Canada: Cannabis ‘Genetics Bottleneck’ A Growing Concern For Budding Licensed Producers

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As the number of licensed cannabis producers skyrockets ahead of federal legalization, industry leaders in B.C. fear a “genetics bottleneck” will stop newer growers from acquiring and growing unique strains.

Health Canada has doubled the number of licensed producers since last May to 88. But as these new growers sink millions of dollars into facilities, their access to diverse starting materials — seeds and seedlings — is hampered by stringent Health Canada rules that require them to be bought from a legal source, usually an established licensee or through government-approved importation from outside the country.

Meanwhile, the illicit market offers an almost-infinite variety of strains, with many cultivated and tweaked over decades by small growers whose unique crops are sought after in dispensaries. Black-market seeds can be ordered online but are not available to the licensees.

Jonathan Page, co-founder and CEO of Anandia Labs, a cannabis biotech and testing firm, said the “genetics bottleneck” is particularly troubling for new licensees seeking starting materials that will set them apart from the others, giving them a competitive edge.

“On the business side, it’s acute,” said Page, also an adjunct professor at the University of B.C. A new licensee will approach an established one for seeds or seedlings, but the established one may not be willing to part with their best genetics without onerous financial terms such as a contract for royalties, Page said.

“Essentially, they’re sort of being asked to enable their competitor or their future competitor,” he said. “It’s a system that makes it difficult for the new licensees.”

In its proposed framework for legalization, Health Canada has said it will create license categories for “micro-cultivation,” which would bring small growers on board, and “nursery” cultivation, which would provide a legal source of starting materials and allow development of new varieties.

Page believes such measures will help Health Canada toward its goal of quashing the black market, possibly allowing some to cross over from it. But he believes the new system must allow adequate variety to serve the needs of medical patients, who want options so that they can strike the right balance of THC and cannabinoids in the products they use. Cannabis market-tracking website CannStandard counted 263 dried cannabis products from 25 licensed producers as of this month, though thousands more strains exist in the black market.

When legalization comes, recreational consumers will call for diversity, too, Page said.

“Health Canada’s going to have to find a way to allow those existing genetics into this industry,” he said. “It seems pretty unlikely that they’ll allow the (regulations) to come in and say to people, ‘Oh, don’t grow the plants you’ve been growing for 20 years — go off to another licensed producer and get new genetics.’”

Page compared the issue of genetics-sharing to farmers who offer a neighbor some seeds or seedlings from their tomatoes, corn or roses.

“Really, Health Canada needs to come to grips with the fact that cannabis is a plant like any other,” Page said. “A freer, more open system of cannabis genetics is what’s needed in Canada.”

Abbotsford lawyer John Conroy, who successfully challenged Health Canada on its cannabis rules during the famous Allard case, calls the genetics bottleneck the “first seed” or “God seed” problem. He questioned why black-market growers who have been perfecting a strain for decades should have to abandon that legacy if they wish to legitimize.

“They’ve got a seed or a strain that they’re making (products) from and, in the future, it’s going to have to be from a licit source, so the issue is, how do you make that seed or strain legal going forward?” Conroy asked.

Conroy believes the answer is amnesty for those producers: “Declare what your starting product is and from now on you either use that or you get one from other legal sources.”

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