Ottawa gets into pot market big-time
$1.3 billion investment in medical marijuana should help up to 450,000 patients
OTTAWA— The Conservative government is launching a $1.3-billion free market in medical marijuana this Tuesday, eventually providing an expected 450,000 Canadians with quality weed.
Health Canada is phasing out an older system on Monday that mostly relied on small-scale, homegrown medical marijuana of varying quality, often diverted illegally to the black market.
In its place, large indoor marijuana farms certified by the RCMP and health inspectors will produce, package and distribute a range of standardized weed, all of it sold for whatever price the market will bear. The first sales are expected in the next few weeks, delivered directly by secure courier.
“We’re fairly confident that we’ll have a healthy commercial industry in time,” said Sophie Galarneau, a senior official with the department. “It’s a whole other ball game.” The sanctioned birth of large-scale, free-market marijuana production comes as the Conservatives pillory Liberal Leader Justin Trudeau’s campaign to legalize recreational marijuana. Health Canada is placing no limits on the number of these new capitalintensive facilities, which will have mandatory vaults and security systems. Private-dwelling production will be banned. Imports from places such as Holland will be allowed. Already, 156 firms have applied for lucrative producer and distributor status since June, with the first two receiving licences just last week. The old system fostered only a cottage industry, with 4,200 growers licenced to produce for a maximum of two patients each. The Mounties have complained repeatedly these grow-ops were often a front for criminal organizations. The next six months are a transition period, as Health Canada phases out the old system by March 31, while encouraging medical marijuana users to register under the replacement regime and to start buying from the new factory farms. There are currently 37,400 medical marijuana users recognized by the department, but officials project that number will swell more than tenfold, to as many as 450,000 people, by 2024. The profit potential is enormous. A gram of dried marijuana bud on the street sells for about $10 and Health Canada projects the legal stuff will average about $7.60 next year, as producers set prices without interference from government. Chuck Rifici, of Tweed Inc., has applied for a licence to produce medical weed in an abandoned Hershey chocolate factory in hard-scrabble Smiths Falls, Ont.
Rifici, who is also a senior adviser to Trudeau, was cited in a Conservative cabinet minister’s news release Friday that said the Liberals plan to “push pot,” with no reference to Health Canada’s own encouragement of marijuana entrepreneurs.
Rifici says he’s trying to help a struggling community by providing jobs while giving suffering patients a quality product.
“There’s a real need,” he said in an interview. “You see what this medicine does to them.”
Tweed Inc. proposes to produce at least 20 strains to start, and will reserve 10 per cent of production for low-cost prescriptions for impoverished patients, he says.
Patients often use several grams a day to alleviate a wide range of symptoms, including cancer-related pain and nausea. They’ll no longer be allowed to grow it for themselves under the new rules.
Revenues for the burgeoning new industry are expected to hit $1.3 billion a year by 2024, according to federal projections. And operators would be well positioned were marijuana ever legalized for recreational use, as it has been in two U.S. states.