2018 will be remembered as the year that Canada legalized adult-use cannabis on a national level. As the only G7 country to legalize both medical and adult-use cannabis production, we are certainly leading the global charge. Every day there’s a story around cannabis. Much of the coverage is around the large publicly traded producers, but the reality is that there is an invisible revolution in the cannabis space: the emergence of legal craft growers.

British Columbia is no stranger to grow-ops. Today, every cannabis dispensary in Vancouver and Victoria sources its cannabis from the non-licensed market. This “grey” market has supplied much of the medical and adult-use cannabis in British Columbia for many years.

When we talk about “craft” growers, we’re borrowing the term from the craft beer industry – or, perhaps more broadly, the larger bespoke movement around consumer goods. The industry seems to be defining craft growers as small businesses with lean operations that focus on quality over quantity. More recently, with the Cannabis Act gaining royal assent this summer, a more formal definition is emerging – 200 square metres of canopy space with a production limit of 600 kilograms per year. In a sense, these regulatory limits will certainly shape the craft business model.

Cannabis Compliance has been actively helping countless entrepreneurs navigate the federal regulations to get their cannabis production businesses off the ground. But the framework in the last four years has shut out small players, mostly due to the facility costs around security and staffing, but also due to criminal record checks and the perception of being unwelcome by the feds. Today this is changing. The Canadian government is putting out the welcome mat for small growers. Not only do they not require a quality-assurance person on site, but also they don’t have to have beefy security systems. Also, to the surprise of many, they can cultivate outdoors.

While we don’t know exactly how many grow-ops are in British Columbia, many believe it’s in the thousands. Many of these were licensed by Health Canada for personal (or designated) production under the former set of regulations (MMAR, then ACMPR), but technically they weren’t supposed to be profitable businesses. They were licensed to provide cannabis to a select number of patients, not for resale to the black or grey markets. The reality is many of them are supplying product to the black and grey markets, and they do have functional facilities. How will they transition into the new legal market? Will they want to?

We believe they will. We have received countless inquiries in the last six months from small growers eager to transition into the legal market – and run a legitimate business. With the new rules being written around craft production, they will finally be welcomed into the legal market. I call this an “invisible” revolution because none of these craft growers will grab headlines in the media. For the most part they won’t have to raise capital. And certainly none of them can go public. These will be entrepreneurs who want to own and operate a small business in the cannabis industry – focusing on their cultivation methods and on producing the most desirable flower. Given how lean they can operate, time will certainly tell if they will compete with the large producers. But they will certainly try.

The challenges facing the craft movement, however, will be around supply channels. In most provinces, the provincial authority is the wholesale purchaser and distributor. In some provinces (e.g., Alberta) the individual retailer decides which brands to carry. I believe the industry has to figure itself out, and the supply routes will get established over time. But at minimum, craft growers will have a very unique position in this emerging market.