Written by guest author Ashlee Kirby

 

With the legalization of cannabis, the thick-rimmed disciples of The Church of Craft may have a new deity: BC Bud. We will likely soon find ourselves in an era where craft microbreweries are no longer the lone reigning local artisan industry in town.

Federally licensed micro growers will now also be able to respond to regional consumer demands and produce locally grown quality products.


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In BC, the Liquor Distribution Branch (LDB) has a monopoly over distribution and is the only entity legally permitted to supply retailers with non-medical cannabis.

To become a federally licensed supplier who can sell to the LDB, prospective growers must comply with federal, provincial, and municipal requirements.

In this article, we’ll focus solely on one of the main federal requirements: a licence from Health Canada.

Getting started

A micro-cultivation license allows the license holder to grow cannabis on a small scale in order to produce dried or fresh plants and seeds. To qualify for a micro-cultivation licence, the total grow surface area must not exceed 200m2, including the use of shelving areas or vertical farming methods.

Health Canada has established the Cannabis Tracking and Licensing System as the primary manner for individuals to set up an account and submit Health Canada licensing applications.

Each individual associated with an application is required to create an account. For a micro- cultivation license, account identification and security clearance applications are required for the designated head of security, master grower, and responsible person.

Depending on whether the applicant is a corporation, partnership, or individual, all directors and officers, partners, and licence holders must be identified, respectively. In addition, an applicant that is not a sole proprietor or individual must also create a corporate profile.

The application for cultivation also requires details to be submitted with regards to the proposed grow site. The applicant will need to submit the site’s complete address, a site survey, an aerial view, a detailed description of the buildings or rooms located on the plot, what activities are proposed, and where they will take place on site.

The license may be subject to additional requirements, such as the need for increased security, which will be assessed on a case-by-case basis. The property’s ownership information or an owners’ consent form must also be submitted.

Prior to submitting the Health Canada application, individuals are also required to show that they have notified the authorities in the area, including the local government, fire authority, and the local police force or RCMP, of their activities.

In order to satisfy the property’s physical security requirements, the applicant must include details of the site’s perimeters, building details, the proposed cultivation locations, all applicable security features and apparatuses and floor plans. Licensed applicants are not permitted to cultivate cannabis in a residential dwelling.

In addition, there are a number of regulatory requirements and reporting conditions that must be employed by the holder of a license. Applicants are also required to submit a Good Production Practices Report as outlined in the Cannabis Regulations.

Next steps

Once the application is submitted, Health Canada will begin its review process. At this time, the Ministry may request additional information.

Once the screening stage is complete, Health Canada will work with the RCMP to begin the security screening stage. One of the biggest barriers to licensing has reportedly been the security screening.

Applicants must provide fingerprints, a criminal record check, and disclosure of all past criminal charges and convictions. According to official Health Canada Regulations however, a criminal record will not automatically preclude an individual from receiving a licence.

Once past the pre-security screening stage, the applicant will be prompted to submit a site evidence package regarding the property’s building and facilities. An on-site pre-license inspection by Health Canada may also be deemed necessary.

If your micro-cannabis license is subsequently approved, it is valid for the duration of two years. Applicants who wish to renew their license are required to apply for a renewal at least 30 days before the expiry.

And that’s not all

Other factors and processes to consider in relation to a craft cultivation business include, but are not limited to:

  • Canada Revenue Agency licencing processes under the Excise Act,
  • the Cannabis Tracking and Licensing System,
  • compliance with various pieces of legislation (including the Food and Drugs Act, the Pest Control Products Act, and The Fertilizer Act) processing and testing requirements of the cannabis,
  • packaging and labelling requirements,
  • record and reporting requirements,
  • incorporating a business,
  • and tax consequences.

It is the responsibility of the prospective grower to ensure compliance with all federal, provincial, and municipal laws and requirements. There is publicly available information on the Craft Cannabis Association of BC Website and a guide published by the Government of Canada, “Cannabis Licensing Application Guide”.

Given the complexity and novelty of the legal cannabis industry, any potential craft grower would benefit from seeking legal advice from a lawyer.

The Business Law Clinic at the University of Victoria provides free legal information on business law matters including incorporation, intellectual property, partnership agreements, contracts, employment law, and taxation.

These services are provided by students, and the clinic is always accepting clients. Please contact the clinic if you have any business law related questions you would like legal information on.

UVic Business Law clinic contact information: 250-472-4522 or [email protected]

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