Could you be Canada's next craft cannabis micro grower?
Under the Cannabis Act, Health Canada offers a variety of licenses for cannabis cultivation. Micro cultivation licenses are a unique class of licenses that are ideal for craft cannabis production by small business owners that do not desire the pressures of mass production. With small scale production, cannabis micro grow license holders are able to offer high-quality specialty marijuana to the Canadian cannabis market.
Unfortunately, the wait time to obtain a micro cultivation license in Canada has become problematic. New changes to the cannabis micro license process in Canada have also added challenges to growers hoping to launch small scale cultivation facilities. Continue reading for a comprehensive guide to help you become a licensed cannabis producer to run a Micro Grow in Canada.
One benefit of the micro cultivation license is that it has fewer operational and security requirements than a standard license.
The Cannabis Act requires a person to obtain a license issued by Health Canada to do various activities with cannabis, including:
- Commercial cannabis cultivation for sale
- Processing of cannabis for sale
- Sales of medical marijuana
- Conducting cannabis testing
- Conducting cannabis research
Cannabis cultivators and processors are also required to obtain a cannabis license from the Canada Revenue Agency (CRA).
What are Cannabis Micro Cultivation Licenses?
The Cannabis Act (or Bill C-45) initially released regulations aimed at large scale cannabis cultivation facilities. This standardization provided a standardized and straightforward licensing process, but the cost of the process discouraged small businesses in the cannabis market. To address this issue Health Canada segmented licenses into different classes for standard cannabis licenses, micro grow licenses, nursery licenses, and hemp cultivation. Micro cultivation licenses allow licensed producers to grow up to 200 square meters of marijuana and an annual maximum of 600kg of dried cannabis (for processing license holders).
Micro cultivation licenses in Canada also bear in mind that small businesses operate with smaller budgets and fewer employees. Storage and monitoring requirements are reduced under the micro cultivation license program, which also has lower regulatory fees.
Micro cultivation licenses allow licensed producers to grow up to 200 square meters of marijuana and an annual maximum of 600kg of dried cannabis (for processing license holders).
The Cost of Cannabis Micro Cultivation
The Cannabis Micro Licensing Process
There are specific actions you should take when applying to Health Canada for a license under the Cannabis Act and its regulations. Before beginning the application process, it is a good idea to become familiar with the relevant federal and provincial, territorial, municipal and indigenous government legislation. Territories and municipalities have their own laws and regulations that have to be considered in addition to the Cannabis Act and its regulations.
Cannabis license applicants then need to decide on the class and subclass of license(s) which they will need based on the activities they plan to perform. Based on the license type, a site must be developed and fully built to regulation specifications. This new requirement is to help streamline the application process and reduce the number of applications for businesses that fail to ever get up and running. Next the application process can begin.
While micro growers face reduced costs, those costs are still hefty. In addition to regulatory and licensing fees, here are other expenses that are not to be underestimated:
- Land and building
- Consulting and legal
- Equipment and grow supplies
- Acquisition of cannabis strains
- Utilities and taxes
- Employee wages
- Security systems
- Technology systems
- Packaging
- Storage and transportation
Transactional fees for cannabis licensing include an application screening fee, security clearance fee, and import/export permit fee. The application screening fee (per application) is $3,277 for standard cultivation licenses, standard processing licenses, and sales for medical purposes licenses. For micro-cultivation, micro-processing, and nursery licenses for nursery cultivation, the application screening fee is just $1,638 per application. The cost is $1,654 per security clearance application and $610 per import/export permit request.
When it comes to annual regulatory fees, minimum licensing fees with Health Canada are $23,000 for standard cultivation, standard processing, or sale for medicinal purposes licenses. For cannabis micro-cultivation licenses, micro-processing licenses, nursery licenses, and for a sale for medicinal purpose license in combination with the micro licenses the minimum fee is $2,500. The fee does have to be paid for each of these license types. A cannabis business that wants to cultivate cannabis small scale and sell it for medicinal purposes would have to pay a minimum fee of $5,000 for example.
The cost to start a cannabis micro cultivation facility is significantly cheaper than standard licensing fees. Micro cultivation also offers a competitive niche in a market where more and more users are looking for high-quality craft cannabis products. Craft cannabis products are expectedly more expensive for this reason, but many are willing to pay that premium.
