Cannabis companies are drowning in paperwork

| Tim Wilson

Every business has its fair share of paperwork, and in all sectors, complaints about the burden of regulation and reporting are common. Within Canada’s cannabis industry, however, the paperwork requirements are intense, with a significant burden on smaller cultivators and processors.

“Larger companies producing a more standardized product are able to streamline their data entry requirements,” says Kirk Tousaw, CEO of Great Gardener Farms. “They may have more paperwork in the aggregate, but they’ll also have more employee resources available. At small companies like ours – three total employees, including the two owners – it’s very hard to find extra time or person-power to do the work.”

The nature of the paperwork itself can be frustrating. In many instances, the requirements aren’t only time-consuming – they also seem illogical.

“Particularly onerous is the requirement that all inputs into the cultivation process be tracked,” says Tousaw. “This means that every time we add nutrients to our reservoirs, we’re required to create dozens of data points. This information is absolutely unnecessary to track, which makes spending time on it frustrating.”

Perhaps due to the fact that Canada’s legal cannabis industry is a relatively young sector, the government’s cautious approach has resulted in many redundancies. The bureaucracy associated with these requirements can, at times, seem absurd.

“The fact that Health Canada and the CRA require almost the same information in slightly different formats is ridiculous,” says Sarah Campbell from the Craft Cannabis Association of BC.  “You’d think they could coordinate in some way to be more efficient for all involved.”

There are also differing paperwork challenges that are dependent on the number of strains grown, and the type of cultivator, with indoor and outdoor grows having unique burdens.

“If we grow one strain and one crop a year, the paperwork is quite easy, but if we grow three strains, it gets a bit more challenging,” says Katy Connelly, owner of Sea Dog Farm, a micro in Saanichton, BC. “The harvest paperwork is a bit of a pain because they want you to weigh every leaf that comes off the field, and every plant before it goes into the compost. As an outdoor grower, my plants are the size of a Christmas tree, so all this weighing is a bit ridiculous and time-consuming if it’s done ‘by the book’.”

Working for paper

The time required to do the paperwork can be less onerous than all the weighing and recording, which are necessary administrative steps before any form is filled out.

“It makes sense to report on the number and plants and the weight of the flower,” says Connelly. “However, weighing harvested plants or raking up all the fallen leaves so I can weigh them does absolutely nothing to ‘keep the public safe’. It is just a huge waste of my time. I think most people either make these numbers up, or weigh one and multiply.”

Connelly says that processors have their fair share of headaches, too. 

“I have to count seeds and weigh plants, but my processor has to register every product at the provincial and federal levels, as well as deal with labelling and excise.”

Given that smaller companies have fewer resources to fill out all the paperwork, these added requirements for microprocessors can be extreme.

“Once you get into the world of extracts, and products created from extracts – such as topicals and edibles – the way that Health Canada and the CRA track things differs hugely, and staying on top of all the requirements for reporting becomes a nightmare,” says Sami Majadla, CEO of CertiCraft, a seed-to-sale compliance software solution. “Tiny microprocessors working with edibles and topicals probably have the worst burden, in my opinion.”

Making it right

The government could fix many of these problems by reducing or streamlining requirements and eliminating redundancies. Sadly, there is no set timeline for regulatory overhaul. The current review of the Cannabis Act is part of a much larger process unlikely to result in change any time soon.

That said, given that the legal cannabis market has made a significant dent in illicit activity and that the need for such rigorous reporting requirements is moot, for many now is the time to transition to a more rational approach. 

“We should move toward treating cannabis more like, for example, wine in terms of reporting requirements,” says Tousaw from Great Gardener Farms. “Vineyards don’t have to track and report their fertilizer usage monthly. While valuable and age-restricted, their product isn’t treated as inherently criminogenic. Cannabis and those in the industry continue to be stigmatized with the perspective that this substance requires significant control and reporting burdens. It does not.”

It would seem inevitable that the paperwork requirements will change at some point. For many observers, a rational approach to the sheer inefficiency and nonsensical nature of today’s regimen could result in some easy fixes.  

“First off, the CRA and Health Canada should completely harmonize their requirements,” says Majadla from CertiCraft. “Secondly, the actual amount of data being tracked can be greatly reduced. To share just one example: needing to keep records of all of your prunings that have been destroyed is such a waste of time. Who cares about leaves that have no value? Nobody benefits from tracking something like that.”

In a challenging domestic market with early-mover status – Canada was the first major industrialized country to legalize cannabis – the added administrative burden placed on industry, particularly small cultivators and processors, is significantly hindering a commercial sector that’s already struggling. 

“If paperwork was the only thing troubling this industry, we would all be just fine,” says Connelly of Sea Dog Farms. “As it stands, paperwork is just one more straw added to the incredible challenge of trying to survive.”