Obtaining a Cannabis Micro Cultivation Licence

The Cannabis Act1 controls and regulates the production, distribution and sale of cannabis in Canada. There are two licenses available for the cultivation of cannabis, depending on the canopy space of the facility. Health Canada is the body responsible for issuing licenses in order to legally operate a cannabis cultivation facility.

Some advantages of applying for a Micro-Cultivation License (“MCL”) include that the security and operational requirements are less stringent than those required in obtaining the Standard Cultivation License (“SCL”). This can be a more attractive option for small business owners looking to enter into the cannabis market.

The essential difference between an MCL and SCL is the size of the operation. An MCL permits a maximum of 200m2 (or 2152 ft2) of total canopy space. The canopy space is the square footage dedicated to the vegetation of the cannabis plants. The total space calculated includes both the indoor and outdoor space.

Once a location is secured, the next step in applying for the MCL is to pay the required fees and submit the requisite application to Health Canada. The initial fees required for the application for the MCL are provided in the chart below:

Fees Micro-Cultation
Application Screening Fee $1,638
Security Clearance Fee Per Applicant $1,654
Annual Regulatory Fee $2,500
TOTAL $5,792

(Government of Canada - Cannabis Fees Order Guide)

An MCL holder is permitted to sell and distribute cannabis directly to the Minister and other parties that are authorized to sell cannabis2.

Along with the obligatory fees, there are other requirements that need to be satisfied as part of the Micro-Cultivation Application (“MCA”). The first step in the MCA is setting up a corporate profile on the Cannabis Licensing Tracking System (“CTLS”). The CTLS platform allows a person or corporation to apply for different licenses online. A corporation applying for the MCL must create a corporate profile and ensure their directors and officers obtain the required security clearances through the CTLS.

Below are the various parts of the MCA and the requirements for each stage of the application.

MCL Application

When applying for the MCL, corporate entities are required to have a head office in Canada, or a branch office in Canada, wherein all the directors and officers are legal adults3. A mailing address is also required; this does not need to be the site address where the cultivation will take place.

Site Details

The applicant is required to provide information including the municipal address of the site, a site survey and an aerial view, as well as details related to both outdoor and indoor areas. Both the survey and aerial view of the site must be up to date.

Site Personnel

A list of all key individuals and their personal information must be submitted to Health Canada as part of the MCA. The applicant will identify a Head of Security, Responsible Person and a Master Grower. The applicant will also submit pertinent information on all proposed team members, as well as security clearances for all the current officers and directors of the company. Individuals are not limited to one role and are able to hold multiple roles within the company.

Site Ownership

An applicant will need to indicate whether the applicant owns the site or if they are leasing the space. If the site is being leased the applicant will be required to have the owner of the site complete a site owner consent form. The consent form must include the following information:

  1. The full site address;
  2. Class and subclass of license the applicant is seeking;
  3. Proposed activities to take place on the site; and 4) A declaration signed by the owner(s).

Notices to Local Authorities

The applicant will need to provide written notice to the local government, fire authority and police services containing their name, date which the person expects to submit the application, type of license they are seeking to obtain, and the address of the site where the cultivation will take place4.

Physical Security

The site must be designed in a way that prevents unauthorized access to the space5. The site plan for the MCA requires:

  1. Details of the perimeter of site;
  2. Details about the building and whether it is multi-unit or stand alone;
  3. Location of any outdoor cultivation;
  4. Any applicable security features; and
  5. The floor plans of the building and site.

The organizational security plan must include the following:

  1. Information on the person designated as the head of security;
  2. Organizational chart indicating all people who have management responsibility;
  3. List of all key individuals requiring a security clearance;
  4. Information on how security requirements will be met;
  5. List of all names, title and contact information responsible for record keeping;
  6. Description of security and awareness training;
  7. Information on operational procedures; and
  8. Measures related to security along with a signed attestation by the proposed head of security of the company approving the security plan.

Record Keeping

An applicant will have further document and information retention requirements and will need to demonstrate the following:

  1. Tracking of inventory;
  2. Communications with authorities;
  3. Inventory and distribution records for cannabis produced;
  4. Information regarding destruction methods;
  5. Physical and personnel security records;
  6. Information on good production compliance;
  7. Copies of complaints and resulting investigations;
  8. Information on systems and controls; and
  9. Information regarding promotional activities.

Final Steps to Getting the MCL

Once the application is submitted through CTLS, the applicant will receive a License Application ID from Health Canada. The ID will be used to track the status of the application. When a review of the application is complete, Health Canada will send a confirmation email to the applicant. The applicant will then be required to provide a video walk through of the site, photos of the facility, and building plans that show the completion of the facility. At this stage, Health Canada may conduct a pre-license inspection of the facility. After all the information is approved and the security clearances are granted for all personnel, the initial license for authorization will be issued to the applicant.

To navigate the complex cannabis licensing and regulatory regime, contact the lawyers at Chand Snider LLP.  Our lawyers have been at the forefront of cannabis licensing in Canada and can assist with the legal application process for obtaining a micro or standard cultivation license.

 

Sources:

1 Cannabis Act, SC 2018, c. 16 (“Cannabis Act”)
2 Cannabis Regulations, SOR/2018-144, ss 11(5)
3 Cannabis Act, ss. 62(7)(e)
4 Cannabis Regulations, SOR/2018-144, ss. 7(1) and 7(2).
5 Cannabis Regulations, SOR/2018-144, s. 63

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