As legal cannabis fast approaches, we’re getting our first glimpse of new industry regulations. One group that’s eyeing these regulations closely is micro-growers. Micro-growers—which are essentially small-scale cannabis grow-ops—have been a mainstay of the underground cannabis industry in Canada for decades. They’ve been invaluable in helping push for greater public acceptance of marijuana.
A cannabis market that’s able to offer a diverse range of products will need the full participations of micro-growers. As opposed to large licensed producers (LP), these micro-cultivators are in a position to supply the market with high-end products, much like craft beer does for its industry.
When the federal government announced it would legalize recreational marijuana, one of its main motivations was that prohibition had made criminals out of otherwise law-abiding Canadians, including micro-cultivators. The federal government’s 2016 task force advised that “excessive restrictions could lead to the re-entrenchment of the illicit market.”
So, when Health Canada recently released its proposed cannabis regulations for micro permits, many micro-cultivators were taken aback by what they saw as an overly restrictive regulatory framework.
Craft Cannabis Industry Worries About Regulations
James Walsh of the B.C. Micro License Association (BCMLA), which advocates on behalf of the interests of the craft cannabis industry, has been outspoken about the proposed regulations. When asked if he was satisfied with Health Canada’s proposals, he responded, “No, we're not satisfied. It's our opinion that there's still too much of a financial burden to allow for a true craft cannabis company to apply and be compliant with the proposed regulations.”
One of the problems James sees with the proposed micro permits is that they impose nearly as heavy a regulatory burden on small growers as on large LPs. “The proposed micro licence,” he says, “is much too close to a full-blown LP to the point where it almost doesn't make sense to apply for a micro licence as opposed to a full LP.”
Both standard and micro-permit holders have to meet the same financial, personnel, security, packaging and production requirements. However, standard cultivators won’t have to stick to the same production and capacity limits that micro-growers must abide by.
James sees this as giving standard cultivators an unfair advantage in the cannabis marketplace. Currently, the three biggest standard cultivators each have market caps above $2 billion.
“We think this is definitely going to hinder the potential for the craft industry,” says James.
What Counts as a Marijuana Micro-Cultivator?
One of the key issues Health Canada has had to determine is how, exactly, a micro-cultivator should be defined. Health Canada opted for a 200-square metre canopy as the upper limit to apply for a micro licence. While some in the industry have complained that this limit is too small, James doesn’t see the limit itself as the main problem with Health Canada’s approach.
“In our opinion,” says James, “the scale of what they're allowing for production is fine. It's actually quite large, but it ignores the reality of the current craft growers, and that is that they don't operate at that size.”
The problem, as James sees it, is that Health Canada is trying to impose regulations that simply don’t reflect the conditions most micro-cultivators operate under. He points out that, when combined with multiple licences, the proposed regulations would allow for about 200 lights per facility. However, a survey conducted by the BCMLA found that most craft growers operate with about 50 to 80 lights. The discrepancy is another sign that the regulations largely ignore the current reality for most craft growers.
Medical Marijuana Standards Imposed on Micro-Growers
Another problem is that Health Canada seems to be adopting standards set for the medical marijuana industry and is trying to apply them arbitrarily to micro-growers. According to James, “[Health Canada] has taken those exact same pharmaceutical requirements and transferred them over to the micro-cultivators. But 99% of the micro-cultivators won’t be cultivating for the medical side. We're not sure why the pharmaceutical standards are being applied to micro-cultivators. It's a bit confusing.”
When asked how the regulations would affect market access for craft growers, James answered: “The regulations are going to hinder their ability to roll into the new industry. The spirit of the regulations was supposed to be based on the federal government task force's suggestion to help bring black market growers into the new system. But when it came down to it, the regulations don't reflect that spirit.”
Cannabis Micro-Growers Urged to Get Involved
The good news is these proposed regulations aren’t yet final. Health Canada is still seeking feedback from members of the craft cannabis industry.
“At least on paper,” says James, “there appears to be a willingness to consider that perhaps the regulations can be tweaked in the future. But who knows. They could just want feedback for feedback's sake. It's hard to tell.”
That feedback could be the key to getting Health Canada to adopt a regulatory framework that better accommodates the craft cannabis industry.
When asked if there’s anything that micro-growers can do to ensure they aren’t shut out of the legal cannabis market, James offers two solutions: “Provide feedback to the government and support associations like ourselves. We’re doing the most work we can with our resources. But if somebody can donate to an association like ours it’s going to help further the cause.”
Photo credit: British Columbia Micro License Association