Since the passage of the Cannabis Act in 2018, Health Canada has taken steps to ensure access to the cannabis market for small growers. It is now possible for small growers to become part of the supply chain for legal marijuana in Canada with a micro cultivation license — but participating in the legal cannabis market profitably requires careful attention to regulation and the very best materials to support indoor growing.
What is micro-cultivation?
Micro-cultivation is a skilled horticultural practice focused on maximum yields of cannabis in a limited indoor space. It is a lawful, systematic approach to using the knowledge and equipment small-scale cannabis growers have used for decades, but with access to a huge, growing, regulated market.
Health Canada imposes these limits on operations granted a micro cultivation license:
- A micro-grower can have a facility with up to 200 square meters (about 2150 square feet) of growing space.
- The only product the micro-grower can produce in that space is cannabis. They can sell dried and fresh plants and seeds. A separate license is required to operate a nursery.
- The only customers for licensed micro-growers are processors, researchers, and large licensed providers. Micro-cultivators cannot sell directly to the public. They cannot sell to a provincial or territorial outlet. They cannot make oils.
These are the limitations of the micro-cultivation license. It is possible (and more expensive and time-consuming) to apply for multiple licenses for the same site for additional commercial activities. The cost of a micro-cultivation license is $2500, payable to Health Canada. This allows the license holder to grow cannabis plants for distribution to the legal market. There is another $2500 fee for a micro-processing license, also payable to Health Canada. This license permits processing and packaging the bud and other parts of the plant. Most micro-cultivators will need both licenses and should get both licenses upfront to avoid delays in selling the crop later. A micro-processing license only permits processing of 600 kilograms of product per year, but very few growers will be able to produce as much as 600 kilos of cannabis from a 200 square-meter growing space.
How is possible to make a profit from micro-cultivation?
Small-scale marijuana producers of long experience will know how to make money from an annual crop of 600 kilos in the “unregulated” market. But profitability at the bottom of the supply chain in the legal cannabis market may take some strategic decisions. Here are two of many important considerations for micro-cultivators.
Don’t just grow “cannabis.” Fill an unfilled niche in the cannabis market.
Small growers can specialize. They can produce seeds for a desirable, hard-to-find strain. With a separate nursery license, they could use a smaller space to grow the plants. They can specialize in cannabis with unique flavors and scents. They can specialize in cannabis for a single medical application.
Micro-cultivators need to be price-makers rather than price-takers. The more carefully their product matches an unfilled need in the cannabis market, the more money they will make and the more stable their income will be in changing conditions.
The other consideration in profitable micro-cultivation is cost control. In Canada, cannabis is grown indoors. Grow rooms need to be insulated. They need to be climate-controlled. Their building materials need to be wash-down ready to control fungal and bacterial diseases. Grow rooms need to be modular, with movable partitions. For the construction materials that make micro-cultivation cost-effective, visit us at Structural Panels Inc.