Article by Sean Williams, The Motley Fool
Pardon the cliche, but the marijuana industry appears to be the greatest thing since sliced bread. Although the cannabis industry has existed for decades behind the scenes, the legalization of recreational weed in Canada, along with more than 40 countries giving medical marijuana the green light around the world, has opened the floodgates for legal revenue to flow into the industry.
But, as is common with any nascent and fast-growing industry, it’s dealing with growing pains. This is especially true of our neighbor to the north, Canada.
This game-changing move is designed to alleviate Canada’s pot shortage
However, Health Canada believes it has a solution that’ll greatly alleviate the cannabis bottleneck currently wreaking havoc in the country. As reported by BNN Bloomberg, Health Canada unveiled a plan this week to only allow applicants that have completed their greenhouses to submit cultivation applications.
Prior to this rule change, marijuana growers would submit their cultivation applications months, or perhaps even more than a year, before they’d break ground on constructing or retrofitting a grow farm. They did this because they knew it would take many months, or more than a year, before the regulatory agency would have time to review their application. But according to Health Canada, more than 70% of applications for a cultivation facility whose paperwork was approved by the agency over the last three years failed to provide evidence of a compliant manufacturing facility.
For example, Aphria (NYSE:APHA) has been waiting for more than a year to receive approval for its cultivation license application for its Leamington, Ontario, joint venture with Double Diamond Farms. The Aphria Diamond facility, as it’s known, involves retrofitting existing vegetable-growing facilities owned by Double Diamond for cannabis production. When complete, the grow site is expected to provide the bulk of Aphria’s annual peak output, with 140,000 kilos of forecast production out of the 255,000 kilos the company expects at its peak across all grow sites.
In this instance, Aphria’s facility is ready to roll, but it’s been left twiddling its thumbs with regard to more than half of its future production because of Health Canada’s monstrous backlog of applications.