Health Canada 'build first' policy a blow to craft cannabis industry: critics

By Penny Daflos

Government regulators have introduced a risky and expensive hurdle for aspiring cannabis producers: fully build the cultivation or processing site according to Health Canada application criteria before the agency will consider an application for a cannabis licence.

This week, Health Canada held information and consultation sessions in Vancouver, Kelowna and Victoria where they faced numerous questions – many of them from aspiring craft cannabis producers who're complaining about the regulatory requirements.

The regulations are so difficult, they say, only one out of nearly 200 applicants has been approved for a government licence.

"It was quite a surprise to industry," says Barinder Rasode, the co-founder of Grow Tech Labs and craft cannabis advocate. "The cost of building out without the guarantee of having a licence is prohibitive. We do believe for craft growers this is going to cause not only a challenge but it's almost like a complete stall for lots of them."

CTV News attended the Vancouver information session hosted by Health Canada and was refused entry by Health Canada employees, who referred us to their communications department in Ottawa.

When officials replied via email, they directed us to a May 8th statement on the new policy that doesn't address the concerns of small-time growers, who are eager to legalize their businesses but feel sidelined by government.

"The consultation process, I've personally found, to be very disingenuous and I know a great number of people feel the very same way," said Cascadia Agricultural Cooperative Association spokesperson Joel Podersky. "Words and actions are simply not meeting (government) policies or are being completely contradictory to Health Canada's claims they want to steward the existing growers into the system."

Longtime cannabis lawyer and consultant John Conroy also attended the Vancouver event and agreed with Podersky's observation.

"I'm basically hearing there's a bit of miscommunication between what the government would really like to do and what Health Canada has been doing, so hopefully that will get ironed out," he said, arguing that the red tape seemed unnecessary. "Our position basically is as long as (the cannabis is) tested, what does it matter what the building looks like?"

Health Canada's May 8th statement says the move came after an analysis of how to "better allocate resources," after they discovered application wait times were so long in part because "…more than 70% 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."

Podersky point out the "build first" policy leaves micro-producers in a catch-22 situation: in order to attract investment, they need a licence to legitimize their business, but they now need a lot of cash to build their facilities first, which they can't get unless they have a licence.

"Essentially this has made the creation of a corporate oligopoly," said Podersky. "In Canada, we have very large corporations and a very small number of them controlling the domestic marketplace."

Rasode is hopeful consultations and advocacy from the craft- and micro-cannabis producers looking to join the legalized framework are heard and that they can find a way forward – even if they have to start at square one.

"We are advocating that there be a reset on the regulations so that craft growers have an easier way to get into the regulated market."

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