New medical marijuana licences trickling in for ‘industry in its infancy’

Aurora Cannabis' medical marijuana facility in Alberta. The Vancouver-based company received a cultivation licence a year after sending its application to Ottawa.





It took 12 months before Aurora Cannabis was licensed to grow medical marijuana under Canada’s new system.

This isn’t one of the many licensed ma-and-pa growers but rather a Vancouver-based corporation that includes a 55,000-square-foot facility in Alberta and offices in three different Canadian cities.

“We spent about $11 million and we built a full facility from the front-door key to the bathroom,” said Marc Levy, one of Aurora’s directors.

His company received its licence under the Marihuana for Medical Purposes Regulations (MMPR) system February 20, just a few days before a federal judge began hearing arguments on February 23 regarding growers licensed under the old Marihuana Medical Access Regulations (MMAR) system.

A federal injunction last March gave these smaller operations a one-year reprieve, allowing them to continue growing medical marijuana legally with their MMAR licenses.

For MMPR applicants, the process has been far more rigorous.

Although Aurora has received its MMPR cultivation licence, it will have to grow medical marijuana for about three more months before Health Canada inspectors return to review the first batch.

If the company gets the final green light, it will be free to sell the product more than a year after sending its application to Ottawa.

“People thought they can just take a warehouse, put a bit of equipment in (and) Health Canada would say, ‘Yeah, grow,’” Levy said.

“Health Canada raised the bar. They provided the first set of licences and then…changed the thought process and changed the rigour on the application process as well as the licence process.”

A Health Canada spokesman told Business In Vancouver the federal government has received about 1,200 applications under the new Marihuana for Medical Purposes Regulations (MMPR).

Fewer than 30 licences have been issued.

Thunderbird Biomedical Inc. was one of just a dozen companies to receive a licence in 2014.

But the Saanich, B.C., operation had to wait nine months before its application was approved. And on February 3 the company received its renewal licence from Ottawa, allowing them to continue with production.

“This is an industry in its infancy. There’s going to be an evolution of even the regulatory framework,” said Thunderbird investor Kam Thindal, who serves as the managing partner of Hamza Thindal Capital Corp.

“The bar is going to continue to raise as problems and issues arise. As much as us as investors are learning about the industry…the regulatory body is also learning how to regulate it better.”

That learning curve has taken its toll on some companies.

Investors in Agrima Botanicals have sunk millions into building a state-of-the-art facility in Maple Ridge, according to chief operations officer James Poelzer.

More than a year after submitting its application, the company has yet to receive its MMPR licence. But it still must pay for staff and facility costs to keep it operational.

Poelzer told Business In Vancouver in August he’s had to reduce staffing to key employees only. The goal is to maintain the facility and ensure it’s ready to go into production the moment the application is approved.

Levy said this is a risk all investors take when getting into an industry at such an early stage.

“The challenge that some of our potential competitors or some of the applicants are experiencing is they haven’t actually fully built their facility and they haven’t invested in the proper SOPs — the standard operating procedures — needed to get past the rigorous reviews of Health Canada,” he said, adding Aurora has had an “amazing” experience with Ottawa despite the slower pace at which the government moves.

“You’ve got to have it all ready. You’ve got to take all that risk capital, outweigh it without any guarantee of a licence.”

torton@biv.com

@reporton