Are you thinking about entering the Canadian Cannabis Industry with a micro cultivation operation? Here is part of what you need to know before jumping in.

Micro cultivation licenses were created to support smaller businesses entering the industry, addressing such considerations as smaller budgets and a smaller staff. These licenses allow cultivators to grow up to 200 square meters (2152 sq ft) of cannabis in an approved facility without any limitations on the total amount of cannabis they produce annually.
Like many businesses in Canada, setting up a micro cultivation operation involves working with many levels of government to obtain licenses and permits, a solid business plan, what seems like a ton of capital investment, and plenty of patience!

With so many variables to be considered when starting a business, especially one as regulated as cannabis cultivation and processing, we cannot overstress the importance of a clear and concise business plan. A proper business plan will confirm the required asset investment, will estimate when you can expect to be profitable, will plan for selection of starting materials and equipment, and act as a guide to establish operating procedures. Your plan should be designed specifically for your business vision and should be created to serve as a blueprint for your operation’s establishment, execution, and growth.

One important thing to consider when applying for a micro cultivation licence is that this licence will only allow you to sell your product in bulk to other businesses licensed under the Canadian Cannabis Act. Suppose you wish to take your product(s) to market yourself. In that case, you will also require a micro processing licence for all activities beyond cultivation, including packaging, and production of edibles, topicals, concentrates, and beverages.

Upfront, there are several fixed costs associated with these licenses that need to be accounted for. These are:

• Application Fee: $2,500.00* (x2 if also applying to become a processor). This is an annual license, and these fees will become due annually.
• Security Clearances for identified individuals: Approx. $1750.00* per person
• Finger Printing for individuals: Approx. $50.00* per person.

*as of September 2021, values subject to change

Next to consider would be the variable operational costs of becoming a licensed micro cultivator:

• Facility – You will need to have your building built to meet GPP (Good Production Practices) requirements before submitting your application and site evidence package
• Upkeep and Maintenance costs – You are responsible for maintaining your site to the same standards that Health Canada licensed it. Think about cleaning, pest control, equipment maintenance etc.
• Salaries
• Technology costs for Seed-to-Sale software, security systems and any other items you deem necessary to operate your business efficiently and in compliance
• Starting Materials
• Cannabis Excise Taxes: We can’t forget to include federal and provincial taxes (where applicable) in factoring overheads when operational
• Consulting fees
• Distribution fees

Expenses that may or may not apply to you and your operation:

• Business registration and legal considerations
• Rezoning to allow for cannabis cultivation (and processing)
• Planners and engineers
• Lease or mortgage
• Marketing and advertising
• Packaging and labelling materials and equipment

Micro cultivators will face many challenges as they build their operations and brand. Still, with a smaller operation and a clear plan, they can pivot quickly to meet the evolving desires of consumers. They can focus on small-batch releases, investing in creating top-quality products to fulfill a specific niche, developing strategic alignment with other industry players, hard work, long hours, passion for what you do, plus a few (or more) sleepless nights. If this sounds like you, congratulations! You’ve just taken the first step by researching what it takes to enter into the world of Canadian cannabis business owners and small businesses business entrepreneurs.

If you are looking to commercially produce cannabis, knowing what licence you’d like to apply for is just the first step. Licence applications can be time complex and tedious. Our experts at dicentra Cannabis Consulting can provide you with the guidance, knowledge and understanding you need in order to successfully navigate the licence application preparation and submission processes. Contact us today to speak to one of our industry professionals to see how we can help you.