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Health Canada Suddenly Announces Big Changes to Cannabis Licensing Process

…and why this is the best news this industry has seen since legalization.

On the morning of May 8th, 2019, Health Canada announced to cannabis licence applicants that changes to the licensing process were happening. Although many received the notice, only some applicants received the details pertaining to a Health Canada led conference call to be held that same day. During the several similar conference calls hosted by Health Canada in English and French, they made a big change that shook the Canadian cannabis community. The changes to the submission requirements affect those looking to apply for a micro or standard licence to cultivate, process and to sell cannabis to medical patients. Effective immediately, applicants will now need to submit evidence that their proposed facility is fully built out to meet all the requirements of the Cannabis Regulation, and therefore ready for production. Previously, when applying for a licence an applicant could expect that their submission documents containing proposed floorplans and security measures would be vetted in an administrative and in-depth review process by Health Canada, while they waited for a go-ahead in the form of passing security clearances and a preliminary approval called a ‘CoR’ or a confirmation of readiness email. The announcement is described here. Without any kind of administrative or high-level review prior to the site evidence request, it will be more important now than ever to consult with experienced advisors when facility planning.

Health Canada also made available via DropBox additional guidance on the updated licence application process as well as guidance pertaining to Good Production Practices (GPP) and the Physical Security Measures.

Just when you think you’re playing the game, the rules change.

It is frustrating for many, but these new changes to the rules are just what the serious but late-comers to the game needed. Concepts, novel ideas or cultivators with ‘sick genetics’ will not be enough to seek a preliminary approval. All will have the same bottlenecks in the regulating process: money, investors, and CapEx, as only funded brick and mortar sites, will obtain licences. Start-up capital and a state of the art facility and a well-crafted application to Health Canada will now be the only deciding factor on whether a licence is obtained in a reasonable timeframe. A timeframe that Health Canada suggests will be within 60 days of being assigned a reviewer (though, at this time, it is still unclear how long it will take applicants to be assigned a reviewer after the time of submission). This means that the path to obtaining a cannabis cultivation, processing or sales for medical purposes licence in Canada has been decimated, unfortunately, along with the hopes and dreams of many willful applicants with a concept, or a dream but no physical site, yet.

What can I expect now?

Cannabis licence applicants received the following notice from Health Canada via the infamous cannabis@canada.ca email address.

Cannabis licence applicants received the following notice from Health Canada via the infamous cannabis@canada.ca email address.

The notice reads:

Dear Applicant,

Health Canada has completed a preliminary and high-level review of the licence application. Based on the information assessed, Health Canada has no critical concerns with the application at this time. This review was limited in scope and included a verification of the licence class or subclass applied for, site address, and corporate structure. It is important to note that the review to date of this licence application does not constitute an approval of the proposed site, and should not be viewed as an indication that the application is fully compliant, or that a licence will be issued in the future.

Health Canada is now requesting that evidence be submitted to demonstrate that the fully built site meets all the requirements of the Cannabis Regulations. Pease refer to the following sections in the Cannabis Licensing Application Guide when submitting the site evidence package:

·      Section 6.8 Physical security including organizational security plan

·      Section 6.9 Good production practices

·      Section 6.10 Record keeping and reporting

·      Section 7.1 Submission of site evidence

To support applicants, Health Canada provided additional guidance on the licence application process and on the regulatory requirements for Good Production Practices (GPP) and physical security measures. These documents can be found in the correspondence sent to all applicants on May 8, 2019, titled “Information Sessions on Cannabis Licensing Changes” or by contacting us at cannabis@canada.ca. They will also be available on the Health Canada website in the coming weeks.

Health Canada, despite their discouraging fact-spouting of the 600,000 square meters of licensed cultivation area is currently operational, with an estimated capacity of 1 million kilograms of cannabis per annum (or roughly the amount of cannabis the population of Canada is thought to consume per year) is not claiming to be limiting the number of licences being granted, which is a common question brought forward by prospective license holders.

In the cloud of negativity, the BIG positive take-home message is this: we will begin to see predictability and consistency in how licenses will be reviewed and granted. We now know that companies who will be granted licenses will be at least financially serious about playing in the industry and that they have a business model that will enable a consistent supply to medical patients. The success of a business is now almost guaranteed once a licence is granted with immediate entry to market. In the long run, this will evolve into a better, more reliable system for both medical patients and recreational consumers.

If you have questions about the licensing process, reach out to info@canndeltav2:8890 to start a conversation with a cannabis licensing subject matter expert.