Cannabis producers must submit to Health Canada by the 15th day of each month. CTLS Health Canada reports must be completed for each licence, so large or complex operations will be required to provide multiple reports.
Essentially a gigantic spreadsheet, CTLS reports reconciling all monthly opening and closing inventory. These mandated reports oversee the cannabis supply chain and prevent illegal inversion and diversion into and out of the regulated system.
Complex & time-consuming
In our experience, cannabis producers really dread CTLS Health Canada reporting. The report puts a heavy administrative burden on teams, and it becomes increasingly more complicated when a cannabis producer has a lot of SKUs and customers.
Often, the root cause of what makes the CTLS Health Canada report time-consuming for cannabis teams to complete is their in
ventory tracking systems. Many cannabis producers track inventory and sales in fragmented inventory systems that involve seed-to-sale software, spreadsheets and paper records. This means there isn’t one central source of truth for inventory numbers.
Often cannabis producers find that the inventory in their seed-to-sale software doesn’t reflect reality due to poor built-in data capture processes that allow for errors. Some producers also find that their seed-to-sale system only provides very simple inventory reports, which do not provide enough granularity to meet Health Canada’s requirements and complete CTLS. As a result, teams spend countless hours, if not days or weeks, trying to reconcile their inventory before submitting the CTLS Health Canada report.
The inability of cannabis producers to have visibility into accurate inventory is why many companies look for next-generationuilt for the recreational market, not ACMPR.
What are the CTLS Health Canada reporting requirements?
The CTLS Health Canada report requires producers to report all unpackaged inventory, packaged inventory, and sales every month.
What is unpackaged cannabis inventory?
Unpackaged inventory includes any cannabis in the production process, not in the form of a cannabis product ready for sale. Unpackaged inventory includes:
- Seeds
- Plants in various stages of growth
- Fresh cannabis
- Bulk dried cannabis
- Cannabis extracts in the processing stages (e.g. extract mixed with ethanol)
- Bulk extracts
- Bulk edibles
- Bulk topicals
Other than plants, all unpackaged inventory must be reported in kilograms. It’s also worth noting that only those with cultivation or processing licenses have to report on unpackaged inventory.
What is packaged cannabis inventory?
Packaged inventory includes any cannabis that is packaged and labelled in its final containers and is ready for sale. Packaged inventory can consist of the following:
- Packaged seeds
- Packaged plants
- Packaged dried cannabis
- Packaged edibles
- Packaged extracts
- Packaged topicals
Packaged cannabis inventory is reported in the number of packaged units and kilograms.
What is sales cannabis inventory?
Sales are tracked for unpackaged and packaged inventory and are broken down into medical sales, non-medical sales, and intra-industry trade. Health Canada CTLS reports require licence producers to indicate the quantity and price of cannabis sold.
For a comprehensive guide to CTS reporting and the Cannabis Tracking Reports Tool, visit the Health Canada website.
What are the main reporting fields for CTLS?
For packaged and unpackaged cannabis inventory, the main reporting fields are:
- Opening inventory: The number of cannabis products packaged for sale or the amount of unpackaged cannabis held in inventory at the site on the first day of the previous month.
- Additions to inventory: Examples of additions include the amount of cannabis received from other license holders from Canada or imported or quantity returned from customers.
- Reductions to inventory: Examples of reductions include cannabis used to produce another class of cannabis (processed), the quantity sent for testing, amount destroyed, shipped or exported.
- Closing inventory: The number of cannabis products (packaged) or amount of cannabis in kg (unpackaged) held in inventory at the facility on the last day of the previous month.
What date do I need to submit my CTLS report to Health Canada?
Reports must be submitted by the 15th of the month, reconciling data for the previous month. For example, on 15th September, you would submit your CTLS report for the reporting period: 1st August – 31st August.
What happens if my CTLS report is inaccurate or late?
Cannabis companies that cannot submit accurate inventory or are habitually late in submitting CTLS Health Canada reports can be subject to enforcement action.
Enforcement action can trigger Health Canada inspections and inquiries and can impact the daily operations of the cannabis producer.
CTLS Health Canada report format
Health Canada requires reports to be captured in a CSV or the cannabis tracking reports tool.
CTLS Health Canada cannabis tracking tool.