1. Application Submission
The first step in obtaining a micro cultivation license in Canada is submitting an application through Health Canada’s Cannabis Tracking and Licensing System (CTLS). The license applicant must submit visual site evidence (video) directly to Health Canada via USB within ten days of submitting the application. All associates of the business that will need security clearance must also create accounts with CTLS and provide that information.
Health Canada requires applicants to submit evidence that demonstrates that they have a fully built site that meets all applicable cannabis regulations at the time of application. A site is considered to be a “fully built site” when it is operational and functional and equipped with all permanent fixtures (security features, facility lighting, ventilation, and air filtration system, etc.). A video walkthrough tour that documents those features is considered to be sufficient site evidence.
One way to cut costs is to only request a license for a portion of a building that falls within the site perimeter. When taking this approach, the applicant only needs to demonstrate compliance for those areas that they would like approval for at this time instead of the entire building. License holders taking this phased building approach then request to amend their license to include the additional space. This also allows businesses to move from a micro grow license to a standard license.
2. Payment of Fees
The second step in applying for a Canadian micro cultivation license is to pay the application screening fee as well as the security clearance fee which is needed for all applicable personnel.
3. Screening
During the screening process, Health Canada will assess applications for completeness, legibility, and the ability to be further assessed. The screening process takes at least 30 days.
4. Review and Security Clearance
Health Canada conducts a detailed review of the documents submitted through CTLS and site evidence in the fourth step in the micro grow license application process. During this time they also conduct criminal background checks and law enforcement record checks for security clearance approvals. Health Canada aims to complete this step within 60 days of assigning these tasks to a reviewer.
Workers cannot perform roles that require security clearance until after Health Canada has granted clearance. Security clearance requests can be delayed if applicants do not provide complete and accurate information pertaining to past employment, education and travel history, and any past criminal convictions.
A process validation tests SOPs to ensure they are effective at controlling variables. Process validations consist of performing a procedure repeatedly and gathering data and metrics on the process. If the data shows a statistically significant rate of success, the procedure can be considered valid. Any change to the procedure will require it to be re-validated, so it is important to decide on a process that will not need to be changed in the future.
At the end of an SOP there is always a section called "Change Control." This section tracks any changes made to the document and who made the changes when. A change control procedure should exist to govern how changes to SOPs are managed. To avoid confusion and mistakes, old SOPs must be taken out of circulation, employees must be notified and trained on the changes, and multiple members of management should be involved in approving the changes.
5. Licensing Decision
If the application is accepted and all security clearances are granted a cannabis micro cultivation license may be issued.
One benefit of the micro cultivation license is that it has fewer operational and security requirements than a standard license.
Health Canada Micro Cultivation License Approval Time
Health Canada is hard at work trying to keep up with license applications. They are up to issuing approximately 13 licenses per month since implementing process improvements in May 2019. Many license applicants are still awaiting approval. Health Canada has identified some common reasons for licensing delays, including the quality of the application, demonstration of sufficient security measures, demonstration of Good Production Practices (GPP), and sufficient record-keeping procedures. Here are some key requirements for a micro grow license application that need to be met to reduce delays in license approval:
Production Capacity
Cultivation and processing license applicants need to submit an estimate of their proposed annual production amount, including kilograms per year per license class and the number of plants or seeds per year and per class. Applicants also need to specify the total square meters of cultivation space and total square meters of non-cultivation operation space per Section 6.4 of the Cannabis Licensing Application Guide.
Designated Quality Assurance Person
Section 6.5 of the Cannabis Licensing Application Guide is only required for processing licenses. Processing license applicants must designate a qualified Quality Assurance Person (QAP) and provide Health Canada with concrete examples of how the QAP meets requirements for technical knowledge, training, and experience. They must also provide the QAP’s resume and other supporting documents like diplomas, letters of reference, and transcripts or certificates.
Site Ownership
Licensing applications must detail the requirements for site ownership per Section 6.6 of the Cannabis Licensing Application Guide. If the side is owned by the individual or corporation applying for the license, they must link to their Account ID in the CTLS. A site owner’s consent form must be submitted if the site is owned by another individual or corporation. This consent form must include the site address, the class and subclass of license(s), and a signed declaration that states who the site owner is, that they are aware of the cannabis activities being conducted and that they consent to those activities.
