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Globe says Hexo, rivals see Health Canada change rules

2019-05-10 07:11 ET - In the News

See In the News (C-HEXO) Hexo Corp

The Globe and Mail reports in its Friday edition that this week, Health Canada announced it would be making big changes to the process for approving licensed-producer applications. The Globe's guest columnist David Clement writes that specifically, it stated that all new applications will have to have a fully built and regulatory compliant facility at the time of application. Health Canada has justified the move by citing that 70 per cent of preapproved applications have not ended up having their production site built and compliant with current production regulations. This change is incredibly problematic for the cannabis industry and, more importantly, for cannabis consumers nationwide. The first issue with this policy change is that it will make it significantly harder for new producers to enter into the cannabis market. Now, because of the change, entrepreneurs and firms looking to enter the market will have to get financing without any indication from government that they will be approved. From a financing side, this makes investment into new cannabis firms extremely risky, with the potential for millions in sunk costs if an applicant does not get approved after already building a fully compliant facility.

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