Small-scale cannabis growers in Canada are facing such burdensome licensing regulations that fewer than 30 such applications have been made to Health Canada since legalization in October.
One of the main problems regarding such licensing comes from restrictions imposed by municipalities, industry experts say.
“Few municipalities have the zoning required to accommodate a micro-cultivation permit,” said Tom Doran, founder and CEO of Pattern Micro Cultivation, a British Columbia-based company that looks to partner with micro-cultivators to build facilities that are compliant with good manufacturing practices (GMP).
“Applicants have to show they have permission from your municipality to set up micro-cultivation,” he said.
Pattern focuses on logistics, including security upgrades, municipal approval, licensing applications, standard operating procedures, branding, distribution, equipment sourcing and funding.
Tougher for growers than retailers
The licensing process is more difficult for micro-cultivators than it is for retailers, according to Deepak Anand, a cannabis industry consultant based in Vancouver.
The process in British Columbia also started late amid local elections and because cities and municipalities were coming to consensus regarding policies and approvals.
“I would say it’s more arduous in the way it’s currently being done through Health Canada,” Anand said, noting that the time from approval to getting a license can take at least 18 months.
“The regulatory process at Health Canada is fairly complex, fairly stringent. You need to have everything in place, your facility built (or leased) before you can actually apply; it’s quite significant.”
As a result, micro-cultivators find themselves continuing to work in the gray market while awaiting licensing approval.
“I’ve been looking into it, read all the paperwork, studied the legalities of it, for the last six weeks,” said one applicant from rural British Columbia who requested anonymity because the application was still pending.
“I went to the city, told them our address, exactly what we wanted to do, and they said, ‘You need a consultant.’ So we have to basically pay someone $250 an hour to talk to the city for us,” he said.
The grower worries that the longer he waits, the more backlogged the system will become as other provinces flood the system, causing even longer delays.
It could be the end of 2020 before he gets his license, he said.
Even so, the grower said he’s in a better position than some because his business will be on existing family property.
“I have a friend who’s looking for land and he’s going to be renting a warehouse for at least two years at over $5,000 a month, which he has to pay for at least a year and can’t do anything with while he waits for his license, if he gets it,” he said.
“So, you’re pushing over $1 million (in startup costs), depending if you have a building or not.”
Rules and regulations
While operational requirements for micro-cultivators are not as stringent as those for larger producers, the rules that fall under a micro-cultivation license, as outlined on Health Canada’s website, are strictly enforced.
- Only one license will be granted for each unique address.
- Applicants must have a fully built-out facility in place to be eligible.
- Micro-cultivators may have a growing space of 200 square meters (2,152 square feet), which can be either indoors (greenhouse or warehouse) or outdoors.
- Producers must follow Good Production Practices, which ensure cleanliness of the premises and equipment.
- Micro-cultivators must conduct ongoing testing of products and employ a quality-assurance person.
- Strict requirements established for packaging, labeling and shipping must be followed.
- Regular inspections may take place to ensure compliance.
There also things “the government of Canada is not going to tell you,” Anand said. “It is all about interpretation of regulations in many cases.”
For example, growers will be allowed to use black-market clones or seeds – but only with their first planting.
Micro-cultivator applicants apply online through Health Canada’s Cannabis Tracking and Licensing System (CTLS).