Expanding micro processing can benefit all micros

| David Brown

While some micro cultivators have said they see little need for an expanded canopy, some micro processors say they believe the changes could benefit smaller craft producers. 

Kayla Mann, CPA at Habitat Life, a micro cultivator and micro processor in BC, says she sees the changes as especially positive for micro processors and great for micro cultivators, who will have more processors to choose from. 

In a previous article, we spoke with several micro cultivators who said they were surprised by Health Canada’s recently proposed changes to micro licensing, which would allow the maximum canopy space to increase from 200 m2 to 800 m2. While some micro cultivators told StratCann they could see expanding their space, limitations like funding or zoning stood in the way. 

“This gives us the opportunity to become a more formal processor and bring product in, not just processing our own.”

Kayla Mann, Habitat Life

Mann explains that Habitat Life grows, packages, and distributes its own products under its own brand. She says she understands the concerns from a cultivator standpoint. But for Habitat, being able to expand its processing space under its existing micro licence means it could begin processing for other micro cultivators, potentially even contracting out some of its unique genetics. 

Inside Habitat’s flower room

Through this process, she explains, Habitat could address its own financial hurdles in expanding its canopy by generating more cash flow on the processing side. She says this could also give the numerous stand-alone cultivators more options when choosing who to use as a processor, ideally giving them more leverage on price and terms. 

“This gives us the opportunity to become a more formal processor and bring product in, not just processing our own,” explains Mann. “Cash flow is one of the biggest issues facing the industry for smaller companies, especially if one’s focus is on domestic consumers sales, falling within the payment terms of each province.”

She also says she understands concerns that making micros four times bigger can compromise the integrity of a small craft-style facility. However, she feels the potential new limit of 800 m2 is still within the manageable scope of a small business and certainly still much smaller than many standard producers. 

It’s also more cost-effective and manageable than building out a second micro, as some companies have done in recent years. 

“I do think there’s a threshold of where craft can go, and I think the proposed changes are likely on the higher end of that, but it’s certainly manageable. For those who imagine growing something that big, I think this is the most cost-effective. The plants still need the same amount of care, so if you’re stretching yourself too far things can happen. But there are ways to address that while maintaining that quality.”

“It’s another size t-shirt for people to put on instead of just extra small or extra large.”

Jonathan Wilson, Crystal Cure

Jonathan Wilson, CEO of Crystal Cure, a micro cultivator and micro processor in New Brunswick, thinks the proposed changes will help carve out a distinction between smaller craft growers that are larger than a micro but still much smaller than many other standard producers who can have a significantly larger canopy.

Wilson explains that the ideal would be a third licence category right in the middle of micro and standard, but he thinks the proposed changes are at least a good step in that direction.

He compares it to the beer industry in New Brunswick, where there are local micro breweries, somewhat larger craft breweries, and then standard large-scale breweries. While the micro breweries have a very limited capacity that allows them to stay mom-and-pop businesses, the craft designation allows a company to still build a brand based on a “craft” style quality but expand it in ways that can benefit from more efficiencies of scale, all without compromising quality. 

“I believe in the true micro, the mom-and-pop,” says Wilson. “When you start to get up to 800 metres squared, that’s necessarily a micro. I agree. But this, to me, opens up the possibility of having maybe three licence classes, I hope.

“We know that some micros are going to say they cannot afford to go there, don’t want to go there, don’t have the demand to go there, and that’s fine. But this gives a chance for those who do want to get just a little bit bigger, they can do that.”

“It’s another size t-shirt for people to put on instead of just extra small or extra large.”

Crystal Cure was first licensed as a standard producer, explains Wilson. In 2023, the company announced it had downgraded its cultivation and processing to micro licences. The company had initially developed business plans for a much larger facility, but by the time it found itself licensed in mid-2019, the market had already begun to pivot to more modest expectations. 

The team at Crystal Cure showing off their farmgate licence

Scaling down to a micro licence not only allowed them to save money on annual licensing fees but better reflected how small the operation actually was, and still is. But with the proposed canopy and processing increase, Wilson says he can see beginning to slowly build up to something a little larger. 

Like Mann at Habitat, he says expanding under their current licence, rather than getting a second micro, will be a more efficient way to build the company and brand. 

“The timing is actually great for us. We were talking about building another micro and expanding Crystal Cure, but now if this changes where we can grow more under our existing licence, then there’s no need to go and build two other buildings until we maximize these.”

Featured image shows the inside of Habitat’s current processing space as they package dried flower.

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