Robert Lloyd Schellenberg was tried in 2016. But his case has been publicized by the Chinese press following the Dec. 1 arrest of the chief financial officer of tech giant Huawei on U.S. charges related to trading with Iran.
An appeals court agreed with prosecutors who said Schellenberg was punished too leniently when he was sentenced to 15 years in prison on charges of being an accessory to drug smuggling.
Evidence showed it was possible he played an "important role," said the announcement by the Higher People's Court of the northeastern province of Liaoning. It ordered the court in the city of Dalian to try the case again.
Authorities have released no details of the accusations against Schellenberg.
In a statement Saturday, the Canadian government said it has been following the case.
"Global Affairs Canada has been following of this case for several years and has been providing consular assistance to the Canadian citizen since they were first detained in Liaoning, China," spokesman Richard Walker said. "We will continue to provide consular services to them and their family."
The Canadian government said earlier it was following the case but has released no details.
The maximum penalty for drug trafficking in China is death.
In 2009, China executed a Briton, Akmal Shaikh, on charges of smuggling heroin despite his supporters' protest that he was mentally ill.