Licence Types and Regulations

Disclaimer: Urban Craft Grower is not responsible for the accuracy of the information below. Though we strive to keep this page accurate and up to date, we highly recommend consulting Health Canada’s website for information pertaining to their licencing requirements. If there is information here that is wrong or outdated, please let us know.

New Legislation

The federal government has recently released its official regulations for Canada’s emerging legal cannabis industry, effective as of October 17, 2018. These regulations include the Cannabis Regulations (a.k.a. SOR/2018-144) and new Industrial Hemp Regulations (SOR/2018-145), published on July 11, 2018. Their announcement follows royal assent to the Cannabis Act on June 21, 2018.

Overview

The newly proposed system of Cannabis cultivation licences is designed to facilitate the growth of a diverse, competitive, legal industry of large and small players across Canada. Allowing for a broad range of products and services, it will limit criminal enterprise while raising the overall quality of legal cannabis products. This replaces older licencing systems such as the Access to Cannabis for Medical Purposes Regulations (ACMPR), under which medical cannabis producers were subject to a single tier of licencing that distinguished only between the production and sale of dried cannabis and cannabis oil.

The system recognizes both the requirements of different activities in the industry (for example, cultivation, intermediary processing, and sales) and the scale of operations (ranging from “micro” to “standard” levels of production). In total there are 6 classes of licence:

– cultivation
– processing
– analytical testing
– sales
– research
– cannabis drug licenses

Here we are specifically concerned with the new cultivation licences and the ways in which they affect Canadian cannabis growers.

Cultivation Licence Types

There are two types of facility licences that can be obtained from Health Canada that permit the cultivation (or, production/growing) of cannabis, namely a Micro Cultivation Licence, and Standard Cultivation Licence.

The type of licence appropriate for your facility depends on the size of your canopy space. Canopy space is the amount of space in your facility that is specifically dedicated to the growth and flowering of cannabis plants. All plants and plant parts must be contained in this area. It is the sole space in which all cultivation, propagation, and harvesting must occur. Canopy space does not include other areas of your operation such as processing spaces, administrative offices, or shipping and receiving areas.

Facilities with 200 m2 (approx 2100 ft2) canopy space or less qualify for a Micro Cultivation Licence. Facilities with an area larger than this require a Standard Cultivation Licence.

Both types of licence allow licence holders to possess and sell cannabis, to obtain dried cannabis, fresh cannabis, cannabis plants, or cannabis plant seeds by cultivating, propagating and harvesting cannabis. Beyond this is a very important differences to consider.

Differences in Cultivation Licence Types

There are important differences between the Standard Cultivation Licence and the Micro Cultivation Licence that we will outline below. Please note that no operation can hold both licence types under a single address.

Standard Cultivation Licence

General Information:

Companies with this licence type may possess and produce dried or fresh cannabis, whole cannabis plants, and cannabis genetics such as seeds. They are permitted to sell fresh or living plants or seeds wholesale to a provincial distribution channel, or dried flower and oil to a company with a Processor Licence. They are not permitted to manufacture cannabis oil or edibles themselves without an additional Processor Licence of their own.

Selling cannabis online to Canadians for medical purposes is possible only for Standard Cultivation Licence holders who also obtain an additional Medical Sales Licence. It is possible for a facility with a Standard Cultivation Licence to hold other sub-licences (such as the Standard Processor Licence, Analytical Testing Licence, R&D Licence, and Nursery Licence, described below) under one address.

Facilities with the Standard Cultivation Licence require some form of visual monitoring and recording of certain areas of the facility due to the increased security risk posed by such a large production area.

Growing Conditions

The new Cannabis Act does not dictate the specific growing conditions for cannabis, although it does require all producers to establish and maintain Standard Operating Procedures for all aspects of their operation, including record keeping, pest management, and sanitation. Growers may select their own methods (such as hydroponic, aeroponic, or soil growing), nutrient regiment, and lighting equipment required for production. Growers cannot, however, grow both indoors (in a warehouse or in greenhouses) and outdoors (in a field).

Indoor growers must follow Good Production Practices (GPP) as a minimum standard of production quality for the sale of cannabis within Canada. Growers who would like to export to international markets must follow higher standards of production, such as those set out in the Good Manufacturing Practices (GMP), which are closer to pharmaceutical standards. Both production standards (the GPP and the GMP) require testing for microbial and chemical contamination, which can be conducted in-house by licenced producers. Pesticide testing must be done through a third-party organization with a valid Analytical Testing Licence. Security measures include visual monitoring and site intrusion detection systems. Private companies will also have to maintain a record of key investors and all details of the financial relationship, explicitly describing the extent to which each investor can exercise control over the licence holder.

Micro Cultivation Licence

General Information:

The Micro Cultivation Licence is a new form of licencing aimed at smaller, “craft” cannabis growers. The objective for this type of licence is to give small-scale growers and processors a secure, sustainable, commercially viable place in the legal cannabis industry. Although it limits growers in some areas (such as production capacity), this type of licence ultimately provides more room for small business entrepreneurs to enter the market.

Unlike the Standard Cultivation Licence, growers with a Micro Cultivation Licence cannot hold other types of licence (e.g. Standard Processor Licence, Analytical Testing Licence, R&D Licence, and Nursery Licence) under a single address. They could, however, operate a large facility with independent addresses for each distinct section of the operation.

Security requirements for the facility are also less stringent than for the Standard Cultivation Licence. As with nurseries and micro-processors, Micro Cultivation Licence holders do not need visual monitoring and recording of their facilities. They must however design their site to prevent unauthorized access from the outside, and limit access to production and storage facilities for authorized personnel.

Growing Conditions:

Micro Cultivation Licence holders may grow either indoors (in a greenhouse or warehouse) or outdoors (in a field). They may provide fresh or living plants or seeds wholesale to third party companies, dried flowers and oil direct sale to other processors and retailers, or sell directly to medical patients. Selling to provincial distribution channels requires an additional Micro Processor Licence for each unique address with a Micro Cultivation Licence.

Application Process and Requirements:

Micro Cultivation Licence applications are submitted to Health Canada for review. It is estimated that it may take 18 months or longer before a licence is granted.

Details required include the following:
– site layout and facility floor plan
– security protocols and protocols
– risk management programs
– standard operating procedures
– corporate structure and summary
– quality assurance reports
– notices filed with local authorities
– and more.

Licence Application & Process

For both the Standard Cultivation Licence and the Micro Cultivation Licence, Health Canada will not approve applications before growing facilities are fully established. All successfully licenced facilities will then be subject to a monthly inspection by Health Canada to ensure ongoing compliance with all federal and provincial regulations.

New Regulations

Security Clearance

To reduce the risk of organized criminal elements entering the new legal system, Health Minister Ginette Petitpas Taylor has stated that incoming federal regulations for cannabis production will require the same high level of security clearance currently employed for licenced medical marijuana producers, which includes background checks for key personnel.

For cultivation, processing, and sale licences, the new regulations will require the following individuals to hold a security clearance:
– all individual licence holders
– any director or officer of a corporate licence-holder
– anyone in a position of direct authority over a licence holder
– key personnel such as the master grower and head of security.

The security clearance process aims to deny individuals associated with organized crime, corruption, drug trafficking or violent offenses, while at the same time allowing individuals with a history of small-scale possession or cultivation of cannabis.

All commercial licence holders will be subject to a seed-to-sale tracking system designed to prevent cannabis products from entering the illicit market.

For More Information

For more information, or to ensure the accuracy of the information provided on this page, we strongly recommend visiting the Federal Government’s website regarding Cannabis in Canada

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