As artificial intelligence continues to reshape industries globally, Canada finds itself at a critical point in AI regulation. With the recent appointment of Evan Solomon as Canada’s first-ever Minister of Artificial Intelligence and Digital Innovation, we are seem to be charting a new course that prioritises economic growth while maintaining responsible oversight. Where does this leave organisations that are eager for clarity and direction in an increasingly complex global and asymmetrical regulatory environment?
What is it?
Canada’s AI regulatory landscape has undergone significant changes in 2025, marking a departure from previous approaches. Progress on the Artificial Intelligence and Data Act (AIDA), originally introduced as part of Bill C-27, was stopped following Parliament’s prorogation in January 2025. This legislative setback has left Canada without comprehensive federal AI legislation, putting the country behind international peers like the European Union, which successfully enacted the AI Act in 2024.
Minister Solomon has signalled a fundamental shift in Canada’s approach, that the government will move away from “over-indexing on warnings and regulation” to focus more on harnessing AI’s economic benefits. His four key priorities include scaling up Canada’s AI industry, driving adoption, ensuring Canadians have trust in the technology, and maintaining sovereignty over AI capabilities. This represents a shift from the previous government’s more cautious, regulation-heavy with AIDA.
Where does this leave us? Internationally, Canada now finds itself caught between competing regulatory philosophies. The European Union has implemented comprehensive risk-based regulations through the AI Act, while the United States under President Trump seems to have moved toward minimal federal oversight in favour of innovation.
What does it mean from a business perspective?
The current regulatory uncertainty and changed government priorities create both opportunities and challenges for Canadian businesses:
- Regulatory Uncertainty Creates Planning Challenges: With no clear timeline for new legislation, businesses face difficulties in long-term AI strategy planning. The absence of federal guidance is likely to affect small and medium-sized enterprises (SMEs) more as they often lack resources to navigate regulatory ambiguities independently.
- Low Adoption Rates Signal Competitive Risk: Only 12.2% of Canadian businesses reported using AI in the second quarter of 2025, up from 6.1% in 2024, but still significantly lower than global averages. This slow adoption puts Canadian companies at risk of falling behind international competitors who are leveraging AI for operational efficiency and innovation.
- Skills Gap Risks: A surge in demand for core AI skills has created significant talent shortages. The mismatch between available talent and business needs will hinder scaling efforts across industries.
- Investment Opportunities Amid Uncertainty: The government’s shift toward economic benefits over regulation may create more favourable conditions for AI investment and development.
- Sector-Specific Variations: Industry sector disparity creates opportunities for early movers in under-served industries but also highlights the uneven nature of AI usage across the economy.
- Compliance Complexity Without Clear Framework: Businesses must currently navigate a patchwork of existing laws including privacy legislation, human rights laws, and sector-specific regulations without AI-specific guidance. This creates compliance uncertainty and risk exposure for organisations implementing AI systems.
What do I do with it?
Given the current landscape, here are concrete actions businesses should take:
- Develop Internal AI Governance Now: Don’t wait for federal legislation (which undoubtedly will come) to establish internal AI governance frameworks. Create policies for AI system development, deployment, and monitoring that align with existing privacy and human rights laws while preparing for future regulatory requirements.
- Invest in Talent and Strategic Partnership Development: Address the skills gap by training current employees in AI capabilities and recruiting specialised talent. Consider partnerships with Canadian AI research institutions like the Vector Institute, Mila – Quebec Artificial Intelligence Institute, or Amii (Alberta Machine Intelligence Institute) to access expertise and talent pipelines.
- Start with Low-Risk AI Applications: Begin AI implementation with applications that have minimal regulatory risk, such as internal process automation or data analytics. This allows for learning and capability building while avoiding potential compliance issues in high-risk areas. Plan for ethics and fairness reviews in your projects.
- Monitor International Regulatory Developments: Stay informed about AI regulations in key markets, particularly the EU AI Act, as these may influence future Canadian legislation. Review existing standards from ISO – International Organization for Standardization – ISO42001 (AI Management System), ISO23894 (AI Risk Management) and ISO42005 (AI System Impact Assessment), also the NIST AI RMF (AI Risk Management) and review resources like the MIT AI Risk Repository.
- Assess Your Competitive Position: Conduct an AI readiness assessment to identify where your organisation stands relative to competitors and international benchmarks. Use this analysis to prioritise AI investments and development efforts.
The appointment of Minister Evan Solomon is a critical moment for Canadian AI policy, signalling a shift toward economic growth and practical implementation over regulatory caution. While this creates uncertainty in the short term, it also presents opportunities for forward-thinking businesses to gain competitive advantages. The key is to act now – developing internal capabilities, building governance frameworks, and positioning for the regulatory clarity that will eventually come. Canada’s AI future depends not just on government policy, but on how quickly and effectively businesses can adapt to this new landscape and seize the opportunities it presents.
Further Reading
AI minister says focus is more on economic benefits, less on regulation (Global News)
Analysis on AI use by businesses in Canada, second quarter of 2025 (Statistics Canada | Statistique Canada)
Canadian AI job market shifting, favouring specialized, in-demand skills (Vector Institute)