Producers generally use the reporting tool, fill it out with their inventory and then convert the document into a CSV file to upload to the CTLS. This option is much faster than manually entering the fields for cannabis producers with lots of sales and SKUs.
Alternatively, you can manually enter the values into the CTLS system.
Health Canada has requirements for the CTLS report, and if there are errors in your CSV or manual upload, the system will notify you with an error message.
Inventory management for Health Canada CTLS reporting
Why are cannabis producers finding it difficult complete Health Canada CTLS reports?
Inaccurate reports from seed-to-sale systems
Many cannabis producers rely on seed-to-sale software to pull reports to find information for their CTLS Health Canada report. More often than not, those reports aren’t accurate or do not provide enough detail. Then producers spend hours or even days verifying and fixing discrepancies and errors in their inventory.
Relying on spreadsheets
Because they cannot rely on their seed-to-sale system for inventory management, producers use spreadsheets to keep track of inventory. Inventory might be managed by one department or multiple departments – creating an incredibly fragmented inventory system.
Due to the lack of ‘guardrails’ for data entry, spreadsheets are prone to mistakes. For example, when someone accidentally overwrites data or misplaces a file… we’ve all been there.
Paper recordkeeping
Another reason cannabis producers end up with inaccurate inventory numbers is paper recordkeeping. Production staff might include the wrong values in their paper records, or someone’s writing might be ineligible – was that a 4 or a 7? These mistakes can throw off inventory, and digging for errors such as those is like searching for a needle in a haystack.
There is a chance of transcription error whenever someone copies from one place to another (paper → spreadsheet).
With all these challenges in the way of Health Canada CTLS reporting, it’s no wonder it consumes so much of the cannabis teams’ time.
Top tips for CTLS reporting from the Elevated Signals expert crew:
Ivan Jelinic, customer success engineer, Elevated Signals:
“Successful CTLS, in my opinion, comes down to (1) teams having a detailed knowledge of Health Canada’s reporting criteria (2) an understanding of exactly how their facility’s operations affect inventory. Competency in both areas will ensure a smooth CTLS compilation and, importantly, help troubleshoot if numbers aren’t adding up.”
How cannabis software can make CTLS Health Canada reporting easier
There are so many different types of cannabis software available, and they all have different functions. To make Health Canada CTLS reports easier, you need access to detailed inventory management software. It’s vital to ensure that the software will solve the top three challenges that producers face. This includes eliminating outdated and inaccurate seed-to-sale software, spreadsheets, and paper records.
Elevated Signals Manufacturing Execution System (MES) software can achieve this.
In Elevated Signals, all production records and work orders are digital. Digital records mean your team doesn’t run into illegible, missing fields or forms. Any inventory captured in a work order automatically updates your inventory records. Another bonus is that you can see records and inventory being updated in real-time, allowing you to have operational visibility into your production inventory.
Having inventory pulled directly from your digital records eliminates the need for seed-to-sale software and spreadsheets. MES can perform seed-to-sale functions, including cannabis traceability and inventory management.
Elevated Signals has been built and developed alongside cannabis producers, so helping teams maintain compliance and making Health Canada CTLS reporting pain-free has always been a priority.
In addition to all the benefits teams gain from Elevated Signals relating to inventory tracking. Elevated Signals can provide full lot traceability from seed to final product and create automatic batch records.
Are you interested in learning how Elevated Signals can help with CTS reports?
Mini-case study: Helping Lotus Cannabis Co. make CTS reporting pain-free
Read the entire case study here.
Problem: previous seed-to-sale software
“The main issue with our previous cannabis software was the time it took to complete our CTS report. The way reports were structured in the system made it hard to read and compile data. There was also a lack of CTS support.”
“On top of the difficulties with collating inventory data for CTS reporting, there were loads of issues, inconsistencies and bugs in the software that impacted our ability to track what we wanted day-to-day. We needed a new system if we wanted to be efficient.”
Solution: Elevated Signals
“As soon as we started using Elevated Signals, we realized its value. Not only was our first CTS report a breeze, the software’s form builder meant we could digitize our quality records, removing the need for pen & paper in the facility.”
-Lucas Wiebe, Lead Grower, Lotus Cannabis Co.