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Licensed Producers & Legalization: Surging Numbers, Crony Capitalism, & Acquisitions

As of writing, there are 91 licensed producers in Canada with a backlog of over 400 applications, and the already-licensed producers are taking advantage while their would-be competitors are stuck in bureaucracy.

That’s why Health Canada has been on a cultivation licensing spree. Let’s compare the number of cultivation licenses issued over the past few years:

  • 2015: four
  • 2016: ten
  • 2017: forty-seven!

Between 2016-2017, Health Canada licensed almost five times as many producers, and 2018 has seen seven licensed producers so far. Emerald Health Farms is the latest, getting theirs yesterday (Mar. 2), but investor fatigue has been on the rise as more and more producers get licensed and go public.

Licensed producers making deals

LP’s are shaking hands with pharmacies and provincial governments to line up supply deals for both medical and recreational cannabis.

Keep in mind that currently, LP weed is medical, but with the recreational market estimated at two to three times the size of the medical market, you can bet the licensed producers are doing everything they can to get a piece of that bigger pie.

There are already LP-affiliated and owned dispensaries out there doing it on the down low.

Cronies and acquisitions

As Canada marches towards cannabis legalization, we are seeing examples of crony and predatory capitalism, as former cops and politicians are suddenly opening their own cannabusinesses and large LP’s try to buy up all of their competition.

In this flurry of mergers, acquisitions, and prohibitionist hypocrisy, what do you think is forefront in LP’s minds- the needs of medical patients or profits?

In terms of recent mergers and acquisitions, Aphria bought Broken Coast and Aurora Cannabis received final approval for its takeover of CanniMed earlier this week.  

Cannabis activists who fought for legalization are worried by the monopolistic behaviour and profit-over-people mentality of some of these licensed producers.

Medical cannabis slipping through the cracks?

It seems medical cannabis is getting lost in the excitement over recreational, and it’s important to make that distinction between medical and recreational.

Medical cannabis is mail-order only, which means that no cannabis storefronts or dispensaries can sell it. This has already been ruled unconstitutional in the Federal Court of Canada, where the judge called dispensaries “the heart of cannabis access”.

Laws differ across the country

Cannabis laws vary from province to province, and even city to city in some cases.

Ontario has left its door open to receiving cannabis from all sizes of producers from all across the country, whereas Quebec seems like it will only be supplied by six large producers, at least so far.

In BC, recreational cannabis will be sold at a mix of private and public stores, but the Liquor Distribution Branch will handle online sales.


Featured image courtesy of Huddle Today.