How Did Marijuana ‘Mega-Farms’ End Up In Canada?

(Photo credit: The Peace Naturals Project)

Canadian health regulators have created a new industry that allows what The National Post describes as marijuana ‘mega-farms.’

Come April 1st, these operations are supposed to supply medical marijuana for some 40,000 patients. And these patients are not your average smokers. Last year, they were licensed to consume a total of 190,000 kg of medical marijuana.

But the focus for most of these companies is likely the long-term. According to Health Canada, the number of Canadians using medical marijuana will rise to somewhere between 300,000 to 400,000 by 2024.

When Did It Begin?

In June 2013, Health Canada announced a new medical marijuana program called the Marihuana for Medical Purposes Regulations (MMPR). The MMPR outlined a massive overhaul to the previous medical marijuana program, known as the MMAR.

Complaints about the old program came from multiple sources.

For patients, it was difficult to sign up for medical marijuana. The MMAR required extensive paperwork that doctors had to fill out, which then had to be reviewed by Health Canada for final approval.

Then-Health Minister Leona Aglukkaq announced the MMPR on June 10 (Photo credit: Health Canada)

The MMPR introduces a much simpler prescription-based system, more like the systems of certain states in the U.S.

For law enforcement, the MMAR also created problems by allowing patients to grow in their own homes. Some license holders would use it as a cover-up to grow marijuana for the black market. While others didn’t, privacy laws made it difficult for law enforcement to monitor crime.

The MMPR bans home-grows, forcing patients to register with a commercial producer and purchase their medicine online.

Who Owns the Mega-Farms?

The MMPR allows any commercial entity to apply for a license to produce marijuana. Regulations are strict, which makes the cost of starting a MMPR business high. Thus, those who can afford to meet the regulations also can afford to operate large-scale grows.

Since June, the total number of MMPR applicants has exceeded 400. But the vetting process has been slow. As of now, Health Canada says it has approved 8 companies under the MMPR. But only 4 are listed on the government’s official website. According to Health Canada, the other 4 are not ready to register patients yet.

Tweed CEO Chuck Rifici standing in the empty Hershey’s factory (Photo credit: The Canadian Press/Adrian Wyld)

Hopeful applicants include a company called Tweed, which has purchased an abandoned Hershey’s Chocolate factory in Smith Falls, Ontario with 470,000 square ft. of space. Privateer Holdings, a U.S. private equity firm focused on marijuana, has also purchased a 35,000 square ft. facility in Nanaimo, B.C. through its new Canadian subsidiary Lafitte Ventures.

One company already approved is Prairie Plant Systems, which was the only supplier contracted by Health Canada to supply patients under the MMAR. The company revealed last October that it undertook a $24 million retrofit of its production facility, allowing it to grow 5 times more than before.

Tjalling Erkelens, CEO of Dutch medical marijuana company Bedrocan BV (Photo credit: Bedrocan BV)

Another approved producer, Bedrocan Canada, will initially import product from its Dutch sister company Bedrocan BV, which has supplied European pharmacies with medical marijuana for years. The company plans on beginning production in Canada by late 2014.

What Will Happen on April 1?

Licenses for personal cultivation will expire. Patients will be expected to get their marijuana from a commercial producer.

But there are problems. For one, patients have launched a Constitutional Challenge to prevent the MMPR’s ban on home-grows, which many say would make medical marijuana unaffordable. If they win, they could stop the ban from happening. If they don’t, some say it’ll take more than a policy change to stop them from growing.

Canadians rally on Parliament Hill for 4/20 (Photo credit: Patrick Doyle/Reuters)

Another issue is a shortage of supply. Growing enough cannabis for 40,000 patients isn’t easy.

According to Privateer Holdings CEO Brendan Kennedy, Health Canada expressed concern about a shortage as early as last June. But today, the department says it’s “confident that there will be adequate production levels” for the new program.

However, with only 4 to 8 companies ready to meet the April 1 deadline, it’s unclear whether the MMPR will be sufficiently supplied at the start. And at this point, even if companies like Tweed or Lafitte Ventures are approved before April 1, it seems unlikely they can have product ready by then.

Source Leaf Science