Canada was the second country in the world, after Uruguay, to formally legalise the cultivation, possession, acquisition and consumption of recreational cannabis and is the first G7 and G20 nation to do so. It is also the home of the worlds largest cannabis company, Canopy Growth Corporation, along with many other well known names; Aphria, Aurora, Tilray, Organigram, Cronos etc. If its good enough for them it may be good enough for you
Immigrant-owned businesses
Unlike some of the other places we have covered in our series on ‘the best places to launch a cannabis business’ Canada allows for immigrant-owned businesses without having to have previously been a resident. There are two main routes you can take to starting a business in Canada. First, you can apply for the Start-up Visa program which is considered as the Federal business immigration program, which means you can start your business anywhere in the country. Second, there is the province-specific Provincial Nominee Program which has several business immigration options.
Start-Up Visa Program — The great thing about this program is that you can start a business anywhere in Canada. You will have to prove that your business idea is viable and one of the key considerations would be if its intended operation responds to the unique challenges of the area where it will be located.
Provincial Nominee Program — This Program has several options available to you and, as the name implies, they are tied to the specific provinces. You will have to get acquainted with the requirements for each of them to maximize your chances of success.
Forward planning
Research
The legal arena is a good place to start your research:
- Familiarise yourself with federal cannabis laws.
- Research your province or territories laws, as well as any local municipal regulations, for cannabis consumption and starting a business.
- Find out what documentation and information you’ll need to provide to get a cannabis license.
You should also look into your financing options and consider how your business will manage its finances. Many banks won’t fund loans to cannabis businesses, however some online lenders, credit unions and alternative banks will.
Business plan
Writing a business plan will help you gauge the feasibility of your venture. Its contents might include:
- A company description. Clarify what your business does and who it serves. Consider which competitive advantages your business will have.
- Market analysis. Is there a great market need for your business? Who will be your competitors? Are there trends that your business is looking to capitalise on?
- Organisation and management. Choose a legal structure for your business. Create an organisational chart to show who will lead your business.
- Marketing and sales. How will you find customers, and what defines a sale — or the point at which you make money — in your business?
- Financial projections. What will your revenue and expenses look like? Make financial forecasts for at least the next three years, and explain why they make sense.
Location
Location is especially important if you’re opening a dispensary, as you want a place that’s easily accessible by your target market and abides by all local laws. Even if foot traffic isn’t your primary concern, pay attention to your city and province’s zoning laws. They can greatly affect where you can locate your business. Rent may be a factor as well and picking the right location may help you keep expenses low.
Obtain a license
Precisely how you get the right to legally sell cannabis varies from province to province to territory. In Ontario, it’s a lottery system, meanwhile, Alberta and British Columbia have a rolling application system with no cap, although there’s a limit on how many stores a single entity can own. It’s also important to note that not everyone is eligible to hold a license and there are certain ‘criminal convictions’ that will prevent you from obtaining a licence. Also in certain provinces (Quebec, Prince Edward Island, New Brunswick and Nova Scotia) all retail outlets are exclusively government run.
Cultivation license
The first type is a cultivation license, and there are 4 classes of cultivation licenses that you can get. Each of them serves a different purpose.
The four classes of the cultivation license are:
- Standard;
- Micro;
- Nursery;
- Hemp.
The requirements for applying for the standard license are of the highest levels because the future producer will be held responsible in front of the federal government if any malpractice happens. Micro-cultivation licenses are better suited for those that planning on making a small-time cannabis business. They are awarded for businesses with growing space that is under 200m2 in size. If you were to be awarded with a micro-cultivation license you would be allowed to produce plants and seeds, but you wouldn’t be allowed to sell them if you didn’t also apply for a processing and a sales license. The nursery license is for those that plan on running a business that helps people grow their own cannabis plants by providing them with seeds, cuttings and such. The last type of license for cultivation is for growing hemp. This is the least regulated type of license and the easiest to apply for.
Processing license
If you plan on making cannabis products, you’ll need a processing license. There are two types of cannabis processing licenses in Canada:
- Micro-processing license
- Standard processing license.
The requirements for both of the processing licenses are the same, and the only difference is based on the size requirement.
Sales license
The sales license will allow you to sell both recreational and medical cannabis, but it is also one of the harder ones to obtain due to all the security requirements. You will have to provide proof of visual monitoring in the form of a yearly record, and some type of alarm system. You will also have to keep track of every person entering or exiting the area in which you are storing cannabis.
Full information can be found on the Government of Canada website.
Capital investment
Most banks aren’t entertaining business loans for cannabis retailers, deeming it too high risk. Also investment is getting more difficult to come by as the industry matures and those early stage investors have already committed themselves to other ventures. This can be a major problem for some companies, since Ontario requires permit holders to prove they have access to $250k to fund their business before they can be considered for the lottery. However don’t lose hope as there are some online lenders, credit unions and alternative banks that will loan to cannabis businesses
Summary
Wall Street has projected between $50 billion and $200 billion in annual sales, making Canada one of the most lucrative locations to launch your cannabis business.
