Home-grown medical cannabis challenges

August 25, 2016
Written by GGS
Aug. 26, 2016 – The Access to Cannabis for Medical Purposes Regulations (ACMPR) came into effect earlier this week.

In essence this allows Canadian medical marijuana patients to grow their own or select an independent grower to grow for them, rather than by purchasing through large-scale licensed producers.

This is the federal government’s response to the Supreme Court ruling that made affordable access to cannabis medicine a human right.

As cannabis legalization spreads globally, local, state and federal governments are all struggling to come up with business models that address regulatory concerns, medical needs and freedom of choice issues.

• In Colorado, and Oregon the more free market approach is often described as the Wild West.

• In New York, Minnesota, and Florida, a fixed oligopoly with very few winning licenses being given out is at the other end of the spectrum.

• In Canada a very structured industry model with an arduous process and high barriers to entry ensured a limited number of large scale producers would satisfy market demand. Until …  the Supreme Court said no.

IMPACT OF ACMPR

How does the ACMPR affect the cannabis industry in Canada?

It creates a new opportunity for Licensed Producers to supply cannabis gardening plants.

There are currently 34 Licensed Producers of medical marijuana across Canada and they are now the only legal source of starter plants and cannabis seeds. Enterprising LPs may consider producing flats of cannabis plants for the home gardener, perhaps packaging it with fertilizer, potting soil, and “How to Grow Cannabis at Home” books.

It creates opportunities for hydroponic businesses and manufacturers like GGS who sell growing benches, lights, environmental controls, greenhouses, and a host of other equipment for cannabis growers large and small.

For patients who cannot grow their own cannabis, or choose not to home grow, the ACMPR allows them to designate a cannabis grower. Could this be a small business model?

The rules under the ACMPR restrict the number of patients that a grower can grow for to only two. And the amount of plants grown is based on the patient’s daily gram prescription.

In Canada the maximum medical marijuana prescription is five grams a day.

DOING THE MATH

An indoor cannabis grower can grow five plants per gram. If a small business cannabis grower has two patients with the maximum prescription, that grower can grow a maximum of 25 marijuana plants.

Assuming a yield of 5 grams per day times two medical marijuana patients times 365 days a year, this small business cannabis farm can sell up to 3,650 grams of cannabis a year.

If the cannabis producer sells for $7 per gram, the total annual revenue is only $25,550. Subtract from that your operating costs to grow and it is easy to see that small marijuana grow ops are not going to be a viable small business model in Canada under the current regulations.

The Canadian government is still in the process of defining how they will regulate both a medical marijuana industry and a recreational marijuana industry. All indications are that they will continue to support marijuana growing in a controlled and regulated environment designed for corporate marijuana production.

In its statement announcing the new Access to Cannabis for Medical Purposes Regulations, Health Canada reinforced that the new program for patients growing their own cannabis is designed to be a temporary solution to address the Supreme Court ruling, and should not be interpreted as being part of the longer term plan.

HOME-GROWN CROPS

If you are an avid cannabis gardener and take great pride in producing the best flower, then the ACMPR will allow you to grow your cannabis medicine for now. Follow the regulations, and purchase benching, irrigation equipment, lights, and whatever else you need to support your cannabis garden.

For cannabis growers looking to start a profitable business in Canada, the lineup is long, and Health Canada is slow to get to your application, but stay the course. Invest in scalable growing equipment, greenhouses, or indoor facilities, so that your initial capital outlay is manageable. You may even be able to get a licence under the ACMPR to grow for two patients so that some of your capital costs are covered during the long application process.

For existing Licensed Producers, building your brand, ensuring top quality controls, and designing your cannabis greenhouse or indoor cannabis growing facility for maximum efficiency is important as this industry continues to expand and develop.

The most popular GGS products for cannabis growers are hydroponic benches, greenhouses and grow net supports.

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