Op-ed: Canada's cannabis legalization depends on small producers and processors

Mar 19 2018, 7:14 pm

Written for Daily Hive by Travis Lane, a long-time organic cannabis cultivator and legalization advocate.

Legalization is upon us.

The last significant procedural obstacle is now out of the way, thanks to the Senate passing the second reading of the Cannabis Act on Thursday 44-29.

This result comes on the heels of a Health Canada release earlier in the week that further outlined current thinking on production and processing regulations.

Using a hockey rink as a visual prop, Health Canada proposed that small scale cultivation licenses, known as ‘micros’, will be limited to 200 square metres, or approximately 2,150 square feet of canopy area. Micro-processors, who will eventually handle extraction and edible manufacturing, would be able to process up to 600 kg of cannabis annually.

These limits will allow the majority of small growers, particularly in BC, to participate under a micro-cultivation license, with somewhat lower barriers to entry than larger cultivators. They also offer the opportunity to make a decent living.

This is a departure from the current medical program, a Harper-era scheme that has led to a slow proliferation of relatively large companies.

The primary reason for this was not necessarily capital, but rather that a medical production license required a business to perform many functions, which made it difficult for many owner-operated cannabis businesses to exist.

At the outset of this system, now known as the Access to Cannabis for Medical Purposes Regulations (ACMPR), every company had to serve as grower, quality assurance expert, marketer, packager, processor, distributor, IT expert, and financier. There was no business network to plug into, so it was all or nothing.

Improvement comes with each license and supply agreement, but it has been very slow going. This is one of many reasons for the continued and increasing success of the long-time illicit cannabis economy, to the point where the black market dominates the market share for cannabis in Canada.

It seems that regulators have finally begun to acknowledge that the illicit market thrives because of these networks of small-scale operations, and that their inclusion in a regulated market is a good thing.

In announcements delivered in the early part of this year, Health Canada set out a modular system of activity-based licensing. This modular approach is important because it allows businesses to structure themselves in many different ways.

Cannabis regulations in Canada are about to become useful. There are few industries where all supply chain functions are performed by one company. Manufacturing, distribution, and retail are generally separate if a physical product is involved.

Sure, some giants like McDonalds might have widespread vertical integration, as do some small farm-to-table restaurants, but these are the exceptions in their own industry.

In the pharmaceutical industry, which seems to be the basis for the medical cannabis system, manufacturing companies don’t retail their own goods. We see small stand-alone pharmacies still operating today, in a heavily consolidated industry.

Owner-operated businesses are crucial to a thriving local economy, as they put their revenue back into their regional economy. Small businesses tend to employ a local workforce, focus on product quality, and get involved in the community.

There is an extra layer of personal accountability involved in a small local operation. A customer can always find the brewer in a craft brewery. No one knows who brewed a single can of Molson.

Without small cannabis producers and processors, cannabis legalization will not fully succeed. If left out, not only will they form the backbone of a thriving illicit market, but it would be a tremendous waste of talent.

It appears that Health Canada has come to the same conclusion, which bodes well for the future of the industry, especially in BC.

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Travis Lane is a long-time organic cannabis cultivator and cannabis legalization advocate who was born and raised in Vancouver. He is a founding partner of Levity Solutions, a consultation company that works closely with BC’s small craft producers and extractors. He is also a director for the BC Independent Cannabis Association, a partner in Holistek, and founder of The Internet Dispensary.

Views expressed in this article do not necessarily reflect the official opinion of Daily Hive. Responsibility for the information and views set out in this article lies entirely with the authors.