Feds reject three cannabis growers for every one accepted

TORONTO — Even as the number of legal cannabis growers has grown rapidly, the federal government has denied three licence applications for every one it has accepted.

As of Feb. 1, Health Canada, which oversees the legal medical marijuana program, had granted 89 licences and rejected 268, according to data provided by Health Canada. The number of licensed producers (LPs) has since grown to 93.

The application process under the Access to Cannabis for Medical Purposes Regulations can be a gruelling multi-year process and people are rejected for a wide range of reasons, said Deepak Anand, vice-president of government relations for consulting company Cannabis Compliance Inc. Much of that comes down to not passing a security clearance.

“It’s a very stringent background check. It’s not like one of the corporate TSX-guy checks, where they go through your criminal record … In many cases they go talk to your neighbours, they figure out what you’re doing,” said Anand.

“Their biggest concern is making sure that there’s no possible involvement of the black market or organized crime, or even you diverting products to anyone,” he added.

Their biggest concern is making sure that there’s no possible involvement of the black market or organized crime, or even you diverting products to anyone

Deepak Anand, Cannabis Compliance Inc.

The rate of rejection appears to vary considerably from province to province. In B.C., for example, 100 applications were rejected, while only 18 were granted. Ontario saw 96 refusals, but had a much higher success rate, with 48 licences granted.

“Anyone who might be selling to a dispensary currently is diverting a controlled substance. And if Health Canada can, beyond a reasonable doubt, prove that, then they will refuse your application,” said Anand. “B.C. has a lot of illegal growers, and so that’s why the number in B.C. is really heavy.”

A lot could change in the coming months, if the government changes its rules around background checks, as is hinted at in the draft regulations accompanying Bill C45, the Cannabis Act.

“Health Canada acknowledges that there are individuals who have histories of non-violent, lower-risk criminal activity (for example, simple possession of cannabis, or small-scale cultivation of cannabis plants), who may seek to obtain a security clearance so they can participate in the legal cannabis industry,” the draft regulations say. The draft document leaves open the question of “whether these individuals should be permitted to participate in the legal cannabis industry.”

But Anand suggested that, barring an intervention from the Senate, the new rules will likely allow people with minor cannabis convictions to make it through the security screening process.

He expects as many as 60 per cent of the 268 rejected applicants to reapply, which would swell the already significant ranks of applicants currently under review.

It’s unclear exactly how many applications are being processed, as the data is broken down by application stages that happen concurrently, and Health Canada “cannot provide a total number of applications,” according to a spokesperson.

But the number is in the hundreds, with 244 applications in the review stage alone and a further 13 being screened. Some of those applicants have been waiting more than three years, said Anand.

Even as companies rush to get applications in, however, the data make clear that not all provinces are jumping into the industry with equal gusto.

Of the applications under review, 77 are from B.C. and 94 are from Ontario. By contrast, only 26 of the licences under review are from Quebec and 23 from Alberta.

“I see some great opportunities in areas where you don’t see very many applications,” said Anand. “There are areas where people can strategically start to grow and talk to municipalities and townships … about not just community engagement, but also jobs in those areas.”


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