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Micro Cultivation/Micro-Processing Licenses

Natural Medicine Extractors

It’s official.

Micro-cultivation and micro-processing licences for the Canadian recreational market will be available for application after October 17, 2018.

So how does one go about getting one, or both, of these licences? First, the basics (this is a very condensed and general overview – these are NOT exact numbers):

1. MICRO-CULTIVATION

No more than 2100sq.ft. of canopy – this effectively equates to an approximate 500-700 indoor plant limit per crop. At 3 crops per year this is 1500-2100 plants per year (1,650 plants average). Assuming each indoor plant produces 3oz of dried flower the total annual production would average approx. 309lbs of dried flower. At 2,000/lb, this would generate annual gross revenue of $618,000.. There would also be approximately the same weight of trim per plant – so an additional 309lbs of trim per year. Despite the fact that trim sells for a fraction of what flowers sell for (but contains approx. half of the cannabinoids) Health Canada treats them both the same for their calculations (yes this makes no sense but that’s the way it is). Assuming the “street” price of trim is around $100/lb you can add another $31,000 to the gross – so ~$649,000/yr. Multiple licences can be “stacked” so production can be increased incrementally.

2. MICRO-PROCESSING

Can process up to 600kg per year (1,320lbs) per licence – these can also be “stacked”. Based on the math from the micro-cultivation section above, a single micro-processing licence could process the production from four micro-cultivation licences (or eight if processing only trim). Extracting oil at a 10% yield-by-weight from flower this would be 132lbs of oil that at $10,000/lb equals $1.32million per year. If the oil was extracted from trim there would only be half as much so the revenue would be approximately $650,000/yr.

So how do I apply?

On October 17, Health Canada will open an online application portal and all applications must be processed through that portal (I don’t have the web address yet). You have to first get a number and set up an application, whereafter you can take your time to complete the application before final submission. But make no mistake, despite Health Canada saying that it wants to facilitate movement of the black market into the licenced mainstream, the application process as it exists today is daunting. There are lots of details to deal with and a non-detail-oriented person that can’t or won’t spend a lot of time researching and dealing with regulators will probably find the process frustrating. Probably best to get a consultant or join an association that is setting up to deal with these issues.

Who can I sell to?

Any licensed seller (a micro-licence does not allow sales directly to the public, rather only to licensed sellers) including independent legal dispensaries, government agencies or large Licensed Producers.

How much does it cost to create an application and get it through the process?

This is the great unknown at this time. There are all kinds of numbers being thrown around from less than $1,000 to more than $2.4million. Best to wait until September to see what the consultants develop.

Natural “fit”

MEDXtractor’s small-scale extractors are a natural “fit” with these types of licences in that cannabis oils are the fastest growing, most lucrative market segment of the overall cannabis market. MEDXtractor will work with prospective growers/extractors to develop mutually-beneficial business models.

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