The Dos and Don’ts of Operating a Successful Cultivation Business

If you’re thinking of starting a cannabis cultivation business, there are several things you should consider before getting started. In this article, we’ve put together a list of Do’s and Don’ts that you should give thought to before pursuing a cannabis cultivation licence. Hopefully, this will help you get started and put you on the pathway to operating a successful cultivation business!

Dos:

• Conduct as much research as possible before getting started. When it comes to cannabis, there is much you need to learn and be aware of. To operate a successful cannabis cultivation business, it’s important that you are knowledgeable on the relevant federal, provincial and municipal legislation around cannabis. By familiarizing yourself with legislation, you will gain an understanding of activities that are permitted and those that are not, as well as your responsibilities as a licence holder. Success comes with compliance, so this is a great place to get things started. The Cannabis Act and Cannabis Regulations are available online for anyone to view. This legislation outlines a wealth of important information and we recommend you read through them as much as possible to gain a thorough understanding of the roles and responsibilities of a licence holder.

• Think about whether you want to cultivate indoors, outdoors or both. Health Canada now offers all of these options under a cultivation licence, so it’s important that you decide what would be best for your business. Growing cannabis outdoors is the most natural and least expensive way to cultivate. All you need is a plot of land, sunlight, and some good soil. Much less energy is required (no lights, no cooling/heating) and nutrients can be regenerated and recycled. Growing outdoors is both sustainable and environmentally friendly, but there are many great benefits to growing indoors as well. By keeping cultivation inside a clean, safe, and secure building, growers have complete control of the production process and environmental conditions. This includes the growing substrate, light, temperature, humidity, and air circulation. With conditions exactly how you want them, plants are more likely to grow to maturity and be pristine. Furthermore, some cannabis strains may be better equipped for indoor growth where conditions are monitored heavily. You should also keep in mind that one can expect to yield up to four crops indoors, and harvest year-round once full maturity is achieved. Contrast this with only one crop outdoors, assuming optimal weather conditions even allow for it! Read more on indoor grow vs. outdoor grow here.

• Prepare a solid business plan and make sure you have capital available for start-up costs and ongoing costs – this includes site location, contractors and builders, renovations, personnel, etc. A good business plan that is highly detailed and thoughtfully created is essential for your cannabis business to succeed. Not only will it help you plan out the lengthy process of establishing a cannabis cultivation business, it will also help you focus on the specific steps to reach your short- and long-term goals and objectives. You’ll also need a well written business plan if you’re looking to raise funds from investors and lenders. Investors and banks will only risk their time and money if they’re confident your business will be successful and profitable. A basic description of your business idea is not enough. Your business plan should be clear, easy to read, detailed and informative. It should cover strategies for achieving your objectives, as well as financial details like predicted profits and income streams and potential pitfalls in your plan. We strongly advise that you contact a professional to ensure your business plan is well written, structured and effective.

• Find the right site location for your cultivation business. Your site should reflect the type of license you are seeking and the activities you would like to conduct. If outdoor grow is an option, you’ll want a site where there is a large plot of land available where plants already grow well. You should consider privacy and security, and you may want to conceal your site from neighbors/the public and potential thieves. It’s important to consider all of these factors when you’re deciding on a site for your cannabis business. Furthermore, under Health Canada’s new licensing regime, applicants are required to have a site that is fully built prior to submitting a licence application. Therefore, it is your responsibility to comply with all applicable provincial or territorial laws (e.g. environmental laws) as well as municipal by-laws (e.g. zoning and building permits). Before securing a site location and starting any kind of construction, it is important that you contact the local municipality where your site is located and determine if the site is zoned correctly for the proposed use. For example, commercial-scale cannabis cultivation is a form of agriculture. Most zoning by-law definitions of agriculture would include cannabis, unless the cultivation of this particular crop has been carved out of the permitted use category. Therefore, it’s important to contact the local planning department at an early stage in order to determine whether and where such a use may be permitted.

• Make sure you have the right building permits before starting any construction on your site. Once your site has been secured, the next step will be to secure these building permits. Licensed producers are required to obey municipal zoning by-laws and a Chief Building Official will refuse to issue a building permit for any proposed construction or new development that does not comply with the provisions of a zoning by-law. While it is possible to apply to a local municipality to amend or seek a minor variance to a zoning by-law as it applies to a particular property, the process can be costly and there is no guarantee of success. Because of this, we advise prospective cannabis businesses to seek out locations where cannabis production facilities are explicitly denoted as a permitted use in the applicable zoning by-law. This way, you can be more confident that your business will receive municipal and public support.

