CanadaEdiblesNewsRetailHealth Canada Changes the Licensing Process: Will it Solve Supply Problems?

David Jagielski David JagielskiMay 14, 20195 min

Health Canada is changing the way it processes cannabis license applications in a bid to speed up the approval process, after an internal review found it was wasting significant resources on applicants who were no where near having facilities to cultivate or sell pot.

The shift in regulations takes place immediately with all news applicants looking to sell, cultivate or process cannabis now required to have a fully built operation site before they can submit their application.

“A significant amount of resources are being used to review applications from entities that are not ready to begin operations, contributing to wait times for more mature applications and an inefficient allocation of resources,” Health Canada said in a statement May 8.

The government agency added this move will allow it to focus on just those applications that are ready to go immediately, whereas under prior regulations, 70 per cent of cannabis license applicants still haven’t demonstrated  a built facility that met regulatory requirements over the last three years. It said the move will help expedite the companies that have been stuck in the queue and that are ready to go.

Why the new process will be a big help

The new approach will simplify the application process and reduce the bottlenecks currently in place by having only mature applicantions waiting for approval, as opposed to ones that might be months or years away from being ready, the agency said.

Health Canada says part of the reason for the change in approach is because of the feedback that it has gotten from applicants, complaining about how long the approval process takes. It hopes the more companies are licensed it will help with growing demand for supply and bring down prices. Analysts say the move will increase competition of the legal market to give people less incentive to turn to the underground, where prices are still cheaper.

Although that might mean a lower price per gram for Aurora Cannabis Inc (NYSE:ACB)(TSX:ACB) and other key producers, Chief Corporate Officer Cam Battley told CBC News it’s the right thing to do:

It is good for patients and consumers and I think it is likely to be beneficial to companies that have demonstrated professionalism, access to capital and an ability to comply with rigorous regulations

The big winners in all this will likely be the consumers with more options to choose from at more competitive prices. And with more supply, that will also help the retail market as some have closed up shop simply because there hasn’t been enough supply to stock shelves.

Health Canada has said the problem isn’t in the supply itself, but the supply chain with raw cannabis getting turned into packaged goods, and into the hands of customers. But for the overall success of the industry, more producers means supply shortages in general should be remedied and the cannabis market can mature faster.

And with the edibles market coming in October, there is more potential demand ahead and Health Canada will be better prepared to expedite the approval process, it said.

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