New Licensing Process Regulations Limiting Access To Funding For Small Canadian Cannabis Producers

According to an industry executive, the latest licensing process in Canada for legal cannabis producers is limiting and it may be a hindrance to small firms in attracting investments. This in return will leave the market to be dominated by bigger companies that have access to funding and those that had already made their mark in the industry before the regulation change in May.

Change of cannabis licensing regulation in Canada

The licensing changes came after the health licencing agency for the process Health Canada got overwhelmed by the amount of applications for licensed cannabis producers. This caused a massive backlog while at the same time putting a strain on resources at the agency leading to delays in processing of applications.

The agency has indicated that there were more than 800 cannabis license applications dating back to 2013. The agency has since approved 457 initial paper based review although still around 70% of the producers are yet to demonstrate evidence that they have set up a facility.According to Tammy Jarbeau the Health Canada spokesman the backlog in applications has led to prolonged wait times for complete cannabis license applications as well as inefficient resource allocation.

The process of licensing has increasingly become under scrutiny following revelations last month that CannTrust Holdings Inc. (NYSE:CTST) was under investigation by Health Canada for dealing cannabis grown in facilities that are not licensed. There has been unsettling events in the cannabis industry in Canada and CannTrust is not the only firm laden with scandal because Canopy Growth Corp (NYSE:CGC) has its share of issues following the removal of Bruce Linton.

New regulations hurting small cannabis firms

Following the regulation change cannabis producers will now be required to first build their growing facilities before their application for license gets approved as a way of streamlining the process. With these new rules smaller business in the industry are finding it hard to set up as well as attract funding.

Cannabis industry strategic consulting firm Vindica Cannabis Corp’s President and co-founder, Mathew Columbro stated that with the new regulations a lot of people have been put out of the running for the application of a license. Under the previous regulations firms could be able to attract funding by leveraging the milestones that they had attained in the process of getting a cannabis license. Columbro further added that now it is hard for small firms because even for day selling of cannabis the firm has to build a facility before making the application and that does not guarantee that they will be licensed.

GTEC Holdings and Candre Cannabis receive licenses

Amid the regulation changeCandre Cannabis Inc. and Alberta Craft Cannabis Inc.’s subsidiary GTEC Holdings Ltd (OTCMKTS:GGTTF) are the latest to get licences from Health Canada for processing and sale of medical cannabis. They both announced on July 29, 2019 that they have received cannabis licenses from Health Canada.

GreenTec Holdings CEO Norton Singhavon has voiced his support for the new regulations stating that it shows the difference between those firms that are serious to get their house in order and those that are not. He added that he actually likes the changes.

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