How Much Does a Micro Cultivation License Cost?

The cannabis micro cultivation license offered by Health Canada is a great opportunity for small businesses to enter the cannabis space as a licensed cannabis producer. There is growing consumer demand for top-shelf craft cannabis that the micro cultivation license is designed to target.

In the cannabis industry, it can take a lot of funding to get any business up and running. Compared to standard cultivation licenses, micro grow licenses in Canada for cannabis are still much more affordable. Just how much does a cannabis micro cultivation license cost though?

New micro grow license applicants will need to pay an application screening fee. This fee for micro grows is non-refundable. Standard sized cannabis growers pay an application screening fee of $3,277, but micro cultivation, micro processing, and nurseries pay only $1,638. Health Canada provides this example:

Micro cultivation license applicants also need to pay a fee for the cost of processing their security clearances. Each person needing security clearance will have to pay a fee of $1,654. Depending on staff size, security clearance fees can range from $8,270 for five individuals to $13,232 for eight individuals. 

Who needs cannabis security clearance? 

That list includes company directors, officers, partners, the license holder (if it is an individual), the designated responsible person (and alternate, if applicable), the head of security (and alternate, if applicable), the master grower, the quality assurance person, and any other individuals that are in a position to exercise direct control within the business.

For each requested permit, there is a non-refundable import/export permit fee of $610. The import/export permit fee along with the application screening fee and security clearance fee are annually adjusted by Canada’s Consumer Price Index to ensure that the fees meet the costs of delivering regulatory services.

Cannabis micro cultivation license holders also need to pay Health Canada an annual regulatory fee. This fee must be paid every year in order to maintain a cannabis cultivation, processing, nursery, and/or sale license. For standard operations, this fee is a minimum of $23,000. Micro cultivation, micro processors, and cannabis nurseries have a minimum annual fee of just $2,500. Health Canada gives the following example of its per-site annual regulatory fee:

Depending on staff size, the micro cultivation license cost is approximately $15,000. This covers the basic regulatory costs, but as you will see there are many other micro cultivation license costs to consider.

License Screening Fee: $1,638

Security Clearance Fee: about $10,000 depending on staff size

Import/Export Permit: $610

Annual Regulatory Fee: $2,500

Approximate total Micro Cultivation Licence Cost: $14,748

In addition to the actual micro cultivation license cost, cannabis business owners have many other financial considerations to make:

• Facility Cost
• Upkeep and maintenance cost
• Labor Cost
• Technology Cost
• Supply Cost
• Cannabis Taxes

Running a cannabis micro grow requires substantial financial investment. Health Canada requires micro cultivation sites to be built and operational prior to granting the actual micro cultivation license. While there are ways to stage building to curb start-up costs, micro cultivation facilities can cost $800,000 or more to build and license. Before starting such a project, you should figure out which laws and regulations apply to your potential venture, and the process of getting a micro cultivation license.

Micro cultivation license cost does not factor in cannabis business taxes. Micro cultivation license holders need to also register with the Canadian Revenue Agency (CRA). The agency elaborates as follows:

“As a cannabis licensee who packages and stamps dried cannabis, fresh cannabis, cannabis plants and cannabis plant seeds, the cannabis duty and additional cannabis duty, if applicable, you must pay is the higher of:

• a flat-rate duty
• an ad valorem duty

A flat-rate duty is imposed when these cannabis products are packaged. It is based on the quantity of flowering and non-flowering material, viable seeds or vegetative cannabis plants included in the dried cannabis, fresh cannabis, cannabis plant and cannabis plant seed product. An ad valorem duty is imposed when these cannabis products are delivered to the purchaser. It is based on the dutiable amount of the cannabis product. If the two duties are equal, the flat-rate duty is payable.

The cannabis duty and additional cannabis duty, if applicable, is payable when you deliver these cannabis products to a purchaser. You must keep track of the flat-rate duty and the ad valorem duty and report the higher duty payable on a transaction-by-transaction basis.

For dried cannabis, fresh cannabis, cannabis plants and cannabis plant seeds delivered to a purchaser in Alberta, Nunavut, Ontario or Saskatchewan, there is also an adjustment to the additional cannabis duty that is required to be calculated.”

How Much Do Micro Cultivators Earn

Micro cultivators are allowed to use a grow surface area (plant canopy) of up to 200 square meters, this includes:

• horizontal and vertical growing surfaces
• indoor, and outdoor cultivation areas where operators are growing cannabis plants, or propagating and harvesting cannabis plants and seeds

There is no size limit for areas used for non-cultivation activities, and storage.

Expected Output for Micro Cultivators

We'll use one of the most efficient cannabis cultivation methods, the Screen of Green (ScrOG) method, to illustrate this example. According to experts, cultivators using the ScrOG method can expect to fit between two and four scrogged plants into each square meter of growing space.

Number of Plants That Can Be Grown

Keeping that in mind, let's suppose that a micro-cultivator is able to use 75% of their allowed grow surface area for growing cannabis. That means that they are growing plants in 150 square meters of space. According to the ScrOG method, the cultivator can expect to plant up to 4 scrogged plants per square meter of growing space, meaning they will be able to plant up to 600 plants in their grow area.

Grow Op Output

The output per plant (number of grams of dried cannabis) will vary by cannabis strain, skill of the cultivator, and external factors (ie., lighting, nutrients, environment). That being said, an average cannabis plant will yield approximately 181.4 grams of dried buds. This means in our example, the cultivator can expect to have an output of 108,840 grams or 108.84 kilograms of dried buds. 

Revenue Expectations for a Micro-Cultivator

As of 2021, the price per gram of Cannabis was $7.50 in Canada. This is the price for standard, ordinary cannabis grown by mass-producers. The premise behind the micro-cultivation class of growers is to produce premium craft product that commands a price-premium over mass-producer incumbents.

Some experts estimate that craft cannabis may cost double what "ordinary" cannabis costs. For our example, let's say that we are able to price our craft product at one and a half times the cost of ordinary cannabis. That means that in our example, a micro-cultivator growing premium, craft cannabis can expect to earn $1,224,450 in revenue per harvest. Professional cultivators usually expect at least 2 harvests per year, meaning our micro-cultivator can earn $2,448,900 before accounting for taxes and expenses. That's a pretty healthy top-line, and it enables micro-cultivators to grow their business very quickly!

Cultivating cannabis takes a significant financial investment. It is very important to consider reducing operational costs in addition to the micro cultivation license cost. Optimizing cultivation operations is vital to creating a sustainable cannabis business. Factors like lighting and environmental controls are prime targets. Growers may look into options like using LED lights that conserve energy and automated climate controls that keep the cultivation environment stable. 

Investing in cultivation software and technology is a major way to reap long term savings. Systems like GrowerIQ can monitor the micro grow environment and analyze the cost benefits of various cultivation inputs compared to yields. From idealisation to storefront, we provide help each step of the way. First, find out how to get a micro cultivation license in Canada!