The preparation and submission of a federal cannabis licence application can be extremely gruelling and quite challenging. At first glance, a licence application may seem straightforward and easy to compile however for the majority of applicants, this isn’t the case. Throughout the preparation process, there are a number of considerations to be made and a number of challenges that arise. Even with the number of guidance documents and resources that are readily available from Health Canada, these documents and resources do not account for every aspect that needs to be considered when preparing your application and when building your facility. Before you begin your cannabis licensing journey, the following should be taken into consideration:
Municipalities: This is probably one of the most overlooked aspects of a federal licence application. Oftentimes individuals looking to apply aren’t aware of the challenges posed by the municipality where their proposed site is located. Some municipalities don’t and won’t allow for cannabis production or processing, while others are currently in the process of amending and overhauling their by-laws to allow for activities with cannabis to take place. Another thing to consider from a municipal standpoint is the zoning of the land on which you intend to operate on. If the land is not zoned appropriately, a supplemental submission such as a minor variance or zoning certificate of occupancy may be required.
Personnel: Because the cannabis industry is still in its infancy in Canada (legalization celebrated its first birthday on October 17th, 2019), there is a lack of qualified personnel to fulfil key roles for licence applications. For those looking to pursue the cannabis cultivation licence class, finding a master grower who has grown cannabis at a large scale and that has the experience to be able to manage large-scale grows can be extremely difficult. For those looking to pursue the cannabis processing licence class, finding a person who meets Health Canada’s requirements for a Quality Assurance Person (QAP) can be even more difficult. With the number of qualifications required, there just isn’t even supply for the QAP demand that currently exists which can often lead to delays in the issuance of a licence.
Capital: With financial institutions being less than willing to assist with the funding of cannabis-centric projects, finding capital to back your venture can be extremely difficult. With changes to the review process coming into effect in May of this year (the requirement of a building that meets certain standards), this challenge has become even more real. Aside from the building itself, being able to purchase the necessary equipment and other necessities that are required for cultivation and/or processing site can also be quite costly.
New Build vs. Retrofit: Another challenge is determining which route to take when it comes to your facility. Each option has own pros and cons. For example, a pro for a new build is being able to design and build your facility from the ground up taking into consideration all the mechanical systems that need to be included in the design and allowing for an optimal layout and production process flow. The con to this is that it is a time-consuming venture and can be quite costly. From the retrofit perspective, a pro would be not having to spend time and money building a facility; lease options also exist provided that your landlord agrees to allow for activities with cannabis to take place. However, a con for a retrofit is you are limited by the layout that has been given to you. Further to that, oftentimes you are not sure if the building itself has the systems (i.e. air filtration and ventilation, plumbing, electrical) that can Health Canada’s requirements but also production demands as well. It is important to consider both aspects before undertaking any construction or renovation activities.
Cost: The cost associated with cannabis production and/or processing facility can be quite high. Aside from the facility itself, depending on your cultivation method if you are growing cannabis and the classes of cannabis products you are manufacturing (i.e. extracts, vape cartridges, edibles), the equipment can be very expensive. Taking into consideration which subclass of licence you are considering (i.e. micro, standard) the cost for security is another thing to consider. Another expense that is often overlooked and critical to include in the budget is insurance from liability coverage to property loss coverage.
Production Standards: The ongoing debate in the Canadian cannabis industry is Good Production Practices (GPP) versus Good Manufacturing Practices (GMP), specifically in accordance with the European Union’s standards (more commonly referred to as EU-GMP). Which standard do you need to adhere too? GPP requirements apply only in Canada and are not observed anywhere else around the world while EU-GMP is similar to many of the GMP requirements that are currently in place in many different industries. Depending on the market you intend to target and the amount of capital you have to back you (EU-GMP certification can be quite expensive as well), you will need to decide how you intend to proceed before even getting started on your application and facility.
There are a number of additional challenges that haven’t been listed that do exist throughout the licensing process. dicentra Cannabis Consulting has helped and is still helping their clients successfully navigate all these challenges in addition to the ones that haven’t been considered. By working with one of our industry-leading consultants, your mind can be at ease and you’ll have full confidence when it comes to your licence application preparation and submission. Let’s talk cannabis!