Canadian CANNAINVESTOR Magazine June 2019 | Page 41

who had passed Health Canada’s initial paper-based review of their application over the past three years had not submitted their evidence package to demonstrate to the government that they have a built facility that meets the regulatory requirements. As a result of this, the government felt that it was expending significant resources on the review of applications from entities who were not ready to begin operations, contributing to wait times for more mature applications and an inefficient allocation of resources.

While there is really only one change being implemented, it is a significant one. Here are some of the key takeaways:

The use of Experienced Consultants and Professionals will be Key. Once the facility has been built, making changes to address Health Canada concerns will be costly and, in some instances, nearly impossible. Getting it right the first time is critical. Thankfully for new applicants there are a number of consultants and professionals who have built a demonstrated track record of success over the past number of years and on whom applicants can lean to ensure that things go right the first time.

Existing Applicants Need to Be Cautious. Just because Health Canada advises that it has no concerns with an existing application does not mean that it cannot fall off the rails. The review that will be conducted by Health Canada is “high-level”. The government has indicated that a positive status update letter does not necessarily mean that an application is fully compliant or that a license will be issued. Existing applicants need to do a deep dive on their applications and triple check to make sure it is compliant with the legislation before build-out occurs.

Faster Turnaround at the Back End. The good news is that once a facility has been constructed the timeline to obtain a license should be shortened considerably. Given that Health Canada will no longer be deploying resources to review paper-based applications of facilities that have not been built, more resources can be spent processing applications where construction has been completed.

Questions About Security Clearance Times. Now that security clearances will not be processed until after a facility is built, how long it takes to process those clearances becomes an even more important question, especially given that applicants will now be sitting on fully built out facilities and burning cash while they wait for those security clearances to be processed.

Any Significant Changes to Financing? Many think that this change may make it harder to raise capital and put a squeeze on smaller applicants. I am not so sure that is the case. Raising capital for cultivation (and perhaps processing) facilities is not an easy endeavour at the moment. Many investors feel that the market is, or will shortly become, saturated and are looking to deploy their money elsewhere. Long gone are the days where bags of cash are thrown at every “late stage applicant”. Securing capital requires a solid team and compelling business plan, two things that ought to be put in place well before a facility is actually constructed.

The use of Experienced Consultants and Professionals will be Key. Once the facility has been built, making changes to address Health Canada concerns will be costly and, in some instances, nearly impossible. Getting it right the first time is critical. Thankfully for new applicants there are a number of consultants and professionals who have built a demonstrated track record of success over the past number of years and on whom applicants can lean to ensure that things go right the first time.

Existing Applicants Need to Be Cautious.

Just because Health Canada advises that it has no concerns with an existing application does not mean that it cannot fall off the rails. The review that will be conducted by Health Canada is “high-level”. The government has indicated that a positive status update letter does not necessarily mean that an application is fully compliant or that a license will be issued. Existing applicants need to do a deep dive on their applications and triple check to make sure it is compliant with the legislation before build-out occurs.

Faster Turnaround at the Back End. The good news is that once a facility has been constructed the timeline to obtain a license should be shortened considerably. Given that Health Canada will no longer be deploying resources to review paper-based applications of facilities that have not been built, more resources can be spent processing applications where construction has been completed.

Questions About Security Clearance Times. Now that security clearances will not be processed until after a facility is built, how long it takes to process those clearances becomes an even more important question, especially given that applicants will now be sitting on fully built out facilities and burning cash while they wait for those security clearances to be processed.

Any Significant Changes to Financing? Many think that this change may make it harder to raise capital and put a squeeze on smaller applicants. I am not so sure that is the case. Raising capital for cultivation (and perhaps processing) facilities is not an easy endeavour at the moment. Many investors feel that the market is, or will shortly become, saturated and are looking to deploy their money elsewhere. Long gone are the days where bags of cash are thrown at every “late stage applicant”. Securing capital requires a solid team and compelling business plan, two things that ought to be put in place well before a facility is actually constructed.

While there is really only one change being implemented, it is a significant one. Here are some of the key takeaways:

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