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Licence Types
OVERVIEW OF CANNABIS PROCESSING
Under Health Canada's Cannabis Act (2018) and Cannabis Regulations (2018), the control and production of cannabis are strictly regulated to ensure compliance across Canada's medical and recreational cannabis industries. Cannabis processing focuses on the manufacturing, packaging, and labelling of cannabis products.
A Processing Licence is essential for businesses looking to enter the cannabis industry. It enables them to produce a wide range of cannabis products, from oils and edibles to topicals and concentrates. Additionally, combining an Online Sales Licence with a Processing Licence allows direct sales to Patients and other intra-industry Licensed Holders.
CLASSES OF CANNABIS PROCESSING LICENCES
There are two main classes of Cannabis Processing Licences:
STANDARD PROCESSING LICENCE
Scope: This Licence is designed for large-scale cannabis product manufacturers. It allows for the processing of various cannabis products, including legal packaging and labelling for direct-to-consumer sales through authorized distributors and intra-industry operations. Market Opportunity: This opportunity is ideal for businesses that aim to produce and distribute large volumes of cannabis products to the broader market.
MICRO-PROCESSING LICENCE
Scope: This Licence limits processing to a maximum of 600 kilograms of dried cannabis (or equivalent) per year. However, if the Licence Holder also has a micro-cultivation Licence for the same site and the cannabis comes exclusively from that site, this maximum quantity does not apply. Market Opportunity: Suited for smaller operations focusing on niche markets or specialized products with lower volume production.
LICENCE PROCESS AND REQUIREMENTS
RESTRICTIONS:
Processing Limits: Micro-processors are restricted to processing a maximum of 600 kg of dried cannabis (or equivalent) annually unless combined with a micro-cultivation Licence on the same site.
Indoor Production: Cannabis must be produced, packaged, labeled, stored, sampled, and tested indoors, adhering to Good Production Practices (GPP).
No Cannabinoid Synthesis: Cannabis obtained under this Licence cannot be recovered by synthesising cannabinoids.
Analytical Testing: All cannabis must undergo analytical testing before sale to ensure compliance with quality standards.
SECURITY REQUIREMENTS:
Site Security: The processing site must be designed to prevent unauthorized access, with physical barriers surrounding the site and storage areas. Access to storage areas must be restricted to authorized personnel only.
Security Clearances: Security clearances are required for key investors, directors, officers, and key personnel involved in the operation, including the Licence Holder, Responsible Person, Head of Security, and Quality Assurance Person (QAP).
KEY PERSONNEL:
Quality Assurance Person (QAP): The QAP ensures the quality of cannabis before it is sold and addresses any complaints or risks associated with the product. The QAP must have the necessary training, experience, and technical knowledge. If processing edibles, an alternate QAP with the required expertise must be appointed.
Security Clearances: Key personnel, including the Licence Holder, Responsible Person, and Head of Security, must obtain security clearance.
RESTRICTIONS:
Processing Limits: Micro-processors are restricted to processing a maximum of 600 kg of dried cannabis (or equivalent) annually unless combined with a micro-cultivation Licence on the same site. Indoor Production: Cannabis must be produced, packaged, labeled, stored, sampled, and tested indoors, adhering to Good Production Practices (GPP).
INVESTOR REPORTING:
If the entity does not have publicly traded shares, applicants for a processing Licence must file a key investor report.
BUSINESS MODEL OVERVIEW
A Cannabis Processing Licence opens up multiple revenue streams, including the production of various cannabis products such as:
PACKAGING AND LABELING OPPORTUNITIES
Packaging and labelling are critical components of cannabis processing, offering significant business opportunities, particularly for cultivators looking to outsource these services. Due to the stringent regulatory requirements around packaging and labelling, many cultivators prefer to focus on growing cannabis and partner with Licensed processors to handle the aspects.
OPPORTUNITIES FOR CULTIVATORS:
Outsourcing: Cultivators can benefit from outsourcing packaging and labelling to Licensed processors, ensuring compliance with Health Canada's strict guidelines while focusing on cultivation. Value-Added Services: Licensed processors can offer value-added services, such as child-resistant packaging, clear and compliant labelling, and the ability to package products for different markets, including domestic and international sales.
REVENUE POTENTIAL
The global cannabis market is projected to reach USD 97.3 billion by 2026 (Fortune Business Insights, 2023). In Canada, the legal cannabis market contributed $17.27 billion to the GDP as of 2023, with the processing sector playing a crucial role in this growth.
EDIBLES AND TOPICALS: SPECIAL CONSIDERATIONS
Manufacturing edibles and topicals involves additional requirements beyond those for other cannabis products.
These include: Separate Production Areas: Cannabis and food products must be produced, packaged, labeled, and stored in separate buildings.
Cross-Contamination Prevention: Strict protocols are required to prevent cross-contamination between cannabis and food products, ensuring that all products meet the highest safety standards.
LICENSING AND REGULATORY OVERSIGHT
Health Canada is responsible for reviewing and approving all Processing Licence applications and overseeing Licence suspensions, revocations, renewals, and amendments. The Cannabis Act allows applicants to submit a single application for multiple Licence classes and subclasses, such as Cultivation and Processing, streamlining the process for businesses looking to expand their operations.
STRATEGIC GROWTH WITH GROWLEGALLY
At GrowLegally, we partner with your company from Seed to Success. We help you navigate the complexities of the licensing process, choose the Licence(s) that best fits your business model, and develop a strategic growth plan tailored to your needs. Our expertise also extends to assisting cultivators with packaging and labelling services, offering an efficient and compliant solution for bringing products to market.
Get Licensed and join our Global Cannabis Inter-Industry Ecosystem!
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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
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Medical Cannabis Clinics and Commercial Licensing Consultants
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