Notice to Local Authorities
The local government, local fire authority, and local police force must be provided with notices from the cannabis license applicant. Section 6.7 of the Cannabis Licensing Application Guide further elaborates this requirement, but briefly, notices must include:
- Date each notice was sent or provided
- Name, title and address of senior official
- Name of applicant
- The expected date the applicant will submit an application to Health Canada
- The class and subclass of the license being sought
- The cannabis-related activities that are expected to be conducted
- The site address
Licensing applications must detail the requirements for site ownership per Section 6.6 of the Cannabis Licensing Application Guide. If the side is owned by the individual or corporation applying for the license, they must link to their Account ID in the CTLS. A site owner’s consent form must be submitted if the site is owned by another individual or corporation. This consent form must include the site address, the class and subclass of license(s), and a signed declaration that states who the site owner is, that they are aware of the cannabis activities being conducted and that they consent to those activities.
Site Plan
The Site Plan is a required document that clearly identified site perimeter and footprint of all buildings, identifies the location of any outdoor grow areas (if applicable), clearly identifies areas for all operations such as growing and storing product and indicated how cannabis flows through the site. The Site Plan also indicates areas that are monitored by security systems and security cameras (indoor and outdoor). Section 6.8 of the Cannabis Licensing Application Guide further details Site Plan requirements.
Guided Video Tours for Micro Grow License
Applicants do not need to use special video equipment to produce their guided video tour for proof of their site, but site evidence must comply with Section 6.8 and 6.9 of the Cannabis Licensing Application Guide and have clear and audible narratives with sufficient video resolution that areas can be seen clearly. It is very important for the video tour to align with the site plan provided to Health Canada. Specific names used for areas should be consistent.
The video tour also needs to include and individual moving through the facility to demonstrate how cannabis will flow through the facility during the production process. Security features through the entire site should also be included, and the video tour should highlight features of the facility that are key to GPP.
Organizational Security Plan
Another important piece of the micro cultivation license application is the Organizational Security Plan (OSP). This plan includes the business plan, organizational chart, a list of key individuals who require a security clearance, and information regarding the head of security. Along with that information, the OSP must also elaborate on the names, titles, and contact information for all individuals who will input data into the CTLS. The OSP includes several other elements including:
- Security awareness and training steps that are taken to ensure that guests and all employees/contractors are trained and aware of security procedures
- A list of SOPs and description of each demonstrating the procedures in place relative to each Priority Area (Appendix D: Organizational Security Plan SOP Priority Areas)
- A description of any other security elements or features of the site
- Submission of the physical security attestation and the OSP attestation
How Many Micro-Cultivation License Holders Are There in Canada?
As of June 30, 2023, there are 66 micro-cultivation license applicants in Canada, according to Health Canada. Here is a sense of the geographical breakdown of applicants across Canada's provinces and territories:
| Province or Territory | Number of Micro-Cultivation License Applicants |
| Alberta | 9 |
| British Columbia | 17 |
| Manitoba | 5 |
| New Brunswick | 2 |
| Newfoundland and Labrador | 0 |
| Nova Scotia | 1 |
| Northwest Territories | 0 |
| Nunavut | 0 |
| Ontario | 15 |
| Prince Edward Island | 0 |
| Quebec | 15 |
| Saskatchewan | 2 |
| Yukon Territories | 0 |
| Canada | 66 |
As of October 28, 2023, Health Canada has issued 339 Micro-Cultivation licenses in Canada.
Micro-Cultivation is Becoming An Increasingly Popular Focus for Cannabis Entrepreneurs
Many cannabis entrepreneurs are turning to smaller, micro-cultivation facilities in order to effectively manage costs, and produce higher-quality cannabis - as compared to larger producers who are producing commodotized, standardized products and facing falling prices as a result of the commoditization. Startup costs are also significantly lower for micro-cultivation facilities as opposed to standard production facilities.
This is also coming at a time when the federal government is approving decreasing numbers of 'standard cultivation licenses'. In fact, in 2022, the federal government approved only 58 standard cultivation licenses, which is the lowest annual total since recreational cannabis was legalized in 2018.
