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Licence Types
EXPLORE THE BOOMING CANNABIS CULTIVATION MARKET
With the ratification of the Cannabis Act in October 2018, Canada became the first G7 country to legalize recreational cannabis on a federal level. According to Statistics Canada, the cannabis market contributes approximately $17.27 billion to Canada's GDP, with legal recreational sales making up around 60% of that total. The global cannabis market is projected to reach USD 97.3 billion by 2026, driven by increasing legalization and consumer demand (Fortune Business Insights, 2023).
In Canada, legal recreational cannabis sales totalled $4 billion in 2022, up from $2.6 billion in 2020, reflecting the market's rapid growth. This surge represents a significant opportunity for those interested in entering the cannabis cultivation sector.
CLASSES OF CANNABIS CULTIVATION LICENSES
There are two main classes of Cannabis Cultivation Licenses:
Standard Cultivation
- Facility Size: More than 200 m² (2,150 ft²).
- Focus: Large-scale cultivation for operations seeking to produce high volumes of cannabis.
- Market Opportunity: Ideal for large-scale operations aiming to produce a substantial cannabis supply for wholesale distribution.
Micro-Cultivation
- Facility Size: Up to 200 m² (2,152 ft²).
- Security Requirements: Less stringent than Standard Cultivation licences.
- Focus: Smaller-scale operations, often specializing in niche, high-quality strains.
- Market Opportunity: Suited for craft cannabis growers looking to market premium, locally-grown products.
Licensing and Regulatory Overview
A Cultivation Class License allows individuals or corporations to:
- Produce cannabis seeds
- Grow and harvest cannabis plants
- Transportation
- Storage
- Intra-industry sales of cannabis
Note: This license only allows cultivation and wholesale sales to authorized licensed holders. It does not permit direct sales to the public or retailers. A Sale for Medical Purposes License is required to sell medical cannabis online directly to consumers. For recreational cannabis, a Retail Cannabis License is necessary for online and over-the-counter sales. Applicants can apply for these licenses simultaneously to maximize business potential.
Health Canada's strict application requirements and ongoing oversight ensure that all licenced activities meet regulatory standards. Once approved, licensees can leverage the one-time influx of black-market genetics, presenting a unique opportunity to introduce new strains into Canada’s legal market.
Strategic Growth and Industry Impact
The overall goal of the Cannabis Act is to create a legal cannabis industry capable of outcompeting the illicit market. GrowLegally is committed to fostering a competitive, diverse, and legal industry composed of various operations and activities, all working together to support Canada’s cannabis ecosystem.
Applicants can select the licenses and permits that align with their business goals, with the flexibility to add authorized activities as their operations grow.
Market Potential and ROI
Obtaining a Cultivation Class License presents a lucrative opportunity for entrepreneurs to tap into a booming industry. The ROI for cannabis cultivation varies depending on the scale and efficiency of the operation. On average, a well-managed cannabis cultivation facility can expect a gross profit margin ranging from 50% to 60%, depending on factors such as yield, quality, and market demand.
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Grow Your Business with GrowLegally
GrowLegally will work with your company from Seed to Success, guiding you through licensing and helping develop a strategic growth strategy tailored to your needs.
COST ANALYSIS (ESTIMATES)
INITIAL SETUP COSTS:
Standard Cultivation:
Typically ranges from CAD 1 million to CAD 2million, including facility build-out, security systems, and initial working capital.
Micro-Cultivation:
Generally ranges from CAD 500,000 to CAD 1,000,000, making it more accessible for small-scale growers.
REVENUE POTENTIAL:
Standard Cultivation: Annual revenues between CAD 5 million and CAD 20 million.
Micro-Cultivation:
Annual revenues between CAD 500,000 and CAD 2 million.
INVESTMENT & RETURN
Starting a cannabis retail store requires an initial pre-operational capital investment, typically between $55,000 and $100,000. These costs generally include:
Rent/Carry Costs (First and Last + 3 months): Approximately$15,000 (We recommend keeping rent under $3,000 per month)
AGCO Licensing Fees: Around $10,000
Construction Fit-Out: Between $15,000 and $50,000
Inventory Purchase: Ranging from $15,000 to $30,000
With a conservative estimate, annual revenues for a well-run store in a decent location are projected to be between $650,000 and $1.2 million. Based on current market data and a lean operational structure, you can expect gross profits to be just under 30% to 40% of your annual revenue.
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GrowLegally Cannabis Clinic and Consulting
4711 Yonge St., 10th Floor
Toronto, Ontario M2N 6K8
Toll Free: 1.888.909.6336
Local: 1.647.931.7011
GrowLegally
Medical Cannabis Clinics and Commercial Licensing Consultants
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