New regulations mean big changes for pot growers

Licensed to growWe walk downstairs to his Toronto home’s basement and sit on leather couches. I feel instantly comfortable. Across from me is Mike Federman, who is a licensed marijuana grower under the current Marihuana Medical Access Regulations program (MMAR).

He starts to roll some grass and I hold the lighter – it’s a joint effort.

After lighting up, he enthusiastically hands me a folded piece of paper from his wallet. It’s a license for medical marijuana that he uses to battle chronic back pain caused by a compression fracture in his spine.

Smoke of an herbal variety fills the air and the aroma and focus in the room instantly changes.

I’ve never seen a man more excited to talk business – weed business, that is.

“The new regime gives us a chance to explore new medical applications that allow for alternative treatments of conditions that were previously unable to be treated,” he says.

Due to new regulations introduced by Health Canada, effective Oct.1, the old system that relied on homegrown medical marijuana operations will be replaced by the Marihuana for Medical Purposes Regulations (MMPR), which will commercialize the industry, according to Canada’s minister of health, Leona Aglukkaq.

According to the Health Canada website, new regulations will “change the way Canadians access marihuana for medical purposes by allowing for the creation of a system of supply and distribution by licensed producers.”

These rigorously regulated licensed producers – appointed to produce medicinal pot for users with prescriptions – will take over the designated personal production role.

Federman was one of these designated producers, but is now applying to be an Alternate Person in Charge (someone responsible for supervising activities at a cannabis production site when another supervisor is absent) at a new facility that is in excess of 100,000 square-feet (pending approval from Health Canada).

He is now part of a team consisting of doctors, security specialists, and marketing and sales professionals – currently being advised by Ron Marzel, a lawyer who has successfully fought for critically ill patients to be able to access a safe, sufficient and quality-controlled supply of affordable pot.

The group is now working towards a collective goal of providing the highest quality medical cannabis for those who need it.

The Canadian Press reports that there are currently 156 applicants for the new large-scale grower licenses, with two companies already approved in Saskatoon.

Federman’s group is one of the companies awaiting approval. He says they are in the middle of a $2 million to $3 million application process that includes acquisition and set up costs.

Statistics from Health Canada show there are currently 37,400 people qualified to use marijuana for medical purposes. However, by 2024 this number could increase to as many as 450,000.

Under the new rules patients will have to go directly to designated growing centres to buy their drugs. Patients currently in the system will have to destroy home crops by March 31, when Health Canada plans to have phased out the old MMAR regulations.

Police officials have raised serious health concerns regarding the production of medical marijuana in private dwellings (as permitted by the old MMAR).

These concerns include “the presence of excess moisture in homes creating a risk of mould (particularly associated with drying of marihuana); electrical hazards creating a risk of fire; and exposure to toxic chemicals like pesticides and fertilizers creating risk to residents…”, according to Health Canada.

In Abbotsford, B.C., police services reported an electrical fire at a licensed residential grow-op caused by extremely high voltages coming into the building on Feb. 12, 2013.

Police officials also say the old program was vulnerable to criminal abuses – mainly the diversion of cannabis to the illicit market. The state of the old program also poses other obvious public safety concerns, such as grow operations and nearby residences being susceptible to robberies and other criminal activity.

As a result, an integral part of the new law focuses on tough rules. Under the new regulations, growers will have to keep record of their inventories, ship products by secure delivery service, and heighten security. The hope is that privatization will ensure a higher level of supervision, eliminating dangers that plagued the old MMAR regulations.

As Federman talks about his budding business, he says, “Our security measures will not only meet Health Canada requirements, but will exceed them.”

Federman’s new facility will include perimeter fencing, biometric numeric access, a reinforced vault for storage, drive-in bays for delivery, extensive surveillance cameras, 24-hour security, and limited access for employees.

One of their top security professionals came out of retirement just to be a part of the venture. Federman says the man was previously in charge of security at a major federal institution with one of the highest levels of security clearance.

Despite the new security requirements, Health Canada says they are placing no limits on the number of these new capital-intensive facilities, and under the new regulations, producers are able to set their own prices.

Capital-intensive is an understatement.

Federal projections expect revenues to hit $1.3 billion per year by 2024.

How will this effect prices? Currently, medical pot in Canada is sold for $5 a gram.

Compared to the average of $10 a gram for dried bud on the street, that’s pretty cheap.

However, the cost will go up as producers set their own prices. Health Canada predicts that the cost of the new legal weed should start at $7.60 per gram, but could drop even lower over time.

Sophie Galarneau, a senior official with Health Canada, in an interview with The Canadian Press, said competition fostered by a free market will keep prices controlled.

Federman passionately supports the idea of a free market dictating the prices of medicinal pot, and says that’s the way it should be.

“With a self-regulating market creating competition, people will know exactly what they’re getting at the quality they demand,” he says. “It’s all about control.”

The new regulations are an entrepreneurial dream.

Jeffrey Rybak, a business law lecturer at the University of Toronto, says there is a lot of interest in getting in on the ground floor of this industry because businesses are optimistic about changes in the future.

University of Toronto lecturer Jeffrey Rybak.

University of Toronto lecturer Jeffrey Rybak.

“It’s a very speculative business environment, but then that’s where the real money is,” says Rybak. “The investors who are looking at this market right now may do very well if they plot a favorable course through the red tape and regulations.”

Large rewards in the future, for businesses like Federman’s, are imminent. With the medical marijuana industry already burgeoning in Canada, the prospects are great for these businesses if cannabis also becomes legal for recreational use.

Federman points to recent law changes regarding marijuana in the United States as an inspiration.

“The minute that I saw Colorado and Washington change laws from medical to recreational, that was the first brick in the wall that came out, the first brick that signaled the beginning of the end of prohibition,” he says.

It seems that support by business and educational professionals is growing. Rybak points to the fact that every major political party in Canada is in favour of either legalizing or decriminalizing marijuana – except the Conservatives.

“We’re fairly confident that we’ll have a healthy commercial industry in time,” Galarneau told The Canadian Press.

As much as Rybak supports the new laws, he is quite skeptical of the current government’s ability to turn medical marijuana into a healthy commercial industry.

“I really don’t think it will reach nearly the number of patients some are predicting,” he says, “but if it reaches even a few more, that’s still better than the current state of affairs.”

Also, let’s not forget the enormous potential for advancement in medical research that the new regulations could allow.

Federman bluntly states he loves pot just as much as he loves helping people. As lucrative as this opportunity is, his ultimate goal is to help increase people’s quality of life.

Plagued with anxiety? Look to the Pharaoh.

Tutankhamen, Charlotte’s Web and Satori are just a few of the large range of strains with varying strengths that his team plans to grow.

They will have an in-house lab to analyze percentages of elements such as THC – often used to soothe pain – and a component called CBD, which is shown to control epilepsy.

This makes it safer and allows them to create strains that target different ailments.

Federman wants to focus on children with epilepsy, creating strains with a high percentage of CBD in order to combat seizures.

Rybak reminds us that medical marijuana is not a myth. “It can help people undergoing chronic care to function without the worse side effects of barbiturates,” he says.

Lighting up another joint, Federman puffs with an introspective gaze and explains:

“The more the public hears about marijuana in the media and medical community, the more they become desensitized to the fact that it was thought of as an immoral drug at some point. They are now seeing light…it is much less dangerous than alcohol and tobacco and so significantly less addictive that it can be managed and consumed by employing methods that reduce side effects while enhancing the benefits.”