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With a federal election looming, the Liberal government’s historic move to legalize cannabis will rightfully be a feather in the cap for Prime Minister Justin Trudeau, who followed through on a progressive and courageous policy promise.

Unfortunately, this major legislative initiative is in danger of being overshadowed by some glaring policy gaps if they are not addressed quickly.

In addition to failing to fulfill consumer demand for edible products, CBD, cannabis derivatives and topicals, the federal government’s regulatory regime has left small cannabis producers and processors behind.

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It was not supposed to happen this way. The federal government’s Task Force on Cannabis Legalization did a great job of consulting a variety of cannabis sector stakeholders, including small producers that have formed the backbone of Canada’s successful medical cannabis program since 2001.

In 2016, the Task Force concluded that there were several advantages to encouraging market diversity. They recommended production controls that would create space for craft cannabis production and prevent the development of monopolies or large conglomerates.

Despite the fact that Health Canada and everyone else agreed with the Task Force, the opposite has happened.

Last year, Health Canada launched the micro-cultivation and processing cannabis licences to facilitate the participation of small producers and processors in the legal industry. They said that for legalization to be effective, the regime must be able to support viable small businesses.

One year later, only one of Canada’s 20,000+ small-scale medical cannabis producers has been approved. As of today, fewer than 300 have even bothered to apply.

Facing a mountain of red-tape, unsustainable production caps, virtually no access to capital and a well-financed corporate cannabis conglomerate, Canadian craft cannabis producers are in a David vs. Goliath struggle for survival.

While most understood there was an initial need for regulations to err on the side of caution and be overly conservative, the balance appears to be off-kilter.

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Despite the gloomy set of current circumstances, there is some hope the underdog may have a fighting chance to enter the legal marketplace. There is growing awareness in rural Canadian communities of the potential economic development and job creation opportunities associated with a thriving local craft cannabis industry – just as we have witnessed with craft beer and boutique wineries.

Ignored by government, but desperate to survive legalization, small producers and processors are taking matters into their own hands. While some are feeling pressure to stay in the illicit market, most are expressing an interest to ‘go legal’.

Federal, provincial and municipal governments need to meet them half-way and embrace this willingness to transition. They should develop partnerships that provide these innovators with an equal opportunity to apply their valuable skills, network and experience in the post-prohibition marketplace.

In British Columbia, efforts are underway to establish a provincial cannabis co-op so that small producers can pool their resources and market influence. Saskatchewan is doing the same. New Brunswick has established a provincial sector association and others are following suit.

A just-released discussion paper on the establishment of the B.C. craft cannabis co-op includes a series of recommendations for the federal government to consider over the coming weeks and months to unlock the full potential of Canada’s craft cannabis sector.

We need federal leadership to create a sustainable craft cannabis industry and a diverse marketplace that will support the economies of rural communities. Tens of thousands of jobs and billions of dollars of economic impact are at stake if we don’t correct our current course. Canada will risk losing its first mover advantage and opportunity to capitalize on one of the fastest growing industries.

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Barinder Rasode is the CEO of Grow Tech Labs.

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