3 min read

Health Canada Shifts to Fully Built Cannabis Licenses

May 13, 2019

Even though Canada has legalized recreational marijuana, the licensing for private cannabis businesses has been slow to roll out causing problems for both retailers and cultivators. Health Canada recently made some policy changes that should reduce the turnaround time for licensing. Moving forward they will only consider applicants who have a “fully built site” to show regulatory officials everything is in place to begin business once the license is issued.

Lack of Evidence 

In Ontario there have been several stores who won licenses via the license lottery, but have failed to open on time or are still in the process. This has led to frustration for many cannabis business owners who have a fully scaled business but no license to operate. The new licensing policy shifts more to a merit based licensing system favoring those cannabis businesses that are already built and ready to make sales.

The new policy is effective immediately and is in direct response to a recent report conducted by Health Canada. The report finds that, “more than 70 percent of applicants who successfully passed Health Canada’s initial paper-based review of their application over the past three years have not yet submitted their evidence package to demonstrate to the Department that they have a built facility that meets the regulatory requirements.”

Cannabis Licensing Policy

Cannabis industry insiders have mixed feelings about the new licensing policy from Health Canada seeing both pros and cons. Ottawa cannabis lawyer Trina Fraser notes that “If Health Canada is making these changes so it can significantly speed up the process of licensing, then that’s good. But if this is going to make it harder for new producers to begin growing, I’m not sure if it is going to help with the shortage issue.”

As of May 2019, Health Canada issued 177 licenses to cannabis businesses in various stages of building. Each business includes more than 600,000 square meters of cannabis cultivation space. Their statement provided some insight into the policy change saying, “Building on changes made in 2017 and 2018. 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.”

Licensing Delays

The end goal is to speed up the amount of time it takes to issue the licenses so that businesses can begin operations, but redressing the application review process is tying up a significant amount of resources. This could possibly prolong the licensing even more for those submitting more complete applications.

Not to mention the hundreds of applications Health Canada must sort through using a high-level review. If the cannabis business does qualify for a license they must then build out their facilities and get back in line at which point the department will review the materials in detail, “in priority based on the original application date.” In the short term, this likely to lead to more frustration but hopefully will help speed up licensing for those businesses who are heavily invested.