Top 10 Tips to Become a Commercially Licensed Producer of Medical Cannabis Under the ACMPR
Location, location, location. Your application as a Licensed Producer (LP) is 100% tied to the location of your facility. If you change the location, you will have to resubmit your application. When you think you have the ideal location, phone the municipality or local government office to confirm they will support a business license for a medical cannabis facility in that location.
Budget a significant amount. Not to mention the various consultants that you’ll require to manage and complete your application, I suggest having a budget of $100,000 to $150,000 just for the application.
Choose your advisors very carefully. Along with your application, you will need to provide the Standard Operating Procedures (SOPs), Quality Assurance (QA) processes, security plans and protocols, a solid business plan, and details of your seed to sale record keeping and tracking solution. If there are questions from Health Canada (and there probably will be), you want to be sure that the consultants will still be in business are also not going to bill you a great deal extra to answer the questions on their work.
Warehouse or greenhouse? If you have to build a growing facility, don’t ignore greenhouses. Most of the larger licensed producers (LPs) are expanding their growing space with modern marijuana greenhouses equipped with light deprivation systems. Do they know something that you don’t?
Size does matter. Under the current regulations, it does not make business sense to have a very small medical marijuana operation. All cannabis facilities must have a full-time qualified and experienced Quality Assurance person who has to monitor and check the production team. You also have to include the cost of a (minimum) Level 7 vault, security and record keeping systems, and a 2,500 square-foot growing facility to make enough return to justify the investment.
A capital idea. When you are trying to calculate how large an investment you have to make in your medical cannabis business, you tend to think about the larger expenses such as: land, building, equipment, etc. Accountants (like us) call these types of expenditures capital expenses. Obviously, you need to be fairly comfortable with the estimates that you have for these major items. However, you also need to allow a large amount for working capital — the money that you’ll need to actually operate the business until you generate enough sales revenues to cover those operating expenses. Even a small operation will need at least $1,000,000 in working capital.
Must be PICky. In your application, Health Canada requires you to name your PICs (Persons in Charge). You have to have a SPIC – Senior Person In Charge and may also have RPICs – Responsible Person in Charge and A/RPIC – Alternate Responsible Person in Charge. The application form does not inform you about this; however, you should have at least three PICs. People take vacations and people are occasionally sick, so you really need three PICs to guarantee that there will always be at least one PIC on site, when anyone is “touching” cannabis.
Security clearances. Be very picky. Your PICs and the officers of the corporation (you ARE using a corporation to apply for the license, aren’t you!) must all be security cleared in-depth by the RCMP. Ideally, not only must those people being checked have clean records (no association with crime or drug offences), even their associates should be able to pass the security checks.
Follow up. If you simply submit your application and wait patiently for a year or two, you are not making the best of your situation. You should continually review your application, and if you know that you’ll have to make changes to it to demonstrate best practices in this ever-changing industry, do so. Submit an abridgement (amendment) to your application to let Health Canada know that you are proactive and serious. You want to assure them that you have a solid application and that you’ll be running an efficient, secure, high-quality, healthy business.
Business plan. Just like the rest of your application, Health Canada will read your business plan very thoroughly. They want to know that you really understand this business. Are your building and equipment costs realistic? Do you have sufficient working capital? How will you manage your inventory? What is your marketing plan, and is it legal? Most importantly, will the business be successful and is the business plan believable?
Of course, it’s important to note our expertise in this industry; we have prepared over 40 business plans for Canadian cannabis businesses without a single rejection from Health Canada. Call us toll-free at +1 (800) 661-9842 and we’ll help you master how to write a business plan for your medical cannabis business in Canada.