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Health Canada announces a dramatic policy change: Now only built-out facility applicants – like Just Kush – can apply for cannabis licensing

Health Canada announces a dramatic policy change:  Now only built-out facility applicants – like Just Kush – can apply for cannabis licensing

 

It can only be described as a seismic change in policy by Health Canada: To apply to become a licensed cannabis producer, you must now have a built-out, prepared site that is compliant with requirements for Good Production Practices (GPP) and security under the Cannabis Regulations. This is bad news for producers who have the grow/processing-business vision but not yet the facilities to turn that vision into reality. However, it’s very good news for Just Kush Enterprises Ltd.

Liberty Leaf’s subsidiary is built out; it is also GPP- and security-compliant. Furthermore, since receiving its Confirmation of Readiness (COR), Just Kush has installed a new 50kW diesel generator and computer equipment; initiated training on the CROPSoft record keeping and inventory tracking software; and nearing completion of the construction and installation of the last of its proprietary aeroponic grow tables. In short, the company is working towards maximizing production from the outset of licensing. Just Kush is license-ready, set-to-go.

Which makes Health Canada’s May 8th policy change welcome. Until recently, applicants merely had to declare a proposed site in their cannabis license applications. The site didn’t even have to have a building on it, let alone be ready and operational. Just Kush was in the same wait line – a very long wait line – of applicants, many of whom weren’t prepared or ready to be licensed, since they were not built out.

Hardly fair. Hardly practical, either. As a lawyer quoted in The Financial Post observes, “You did not even need a shovel in the ground to begin the application process.”

CBC News traces Health Canada’s policy-change decision to the untenable backlog of applications the agency faced: “…for example, more than 70% of licensing applicants that passed its initial paper-based review over the past three years have yet to submit the required evidence to demonstrate they have built a facility that meets the regulatory requirements.”

Health Canada told CBC, “The new approach responds to feedback from applicants about the time it can take to become licensed and the fact that there is now a larger number of applicants seeking to enter a growing and maturing legal market.”

Those who aren’t prepared with ready-to-go facilities will suffer, warns The Growth Op. Health Canada’s requirement for built-out, compliant sites “may pour cold water on the explorer spirit and entrepreneurial drive of smaller entities looking to enter the market, promoting an unlevel playing field dominated by larger companies.”

The Growth Op cites a tweet by Trina Fraser of Brazeau Seller Law: “…mark my words, it will lead to increased LP failure rates, with applicants scrounging up enough $ to build a tiny phase 1 and then finding it difficult to raise $ to expand/scale fast enough to survive.”

Cannabis lawyer Matt Maurer of Torkin Manes LLP chimed in with his own concerns to BNN Bloomberg: “We go from a situation where if you wanted to submit an application, you submit your paperwork and you sit and wait to hear back from Health Canada. Now you’re asked to build a $30-million to $40-million facility before you even submit your application.”

On the upside, though, notes BNN Bloomberg, Health Canada’s policy change “will likely alleviate a bottleneck that observers attribute to a long-running shortage of legal pot in the country.”

No question the new policy moves the goalposts. But, to use a sports metaphor, Just Kush is ‘ahead of the game’. It has received Health Canada’s COR. It has a built-out facility. It has answered all Health Canada’s requests for information (RFIs). It is fully GPP – and security -compliant.  Once its cultivation license has been granted by Health Canada, Just Kush will literally be ‘off and running’.

 

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