A marijuana grow operation.

A marijuana grow operation.

Medical marijuana industry shifts gears

Medical marijuana industry competes for scarce investment dollars

By Geordon Omand, The Canadian Press

VANCOUVER – The free-for-all era of Canada’s commercial medical marijuana industry is over as a new crop of growers try to woo scarce investment dollars in an increasingly competitive business, observers say.

Boris Ziger, CEO of Matica Enterprises Inc., said the short-lived days of unbridled growth ended soon after last year’s change in federal regulations that shifted medical-marijuana production to commercial enterprises from patients growing their own pot.

He said the stock market went “absolutely crazy” in the spring of 2014 as various companies began branding themselves as pot producers in hopes of cashing in on what was really “irrational exuberance you hear about in business school.”

“It’s become much less Wild West-y,” said Ziger, of the Toronto-based investment firm that has sunk millions of dollars into aspiring medical marijuana producer THC Dispensaries Canada Ltd., in Nova Scotia.

All the exuberance at the beginning of the rush had Canada’s security regulators warning investors about buying into medical marijuana companies over lack of disclosure and the general frenzy in the market.

“It was a very hyped-up market, people were very speculative, a lot of loosey-goosey talk,” said Nick Brusatore, who owns a controlling share of vertical-farm innovator and marijuana-producing hopeful Affinor Growers.

“People have had enough of the hype,” he said. “The market’s wise to it now.”

But new businesses trying to get into medical marijuana production are having a tough time financing their ventures.

“Even we’re finding it a little difficult to raise some cash,” Ziger said, adding the newest players have to work a lot harder for what could be a big payoff.

“There hasn’t been a new industry opening up like this since the prohibition of alcohol was lifted. That’s really the only comparison you can make.”

Ziger said Matica is in the final stages of obtaining a licence from Health Canada and plans are in the works for a $10-million expansion of a 14-hectare lot in Nova Scotia for THC to eventually produce 11,000 kilograms of medical marijuana annually.

Despite the stiff competition for investors’ cash, companies continue to apply to Health Canada for licences to produce medical marijuana.

As of Jan. 26, Health Canada had received more than 1,200 applications for Marijuana for Medical Purposes Regulations licences.

The agency said that about half of them were returned as incomplete, while 223 were refused and 35 were withdrawn.

Health Canada said 23 licences have been issued — 15 for fully authorized production of medical marijuana and eight for probationary, cultivation-only permits.

The agency is currently processing 320 applications.

An estimated 40,000 patients use medical marijuana in Canada.

The exact number of people whose doctors prescribe marijuana is unknown because of a court injunction that allows producers under a now-dismantled licensing system to continue growing in the leadup to a constitutional court challenge.

In the early days of the new-generation industry, a disproportionate number of beleaguered mining companies was among the ranks of medical marijuana newcomers lured by the prospect of satisfying disgruntled shareholders.

An already established network of deep-pocketed investors was especially useful in a fledgling industry.

OrganiGram Holdings Inc. was once known as Inform Exploration Corp., and is now a fully licensed medical marijuana producer.

Other established mining companies also making the transition to diversity into the marijuana industry are Bayhorse Silver Inc., Satori Resources and Vodis Pharmaceuticals Ltd., formerly Southbridge Resources.

Many of the companies angling to get in on the medical marijuana game are eagerly eyeing the prospect of outright legalization in Canada and are positioning themselves to take advantage of any legislative change.

But some dissenters believe legalization would spell the end of the medical marijuana industry in Canada.

Brusatore said legalization would see pot sourcing shift outside of Canada to places like Argentina and Uruguay, where growing costs are a fraction of what they are domestically.

“The marijuana markets are not going to be what people think. They’re going to get crushed. Period.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The Songhees Wellness Centre is a symbol of First Nations strength in the region. Representatives of local First Nations will soon play a greater role in decision making and governance relating to the Capital Regional District. (Courtesy Royal Roads University)
Capital Regional District to add First Nations representatives to advisory committees

Board approves bylaw, looks forward to Indigenous input on future decisions

Willow, a kitten belonging to a Victoria family, was rescued by firefighters on Thursday after she got stuck in a basement drain pipe. (City of Victoria/Twitter)
Victoria kitten stuck in basement drain pipe rescued by firefighters

Willow the cat on the mend, owner feeling ‘enormous gratitude’

(Black Press Media file photo)
Blue-green algae bloom confirmed in Elk Lake, water-based activities not recommended

Blue-green algae can be lethal to dogs, cause health issues for humans

Victoria police arrested a man Jan. 15 after he rammed his minivan into an occupied police vehicle. (Black Press Media file photo)
Victoria man arrested for ramming minivan into occupied police vehicle

Man caught after fleeing, crashing into cement retaining wall

Mayor Rob Martin and Costa Canna president Phil Floucault cut the ribbon on Colwood’s first cannabis retail store. (Jane Skrypnek/News Staff)
Cowichan Tribes’ Costa Canna cannabis store opens in Colwood

Cowichan Tribes has one-year deal to grow, sell cannabis

Keith the curious kitten is seen on Nov. 4, 2020 at the Chilliwack SPCA. Friday, Jan. 22, 2021 is Answer Your Cat’s Questions Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Jan. 17 to 23

Answer Your Cat’s Questions Day, Pie Day and International Sweatpants Day are all coming up this week

(Phil McLachlan - Capital News)
‘Targeted’ shooting in Coquitlam leaves woman in hospital

The woman suffered non-life threatening injuries in what police believe to be a targeted shooting Saturday morning

JaHyung Lee, “Canada’s oldest senior” at 110 years old, received his first dose of the COVID-19 vaccine on Thursday, Jan. 14, 2021. He lives at Amenida Seniors Community in Newton. (Submitted photo: Amenida Seniors Community)
A unique-looking deer has been visiting a Nanoose Bay property with its mother. (Frieda Van der Ree photo)
A deer with 3 ears? Unique animal routinely visits B.C. property

Experts say interesting look may be result of an injury rather than an odd birth defect

Terry David Mulligan. (Submitted photo)
Podcast: Interview with longtime actor/broadcaster and B.C. resident Terry David Mulligan

Podcast: Talk includes TDM’s RCMP career, radio, TV, wine, Janis Joplin and much more

Seasonal influenza vaccine is administered starting each fall in B.C. and around the world. (Langley Advance Times)
After 30,000 tests, influenza virtually nowhere to be found in B.C.

COVID-19 precautions have eliminated seasonal infection

Lilly and Poppy, two cats owned by Kalmar Cat Hotel ownder Donna Goodenough, both have cerebellAr hypoplasia, a genetic neurological condition that affects their ability to control their muscles and bones. Photo by Alistair Taylor – Campbell River Mirror
VIDEO: Wobbly Cats a riot of flailing legs and paws but bundles of love and joy to their owner

Woman urges others to not fear adopting cats with disabilities

Chief public health officer Dr. Theresa Tam provides an update on the COVID-19 pandemic in Ottawa on Friday, Jan. 8, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada’s top doctor says to avoid non-essential travel as B.C. explores legal options

Premier John Horgan says he is seeking legal advice on whether it can limit interprovincial travel

Martin Luther King Jr. addresses the crowd during the march on Washington, D.C., in August of 1963. Courtesy photo
Government reinforces importance of anti-racism act on Black Shirt Day

B.C. Ministers say education “a powerful tool” in the fight for equity and equality

Most Read