Examples of Successful Micro-Cultivation Growers in Canada
Consumers are increasingly choosing micro-cultivators over standard, bulk producers because of the higher-quality cannabis, and a general shift towards craft-type products. Standard cultivators face a tough time growing high-quality, premium cannabisproducts in large grow operations. It's easier to grow high-quality products in smaller batch quanitities, in a smaller facility. Here are some examples of successful micro-cultivation growers in Canada, as a source of inspiration for your journey.
Organnicraft
Organnicraft grows out of Vernon BC, and produces a mix of high-end California Exotics, and a few BC staples (such as BC Kush). Their micro-license allows the company to have a canopy of 2,150 square feet, so they operate four 500 square foot grow rooms on a staggered rotation for continuous, fresh harvests. The company supports 11-50 employees, and has been able to successfully build a reputation of being a high-quality, craft cannabis producer.
North 40 Cannabis
North 40 Cannabis grows out of Nipawin, Saskatchewan, which traditionally a wheat growing region. They are a small, family run cannabis cultivator that grows cultivars such as the 'Pear Effect', 'Platinum OG', 'Sourdough', 'Madam X', 'Ladies Night', 'Colada', and 'Farm Gas'. They clearly take an artistic approach to growing cannabis, and they highlight that by showcasing their team on their website as well.
Origin Coast
Origin Coast is a micro-cultivator, and micro-processor and that operates out of Edwardsville, Nova Scotia. They take pride in producing high-quality craft cannabis, and commit to growing small batch, superior quality cannabis. In fact, they actually cut their plants at the stem when they harvest, this way they are able to hang dry the whole plant and hand trim, so that nothing goest to market until it's fully cured.
Some of their cultivars include:
- Sherbmints: Cross of Sunset Sherbert and Kushmints. It is a hybrid bred by Seed Junky Genetics. It has energizing sativa-dominant effects and physical indica-dominant effects, giving a well-balanced experience.
- Layer Cake: Crossed with the most sought-after genetics worldwide. This indica dominant hybrid is a cross between Wedding Cake X GMO X Triangle Kush X Skunk. It is bred by Swamp Boys. Amazing for those who want the true couch lock experience
Managing a Cannabis License
After a license is granted by Health Canada it needs to be properly managed. License holders must take the proper steps to renew their licenses and are also able to amend it if they wish to expand their operations. License holders must also continue to comply with requirements for reporting and notifying Health Canada of events like disclosures, changes to the business that require approval and permit refusals, suspensions, and revocations.
Barriers to Micro Cultivation Licenses
Starting a micro grow is a large financial investment without the promise of success. Many municipalities lack zoning required by micro cultivation license which presents a big challenge to locating a site to start a micro grow. Next, long application wait times mean that it can take a while before a micro grow can begin production. Once licensed, micro cultivation facilities also face limits to operating based on type(s) of license(s) they have been granted. Overall, this can make it very challenging to start a micro grow and leave businesses with less marketing budget due to the high cost to start up.
Collaboration between large growers and micro growers is becoming more common. These shared ventures allow large growers to offer premium craft cannabis and help small cannabis ventures get up and running. One benefit of the micro cultivation license is that it has fewer operational and security requirements than a standard license. Micro cultivation licenses must still meet core regulatory requirements, namely:
- Only one license per unique address
- A fully built-out facility must be in place
- Limit of 200 square meters growing space (indoor or outdoor)
- Producers must follow Good Production Practices
- Micro cultivators must conduct ongoing testing of products
- Strict requirements for packaging, labeling, and shipping must be met
- Regular inspections for compliance must be conducted
Find Out More
GrowerIQ can help you get started if you are considering a cannabis micro cultivation license. The best place to start is by setting up a time to chat with one of our specialists. Get started right away by filling out the form below, or starting a chat with us in the chat widget to the right.
Start My Micro Application
About GrowerIQ
GrowerIQ is changing the way producers use software - transforming a regulatory requirement into a robust platform to learn, analyze, and improve performance.
To find out more about GrowerIQ and how we can help, fill out the form to the right, start a chat, or contact us.