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GGS Structures makes greenhouses used by medical cannabis

On Monday, Canada traded a leader who recently claimed that marijuana is "infinitely worse" than tobacco for one that has publicly announced intentions to legalize the drug for recreational use, a transition that has far-reaching implications for Canada's pot entrepreneurs.

While legalization will not happen overnight, much did change for small-business owners in the medicinal-marijuana industry.

"Marijuana entrepreneurs are all smiling because the future will now, hopefully, be accelerated," said Robert Josephson, president of WeedMD, a Toronto-based medicinal-marijuana grower whose facility in Aylmer, Ont., is waiting on final inspection from Health Canada. "The election results are only positive for the industry, and good for all the entrepreneurs toughing it out."

Although it may take years before prime-minister-designate Justin Trudeau makes good on his promise to move forward on recreational marijuana in Canada, Monday night's victory sent marijuana stocks surging, and paved the way for more research and education into medicinal marijuana.

According to Mr. Josephson, Canadian doctors have been a bottleneck in the medical-marijuana industry in recent years. Under the Conservative government's watch, Health Canada has historically discouraged doctors from prescribing medicinal marijuana, citing a lack of clinical trials.

Mr. Josephson believes that the change in the ruling political party will lead to increased investment in marijuana and its medicinal applications by Canadian health-care professionals. "It's all about the doctors' willingness to prescribe in our program in Canada," he said. "Just the election results alone will open people's eyes. The stigma has been greatly reduced, and I think it will be further reduced."

Canada is currently home to 50,000 licensed medical-marijuana users and 26 licensed producers, all of whom are regulated by Health Canada. Now that the Liberal Party has secured a majority government, Hugo Alves, the head of the marijuana industry team at Toronto-based law firm Bennett Jones, expects those numbers to grow.

"The fact that there's a majority government, you're going to have some stability in terms of the length of time that the party is going to be in office. Entrepreneurs know that this government will be there for four years," he said. "In terms of whether or not there's more licences, I think now that the election's over, there will be a period of time where there's a shuffle of cabinet, so I expect there to be some disruption."

Canada's existing marijuana industry could be further disrupted depending on how the Liberal Party might structure a recreational-marijuana industry, Mr. Alves said.

"They can keep it federal and build off the existing platform they have now. They can build on the existing system to allow for retail dispensaries – but those dispensaries need to purchase from licensed producers as opposed to the black market. They can go all the way to decriminalization, which is eliminating marijuana from the Controlled Drugs and Substances Act," he said.

Mr. Alves added that the country is already well positioned to transition to a quality-controlled, mass-market production system, thanks to a recent change in policy by the Harper government.

When the Marijuana Medical Access Regulations (MMAR) were rolled out in 2001, they allowed registered patients the right to grow their own medicine or designate a grower to do so on their behalf. Last April, however, the MMAR were replaced with the Marijuana for Medical Purposes Regulations (MMPR), which require patients to purchase only from licensed producers, who must adhere to Health Canada's strict quality-control guidelines.

"The main focus in transitioning from MMAR to MMPR was taking the production and putting it in the hands of parties capable of producing a safe product," said Roger Ferreira, chief executive officer of Beleave (formerly First Access Medical), which is currently going through the process of becoming a licensed medicinal-marijuana producer.

The transition was championed by a Conservative government concerned with medicinal products winding up in the black market, but the move from homegrown to a consistent, quality-controlled and regulated mass-production system may have unintentionally laid the foundation for a recreational-marijuana industry.

"By transitioning from small mom-and-pop operations to the megafacilities we see today, it is likely that [the Conservative government] inadvertently created the infrastructure that would greatly benefit from legalization," added Bojan Krasic, chief financial officer of Beleave.

It's not just the licensed producers that stand to gain from a change in medical marijuana policy.

Leigh Coulter, president and co-owner of GGS Structures, which builds greenhouses for marijuana operations and other agricultural products, anticipates major growth for her small business after last night's election. "This is an extension and a chance to let the world know Canada will be a leader," she said. "We will develop the technologies to ensure that this is a crop of great revenue potential."

Mr. Alves anticipates a number of other small-business sectors benefiting from a more marijuana-friendly Canada as well.

"You just have to look south of the border to see the types of businesses that have sprung up – everything from marijuana-focused marketing and promotions to technology platforms and delivery systems," he said. "There's also a real opportunity for some of the businesses that currently exist in an unregulated market to really become a mainstream businesses; they can develop and scale as opposed to remaining in the shadows of a grey market."