More than a year after Health Canada introduced the micro-licence category, around a dozen applicants have squeezed through the licensing process. What these successful applicants have in common is an ability to keep costs down by doing labour themselves, according to Janeen Davis, director of business development and client services with Pasha Brands Ltd.
"It’s people who have mitigated their startup costs and are doing a lot of the work themselves. There’s four security cleared positions required, and maybe some of these micros are working three of them themselves, they’re the master grower, they’ve really mitigated their costs,” said Ms. Davis, who has worked with more than 100 would-be micro-cultivators on licence applications.
There’s also a willingness on the part of successful applicants to submit scaled-down applications to Health Canada, with the intention of expanding at a later date.
“They weren’t trying to go for the full 2150 square foot canopy, they weren’t trying to build a $1.5-million facility... They figured out what they could do with the space that they had and the funds that they had, and went ahead and did the application and started to just move through the process with Health Canada," Ms. Davis said.
Would-be micros still face many challenges, notably a lack of access to capital, either from banks or private investors, and problems with zoning at a municipal level. Nonetheless, Ms. Davis is hopeful that there will be a steady stream of licences granted in the coming months.
“I’m expecting Health Canada should be doing one to three a week by the amount of evidence packages they have in queue and knowing how long it takes to go back and forward with RMIs [Requests for More Information]," she said.
Cannabis Professional spoke to three people who have successfully made it through the licensing process. Here is their advice:
West Kootenay Cannabis Corp.
Licensed: Dec. 6, 2019
Licensing Timeline: 11 months
Cost: $500,000, with labour contributed by the owners.
Greg Warkentin was already licensed to grow medical cannabis on his property in Kaslo, B.C. He hired a regulatory consultant in the summer of 2018, and submitted his application in January, 2019. Mr. Warkentin received a confirmation of readiness certificate in early May, just days before Health Canada changed the system to require applicants to have a fully built-out facility.
He and his three business partners, all tradespeople, spent the next three months building out the facility, and submitted their evidence package at the beginning of August.
Advice:
Do the work yourself: "We didn’t borrow any money to do it. I have three partners: one guy is an air specialist, one is an electrician, and then I’m a builder. So I did all the work myself, so that’s more or less the reason I could do it. I’m not a rich guy or anything like that.”
Don’t overpay for security: “I got quotes on security, for cameras and stuff; the first quotes were like $175,000. In the end I did everything for $9,000. I installed the cameras, and I just hired a guy to come hook them up. You’ve got to be careful, because as soon as they hear you’re a cannabis company, they just try and nail you.”
Know the rules: “You’ve got to read up on everything beforehand, go through the Cannabis Act.... You can get a set [of standard operating procedures] for like $2,500 on the internet, and go through those, because they will tell you everything you need to know, and they will tell you if you want to do what Health Canada wants you to do. There’s so much recording, so much paperwork; you got to write down everything that comes in, and monitor everything, and monitor your monitoring.”
ANC Cannabis Ltd.
Licensed: Dec. 6, 2019
Licensing Timeline: 13 months
Cost: $750,000, with labour contributed by the owners.
Tairance Rutter submitted his application to grow in an industrial property in Edmonton in late October, 2018. The licence did not really start moving until February, but by early May, Mr. Rutter had received a certificate of readiness (also squeaking in just before the rules changed on May 8). His team got their evidence package into Health Canada in September.
The group did not hire a consultant. However, the process was manageable because Mr. Rutter and one of his business partners had experience working in the food processing industry.
“Everything you do is an SOP; everything you follow is GPP; you eat, breath and sleep Good Manufacturing Practices. So making the transition from food into cannabis was probably the most natural transition I’ve ever had in my life,” he said.
Advice:
Approval can be sudden: “We received an RMI on our site evidence package in October, and kind of got nothing back until the beginning of December. We didn’t really hear back from Health Canada at all; and then December 6, we just got an email in the morning saying security clearance has been approved for everyone on the team, and then at like 1:00 p.m. on December 6, we had an email with our licence.”
Private financing is still possible: “Our business plan and our experience in the space and the confidence that we were able to portray did help us secure some private sector corporate backing. So that’s how we managed to navigate. If your business plan is sound and you can prove your experience or get your investors confidence up by proving out your team, there definitely is still funding sources available.”
What provinces are interested in craft product? “I’ve had conversations or in-person meetings with every single province to date, and it varies greatly.... If you can obtain a processing licence you can shoot direct to retail now in Saskatchewan. It looks like Ontario is following suit. I’ve had conversations with OCS and they’ve been willing to entertain the craft sector.
“I am actually on the board of the ACMLA, which is the Alberta Cannabis Micro Licence Association, so we’re currently advocating with AGLC, and they said they’d be interested in working with micros, especially a collective; so collectively band together, create SKUs, that’s something that we’re working on right now.”
Lakeburn Craft Cannabis Corp.
Licensed: Dec. 6, 2019
Licensing Timeline: 7 months
Cost: $200,000, with labour contributed by the owners.
Nathan Kavanaugh already owned the building in Dieppe, NB that was licensed in early December. Owning the property and doing much of the labour in-house kept start-up costs down to around $200,000. It was also a fairly smooth process, with the licence application going to Health Canada in June. They then submitted the evidence package in October: “It took maybe a month and a half. They came back with a list of deficiencies and it took us about a month or so to fix, and then within a couple weeks after that we were licensed," Mr. Kavanaugh said.
Advice:
Do what you say you’ll do: “Just make sure you cross your t’s and dot your i’s on the paperwork side of things, because if you tell them you’re going to have a keypad lock and it turns out you have a regular key lock, they’re going to pick up on it and make you change. So every little detail has to be up to snuff; don’t leave anything and say, ‘it’s good enough,’ because it’s not.”
You don’t have to overpay for consultants: “You can pay $90,000 for a company to come in and do all the paperwork for you. What these guys [Flemming & Singh Cannabis Inc.] offered was guidance. It was $10,000 instead of $80,000 or $90,000 that other consultants want, but it is a lot more work for us. They’re going to supply us with the template of what your application should look like, and you do your best to make it look like that.”
Mark Rendell