Cannabis Producers Look to Small-Scale Growers To Diversify Product Offerings

Article by Sarah Efron, Globe and Mail

Cannabis producers look to small-scale growers to diversify product offerings OLYMPIA, WA - MARCH 15: Micah Sherman, 32, and Nicole Graf, 28, who moved from Brooklyn NY to cultivate cannabis, care for the "mother plants" which will seed their 7000 sq feet indoor farm in a warehouse south of Seattle, on March 15, 2014 in Olympia, Washington. Sherman and Graf left good jobs in Brooklyn and invested $600.000 in Raven, which will market high-end cannabis products to aging baby boomers. With legal medical cannabis allowed in over 20 states, and recreational use allowed in two (Colorado and Washington), the legal cannabis market is primed to expand dramatically. Privateer Holdings, a private equity firm that invests only in legal medical and recreational cannabis markets, has already raised over 50 millions dollars from investors, effectively bringing cannabis to Wall Street (Photo by Gilles Mingasson/Getty Images).

Licensed cannabis producers are looking to make deals with both legal and black-market small-scale craft growers to add variety to their product offerings for the recreational market.
Since Oct. 17, prospective growers have been able to apply for micro-cultivation licences from Health Canada. The licence limits plant canopy size to 200 square metres, but has less rigorous security rules than the standard cultivation licence. Health Canada says so far, it has received 15 applications under the micro subclass to cultivate or process cannabis.
Even though the first micro cultivation licences aren’t expected to be issued for many months, established licensed producers have been negotiating with small growers and in some cases have signed supply deals. Some of these small growers are new entrants, while others are currently producing cannabis illegally or are growing under medical licences.
Some within the industry warn that the small growers may be placing themselves at a disadvantage in the long-term with these deals, but the large firms making the agreements emphasize the benefits a big partner can offer.

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