Micro cannabis licences surge in 2023 amid revocations of standard licences

Micro cannabis licences surge

The cannabis industry in Canada saw a significant shift in 2023, as more micro cannabis licences were issued than standard licences, while the number of revocations and expirations of both types increased. This trend reflects the growing popularity and viability of small-scale cannabis production and processing, as well as the challenges and competition faced by larger licence holders.

Micros outnumber standards in 2023

According to data from Health Canada, 185 new federal cannabis licences were issued in 2023, of which 100 were micros, 64 were standards, six were nurseries, and 15 were stand-alone medical-sales-only licences. Micro-cultivation licences, which allow for a maximum of 200 square metres of canopy space, were the most common type of licence issued, with 68 out of 185, or about 37%. There were 12 micro-processing licences issued, which allow for a maximum of 600 kilograms of dried cannabis or equivalent per year, and 20 licence holders who obtained both a micro-cultivation and a micro-processing licence.

Micro cannabis licences are generally more affordable and easier to obtain than standard licences, as they have lower security and regulatory requirements. They also offer more flexibility and diversity for cannabis producers and processors, who can focus on craft, quality, and niche products, rather than mass production and distribution.

Revocations and expirations rise in 2023

While new applications for cannabis licences continued to come in, the number of licences that were revoked or expired also increased in 2023. As of December 31, 2023, there were 166 licences that were either revoked or expired, of which 146 were revoked at the request of the licence holder, three were revoked by Health Canada, and 17 expired. This means that about 18% of the total 926 federal licences that were active at some point in 2023 were no longer valid by the end of the year.

Micro cannabis licences surge

The reasons for revocations and expirations vary, but some common factors include financial difficulties, market saturation, regulatory compliance issues, and strategic decisions. Many licence holders, especially standard ones, faced challenges in competing with the illicit market, as well as with other legal producers, resulting in price compression, oversupply, and low profitability. Some licence holders also decided to consolidate, merge, or sell their assets, as part of their business plans or survival strategies.

Quebec leads the way in micro licences

The distribution of new micro licences across the provinces and territories also showed some interesting patterns in 2023. Quebec was the most frequent location for new micro licences, with 37 out of 100, or 37%, followed by British Columbia with 19, Ontario with 17, Alberta with 15, Manitoba with four, New Brunswick and Nova Scotia with three each, and Saskatchewan with two. No new micro licences were issued in Newfoundland and Labrador, Prince Edward Island, Yukon, Northwest Territories, or Nunavut in 2023.

Quebec’s dominance in micro licences can be attributed to several factors, such as the province’s strong culture and history of cannabis production and consumption, the support and incentives from the provincial government and the cannabis regulator, the Société québécoise du cannabis (SQDC), and the high demand and preference for local and craft products from Quebec consumers.

Outlook for 2024

The cannabis industry in Canada is expected to continue to evolve and grow in 2024, as new products, markets, and opportunities emerge. Micro cannabis licences will likely remain a popular and attractive option for many aspiring and existing cannabis entrepreneurs, as they offer a way to enter and thrive in the legal cannabis space, while maintaining their independence and identity. Standard cannabis licences, on the other hand, will have to adapt and innovate to overcome the challenges and competition they face, and to leverage their scale and resources to their advantage.

The cannabis regulatory framework in Canada will also undergo some changes in 2024, as Health Canada announced in October 2023 that it will phase out inspections for authorized activities change requests from processors to add the activity of sale of extract, edible, and topical cannabis products, starting from January 1, 2024. This change will apply to all processing licence holders, micro or standard, and will streamline and simplify the process of obtaining sale authorization for these products.

By Benjamin Parker

Benjamin Parker is a seasoned senior content writer specializing in the CBD niche at CBD Strains Only. With a wealth of experience and expertise in the field, Benjamin is dedicated to providing readers with comprehensive and insightful content on all things CBD-related. His in-depth knowledge and passion for the benefits of CBD shine through in his articles, offering readers a deeper understanding of the industry and its potential for promoting health and wellness.

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