CRAFT WEED? DON’T HOLD YOUR BREATH
WHEN CANADA LEGALIZED CANNABIS A YEAR AGO, BASEMENT POT GROWERS LIKE FRANCIS THOUGHT THEY HAD IT MADE. AFTER ALL, HOME BREWERS BECAME CRAFT BREWERS AND A FEW HIT THE BIG TIME. WHILE OTTAWA TALKED ABOUT LETTING THE LITTLE GUY IN, THE RULES SEEM TO SEND A D
CRAFT WEED STAYS IN THE CLOSET
Francis Tucker wants to grow and sell craft cannabis the same way hundreds of business-savvy beer lovers market craft beer.
But that’s not going to happen.
He’s got the skills — he has been growing marijuana, for years. It started as a just-for-me operation but then became a small grow with a small group of clients.
When Tucker (not his real name) first heard that the federal government was planning on legalizing weed, he was happy, at least until he saw the Cannabis Act and the requirements for a micro-cultivation licence.
His plan, along with many other small growers, was to go legit and turn his business into a boutique style operation, selling his own product.
However, with a change to the licensing requirements in May of 2018, that is now impossible for him.
Health Canada requires that a facility be built and functional before an application can even be made, which Tucker said is the nail in the coffin for most micro-producers.
“The small craft grower doesn’t have the opportunity to start without a risk of significant delay, while operating at significant cost, with no chance of making any money for some time. It’s not feasible for small craft, hobby growers,” the Newfoundland grower said.
“It’s not as accessible as craft brewing is and I don’t really see a difference on that level. It should be as accessible.”
Health Canada tightened up the regulations following a review of their application process. The review showed that over 70 per cent of applicants who successfully passed the first round of the process hadn’t built a facility and subsequently hadn’t produced any marijuana.
“A significant amount of resources were being used to review applications from entities that were not ready to begin operations, contributing to longer wait times for more mature applications and an inefficient allocation of resources,” Health Canada said of the change in an emailed statement.
Tucker said while he understands the rationale behind this decision, it’s a major barrier as far as he’s concerned.
“You’d need a lot of capital to build a facility,” he said.
“It would be pretty hard to convince a bank to give you that much cash with no guarantee you’ll even get the licences, so it pretty much leaves this to the rich and people with black market backing, in my opinion.”
Since the facility needs to be completely functional beforehand, there would be significant up-front cost to remodel an existing building or build a new one.
Now consider brewing. To get a brewery licence there are hoops to jump through in each province, but none require the facility be up and running before getting a permit.
Having a rental contract for an appropriate building and a detailed proposal is enough to apply for a brewery/distillery permit in Nova Scotia and Newfoundland and Labrador, for example.
He’d like the same rules for cannabis.
In addition to the cost for the facility, it can take months after it’s built just to go through the application process. Processing and fees can cost well in excess of $100,000.
Tucker said the level of regulation surrounding marijuana is inconsistent with other controlled substances, such as alcohol.
“Look at, for example, the number of craft brewers that have popped up over the province,” he said. “I don’t know of any craft weed places that are proposed or running or anything. But there are several large-scale (growing) facilities being built here.”
Unless the regulations change, Tucker believes there will be a few big growers and a lot of opportunities for entrepreneurship and local jobs lost.
Complaints about marijuana supply and quality have been common since legalization, both issues Tucker said craft growers could help alleviate.
Many parts of the country don’t have a marijuana store within driving distance, but a smaller operation could set up in rural areas where the big players won’t go, due to the scale of their operations.
In terms of quality, it would be more of a concern to a small grower than a large company, Tucker said.
“If a craft grower with only a few strains gets a bad reputation that’s probably the end of their business,” he said. “With the big companies selling a huge amount of inventory, one bad batch won’t matter to them as much.”
He can’t make his case directly to government, because he’s growing illegally.
So, what’s government doing?
Health Canada said they are committed to encouraging micro-class licences and have offered a number of ways to make access easier.
There are lesser security requirements for a micro-class facility and lower cost-recovery fees, scaled to the size of the business. Additionally, there is a specific team set up to deal with this class of applicant to speed up the process.
Regarding the cost of a facility, Health Canada said microclass applicants also have the option of an incremental approach, licensing one or two rooms initially and scaling up from there via licence amendments.
Tucker said while the faster processing is helpful; the cost of the application and investment required wouldn’t really make setting up one or two rooms feasible as a business.
“You would be years just recovering from the cost of the process at that rate,” he said. “I understand the idea, but it doesn’t really make it more realistic.”
Bottom line: don’t expect to see a craft cannabis industry any time soon.