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Costs of Becoming a Medical Cannabis Producer Skyrocket as Health Canada Drops a Bombshell

Health Canada is taking additional steps to protect the integrity of the current medical cannabis system. While many industry insiders suggest the new changes are simply another move disguised to prevent new entries to the medical cannabis market in Canada.

On May 8, 2019 the processes, and costs associated with becoming a medical cannabis producer in Canada drastically shifted, with adjustments to the current regulations aimed at producers.

In a press release issued by Health Canada early today, new applicants seeking approval to produce and distribute medical cannabis will be subject to a complete facility evaluation, prior to approval. The changes introduce the potential for hundreds of thousands of dollars to be added on the bottom line of becoming a medical cannabis producer pre-approval, opening the doors to applicants loosing similar amounts in applications that have gone unanswered, or unapproved.

Health Canada reports:

Effective immediately, Health Canada will require new applicants for licences to cultivate cannabis, process cannabis, or sell cannabis for medical purposes to have a fully built site that meets all the requirements of the Cannabis Regulations at the time of their application, as well as satisfying other application criteria.

Health Canada Spokesman

The reasoning behind the new policies? To better align the regulation for cannabis production with the processes of other pharmaceuticals. You can read the full press release here.

There is one issue plaguing the availability of cannabis in Canada, and it’s the logistics. And currently, there seems to be no realistic strategy for a end-game to the improvements.

As history would see in Alberta, applicants have found extensive hardships on the tight-lipped nature of the AGLC, and the application process as a whole. Recreational cannabis dispensary applicants in Alberta have been subject to similar treatment, with costly fees associated to dispensary hope-fulls. Unfortunately, this puts an unrealistic strain on mom and pop shops, and potential business owners, not the bigger brands which have seemingly been pushed through the application process avoiding similar queues.

While applications aren’t reviewed in a first come first serve manner, we are beginning to see startups paying inflated lease rates, with long term commercial rental agreements and thousands of additional costs, sitting stagnant for small business owners while some of the larger brands seemingly get a quick pass to distribution.

Lucas McCann, the Chief Scientific Officer at CannDelta Inc commented on the costs associated with entering the cannabis industry at a production level:

Real estate’s a huge part of the application, whether you’re leasing a facility or whether you’re owning it, that’s going to have a huge impact on capital expenditure. Security is another huge cost.

Lucas McCann – Chief scientific officer @ CannDelta Inc

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