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Small-scale cannabis growers have long-decried the multimillion-dollar barriers to entry keeping Canada’s legal pot supply dominated by a handful of Bay Street-backed firms.

The federal government’s answer to that was the micro-cultivation license, established by Health Canada in late 2018. While limiting total canopy space per license to 200 square meters – enough to produce roughly 500 kilograms of dried flower annually – the “micro” license also meant less up-front spending for aspiring cannabis entrepreneurs by limiting requirements for staffing and security.

Hearst Organic Cannabis Products, one of the first three micro license recipients – named for the northern Ontario logging town where it is based – was able to keep startup costs under $500,000 to reach the point of initial harvest. Owner Joël Lacelle expects his first crop – half sour diesel and half crown royal – will be ready for processing before the end of this month.

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As of Oct. 31, there were nine entities across Canada licensed to cultivate and/or process cannabis (the micro license allows for both), Health Canada spokesperson Geoffroy Legault-Thivierge said via e-mail.

“In addition, 195 other applications for micro-licences have been received, of which 50 have submitted final evidence packages indicating that they have a built-out, compliant site ready for final review by Health Canada,” Mr. Legault-Thivierge said.

North 40 Cannabis in Saskatchewan and British Columbia-based Canandia are also expected to harvest their first legal “micro" crops before the end of this year and, like Mr. Lacelle in Hearst, the owners have right-of-first-refusal agreements with Pasha Brands. The Vancouver-based company describes itself as a “craft cannabis brands organization” and is planning to process, market and distribute all three crops via its Medcann Health Products facility.

Jamie Shaw of Pasha spoke to Cannabis Professional about when and where Canada’s first legal “craft” cannabis products will become available, what they’ll look like and how much they’ll cost. The conversation, reproduced below, also explains why the 200-square-metre canopy limit means any fans of legal “craft" cannabis brands can expect permanently inconsistent supplies.

On store shelves in January 2020, starting with Ontario, Saskatchewan and B.C.

It is kind of a race at this point because we have three micros that are all going to be harvesting around the same time, they all have slightly different processes so right now we aren’t really sure which one is going to be first.

We are thinking early January at least in one province and probably end-of-January in others. We have made submissions to the [Ontario Cannabis Store] and the [British Columbia Liquor Distribution Branch], those submissions have been made a while ago for multiple products including those that should be coming soon.

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The goal is to get Saskatchewan-grown cannabis processed in Saskatchewan and sold in a Saskatchewan retailer very, very soon [but] the issue is also it might end up being Ontario first. And eventually to all provinces.

Prohibition-era Pre-rolls and craft-branded dried flower

We are expecting flower and pre-rolls to be our first products to market. We will be doing pre-rolls under our pre-roll brands Grizzlers and Roll Models. Those are prohibition-era brands we own.

Some of our micros don’t necessarily want their own brands, so it won’t anything cookie-cutter. For example, if Hearst comes in with small buds then we might pre-roll all of it ... who knows?

It also depends on the grower. With North 40, we will be promoting his specific brand and selling products under the brand, but some of our growers don’t want that at all. They just want to grow.

[Q: But these first three micros all want their own products marketed under their own individual brands, correct?].

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Yes, but it might not be all product, that might be where we take the smaller buds and do something else with it, for example. It will go harvest-by-harvest.

'Stuck’ with premium pricing

I don’t think we can say exactly what pricing will be yet, we still need to look at the crop to see what we will be willing to pay for the crop and then it depends where it is being sold, [but] I think [premium pricing] is what we are stuck with at first, and that is sort of inherent to craft, but our goal is to ultimately be able to bring more economically-priced strains and products to market.

We will be able to do that when we have more micros and there is more product coming in, but some of [the product pricing] will definitely be premium especially to start.

‘Limited-time only’ is a longstanding cannabis tradition

That is part of the unique thing about micros, but you don’t want to be [buying cannabis from the same source year-round] because then you’re just buying old product

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It also depends what people are paying and how loyal they really are. If you’re selling all the product you’re producing with a profit than you’re doing just fine. But cannabis is not a commodity like alcohol, and people that are familiar with the way dispensaries in Vancouver operated for years, they would get a certain strain in when the grower’s crop came in and that was it and once that batch was gone you weren’t getting it again until the next batch came in. That is part of the whole craft process.

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