Craft Cannabis/
FIVE STEPS IN
micro-Licensing Craft cannabis startups in particular will need to be savvy and creative if they wish to become successful microprocessors. They will need to prove to wary investors that cannabis production can be better at a smaller scale by experienced operators. By Manny DaSilva
T
he cannabis rush has created a plethora of cannabis cowboys eager to cash in on a volatile industry that’s still in its infancy. Large corporate entities are vying for the same market share. Many factors – including the lacklustre performance on product offerings and crashing stocks of many of these companies – have proven that (unlike the saying “It’s just a weed, anybody can grow it,”) producing cannabis is not as simple as it has been portrayed. Many provinces also lack the vision to allow a free and open market to flow product into retail outlets to service the masses. On October 18, 2018, Health Canada created the micro sector, consisting of microcultivation and microprocessing. This new category was established to provide legacy growers with a springboard from the grey and black markets into the legal one. These craft growers are responsible for producing high-quality, unique strains that consumers have become accustomed to buying from dispensaries. Many are seeing this move as a blessing for both legacy growers and consumers in search of quality craft products. Although the premise of a business legally growing cannabis is very enticing, it’s not without pitfalls. In fact, it’s laden with both huge obstacles and heartbreak for some individuals. In this article, I will lay out experiences from both myself and other people I have encountered over the past two years as we’ve ventured into the legal micro cultivation/processing world. I’ll also discuss the stages to become licensed. Much of the information is available online, but is neither easy to find nor to decipher. I have broken the process into five steps. 1. Self Analysis »» »» »» »» »» »»
What cultivation experience do I possess that will help me to succeed? If I do not have any real experience, do I know an experienced individual who is willing to partner with me or to be employed as a master grower? What is my current financial picture? Can I afford to personally fund an operation? Will I need financial backers or partners? Which licence or licences do I want to apply for?
Microcultivators are restricted to 200 square metres (2153 square feet) of canopy space. ‘Canopy space’ is described as the area where your plants will sit, rather than the square footage of the actual room or build10
Cannabis Prospect Magazine | December 2019
ing. Microcultivators can only sell to licenced producers, not consumers. A microprocessor is limited to purchasing 600 kg of dried flower for processing per year. Businesses with this licence type can sell both B2B (to licenced producers) and Business to Consumer (B2C). If you apply for both licence types, you can do both B2B and B2C and will no longer have a 600 kg limit. The route you choose depends on what your main goal is. Both ways have their pros and cons. Most lending institutions will not provide funding for cannabis operations. This situation leaves you to raise capital from private donors or partners. The regulatory requirements from Health Canada are not for the lackadaisical and require constant attention. The implementation of SOPs (Standard Operating Procedures) is an ongoing task in itself. Be prepared to dedicate a lot of time to regulations and staying compliant. It’s no wonder that LPs have people dedicated to this aspect of the business. Are my investors or anyone in my company clear of any criminal charges or police interaction of any kind? Health Canada has put in place a system of deep background checks for all security personnel that will require a clearance. This process is not the same as a criminal conviction background check. It is conducted by the RCMP and involves all levels of police – federal, provincial and municipal police records. Who needs a clearance? The master grower, head of security and QAP all require clearances. Anyone that is a director of the corporation, sole proprietor, member of a partnership or has 20% or more ownership in the company must be declared on your organizational chart. If any of the above individuals have been in the presence of another individual or group that has committed a crime, or is suspected of being involved in a criminal organization (a police report must exist), those people will be denied a clearance. This situation could result in your entire application being denied. Each security clearance will cost you $1600 per person. 2. Finding a Property Finding a property or existing building to retrofit can be a daunting task. It can be costly when you have to hire planners and survey compa-