• Employ a Master Grower that has extensive experience/training in botany or horticulture. Your Master Grower will be responsible for the life of your cannabis plants, so they should have the necessary training, skills and knowledge to perform their duties. Your Master Grower should be familiar with the optimal environmental factors for cannabis cultivation such as ventilation, temperature, light, water, humidity, etc. Furthermore, they will also be responsible for the following duties at your site:
  – The overall planning, preparation, oversight and maintenance of cannabis plant production
  – Managing cultivation staff, schedules, cultivation processes, inventory, and vendor relations
  – Maintaining accurate records of cultivation activities using the designated software system (inventory, water/nutrient application, weight and other numerical values, etc.)
  – Overseeing inventory, client orders, and deliveries to ensure efficient levels of all cultivation inputs and supplies
  – Working with cultivation staff to maintain a clean, orderly and compliant growing facility
  – Following established Standard Operating Procedures (SOPs) and contributing to the development of new policies and procedures regarding cannabis cultivation
  – Assisting the Quality Assurance Person with training of new cultivation staff, as necessary

Don’ts:

• Start off with an extremely large cultivation area if you’re not prepared for it. While some businesses are tempted to immediately start growing with multiple acres of land, this can be costly to maintain and difficult to upkeep, if you’re not prepared. If you have a large plot of land, consider licensing in phases to ensure things are not overwhelming. Those seeking Standard licenses will need a larger site with buildings and rooms that will accommodate the activities taking place. Micro licenses generally don’t require as much space as they are limited in the amount of canopy space.

• Spend a fortune on building out/construction. You should establish a budget for your project and find out if your contractors are able to work within this. There are many options available to comply with the Good Production Practices (GPP) requirements of the Cannabis Regulations, so it’s important that you think about what you’d like your facility to look like and what your business can afford. Keep in mind, a seemingly low price up front will do you no good if you’re constantly hit with change orders to get what you really wanted, resulting in a project that balloons way over your budget! Also, you should take some time to ask any questions on your mind, including how well the contractor does in getting projects completed on time. Before starting any of your construction work, we advise you to speak with multiple contractors you may be considering and get written proposals from each of them. When you compare bids, make sure each one includes the same materials and the same tasks, so you’re comparing apples to apples.

• Try to run a cultivation business with as few individuals as possible. A team is crucial for success, so it’s important to have trained and experienced personnel on site to ensure things run smoothly. Keep in mind there are a few different roles that will need to be filled for a cultivation licence holder (e.g. Head of Security, Master Grower) so rather than having the same individual double up on these roles, you may want to consider having a separate, qualified person perform each role so that they are able to manage all of the responsibilities that are associated with their job position. You should also hold regular training sessions for your long-term employees to reinforce job expectations, as well as whenever you introduce new products, procedures or responsibilities.

• Submit an incomplete or inaccurate application. There are many different pieces to the application, including paper documents as well as video/photographic footage of your site. It is crucial that your site evidence package and your paper application are both complete, accurate and correlating. Health Canada may refuse to consider an application if any of the required information is not provided. Furthermore, submitting an incomplete or “messy” application can slow down the review of your file, which will ultimately result in extra waiting time for you to receive your licence. It’s also important that you’re open and honest about your business and all of the individuals/companies involved. For example, you will need to disclose key investors, directors, officers, partners, as well as any other corporations/individuals that are in a position to exercise direct or indirect control over the licence holder (e.g. parent/holding companies). All of these individuals will also need to apply for security clearance. It may seem like a good idea to keep your application simple by only including a few individuals and not mentioning any controlling organizations such as parent companies, in hopes that this will speed up the review of your application. BUT BEWARE – this can be a disastrous decision. Not only will it slow down the review of your application (because Health Canada will send requests for more information asking you to disclose this information), but it could put your application in jeopardy due to required info not being provided.

To navigate all of the application requirements, we recommend working with a licensing expert. Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs and much more. Our team is equipped with professionals who have extensive experience in the Cannabis, Pharmaceutical, Natural Health Product, Food and Medical Device industries. We leverage years of cannabis quality assurance, operational and cultivation knowledge with real-life hands-on experience. Our team has experience submitting over 125 cannabis license applications under ACMPR and the Cannabis Act, with NO refusals to date. This speaks to our team’s dedication and due diligence to help our clients succeed.

No matter what kind of setup you choose for your cultivation business, it’s important to stay informed and educated, and have a solid plan in place so that your cannabis business can succeed. Contact us today to discover how the Experts at CLE can license and legalize your cannabis business to meet federal or provincial regulations.

How we can help you

At Cannabis License Experts, we provide you with the guidance to plan your indoor or outdoor cannabis business, acquire funding, navigate the legal requirements, and acquire the appropriate licence for your operations. As the Canadian cannabis industry develops, more and more licensed producers will be needed to meet the demands of consumers.

Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs, and more.

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