Cashing In on Medical Marijuana

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Medical marijuana | BCBusiness
Image by: Adam Blasberg
MediJean CEO Jean Chiasson (left) and chief strategy officer Anton Mattadeen believe R&D is the key to unlocking the medical- marijuana industry’s billion-dollar potential.

Next month, new legislation comes into effect stating that the only access to marijuana for medical purposes will be through licensed companies. A billion-dollar industry is there for the taking, and several B.C. producers are poised to light it up

In business, your choice of real estate says a lot about your enterprise. A flashy storefront on Alberni or Burrard is de rigueur if you’re a luxury retailer; for the banks, you need to be high atop the action, on Georgia or Hastings or Howe.

But if you’re one of the dozens of B.C. entrepreneurs hoping to crack into Canada’s newly legitimized medical marijuana industry, a more low-key approach is in order. For one thing, despite Health Canada’s edict that as of April 1, 2014, the only access to marijuana for medical purposes will be through licensed producers, pot carries a residual black-market stench to it, making neighbours leery of anybody who might be trucking in the trade. Then there’s the security risk: those who get a licence in 2014 to sell marijuana become a target for the criminal element hoping to steal product for their less-than-legitimate enterprises.

And so it is that my first visit to one of B.C.’s medical marijuana hopefuls, MediJean, takes me to a nondescript business park in Richmond full of unmarked, low-slung offices and winding roads: in other words, a perfect place to get lost. Only once inside MediJean’s headquarters, decorated in the pastels-and-wood motif of an upscale dentist, do you see the posters and promotional material that the company hopes to take to market once they get their licence and grab a share of what’s expected to be a billion-dollar industry.

The federal government’s change to the laws governing medical marijuana, which came into effect on June 19, 2013, represents a profound shift in policy and comes with surprisingly little fanfare. In the old system, called Marijuana Medical Access Regulations (MMAR), launched in 2001, individuals (with the help of their doctors) applied directly to Health Canada to grow their own supply—or become an authorized producer to grow on behalf of someone else (up to a maximum of four people).

In the new system, called Marijuana for Medical Purposes Regulations (MMPR), only licensed producers can grow marijuana—and while Health Canada has a strict application and approval process for who qualifies as a producer, it has otherwise disintermediated itself from the business. If you have a prescription from your doctor saying you need pot, you’re free to fill your prescription from any licensed producer, similar to most prescription drugs.

The money at stake for those producers who get a licence is significant. In addition to the 30,000-plus individuals who currently have licences to grow under the MMAR system, Health Canada estimates that some 450,000 people currently “self-medicate”—growing or purchasing their own supply from disparate sources (including MMAR producers), without the government’s knowledge. With the MMAR licences expiring on March 31, and those producers effectively put out of business, the vast majority of patients needing medical marijuana are expected to now buy from a licensed producer.

How much they’ll buy is a matter of some debate, but Health Canada estimates a typical patient will go through at least 30 grams of pot a month, with the agency allowing users to possess up to five times that—150 grams at any one point. With the current market price ranging from $6 to $12 a gram, that’s at least $180 a month per patient, or about $2,200 a year. Multiply that by about 500,000 users, and you’re over a billion dollars a year in revenues for the industry. At bare minimum.


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