Starting April 1, Canadian law will allow the commercial production and sale of medical marijuana, and one Metro Detroit company hopes to cash in on the new market.
Creative Edge Nutrition Inc., based in Madison Heights, has purchased more than 10 acres near Windsor, and plans to build a 27,000-square-foot indoor pot farm to grow 1.3 million pounds of marijuana annually to sell in Canada, Israel and other countries that allow it.
The company’s Canadian-based subsidiary, CEN Biotech, recently broke ground on the Lakeshore facility, and is awaiting government approval to grow, sell and import/export marijuana a few months after the building’s completion, expected in two to three months.
“We consider ourselves pioneers,” said Bill Chaaban, CEO of Creative Edge. “We intend to sell in every country we’ll be legally allowed to.”
Chaaban expects the business to be very profitable; he estimates $5 billion in sales per year with an 80 percent profit margin. Canada will have about 37,800 medical marijuana patients who will need suppliers after April 1, according to Health Canada, the country’s health department, so industry experts say it’s a good business strategy that sets up Creative Edge for more success if U.S. marijuana laws change.
“It’s a pretty smart move,” said Chris Lindsey, a legislative analyst with the Washington, D.C.,-based Marijuana Policy Project. “If the U.S. laws change, they’re in a really good position because they have the infrastructure already operating. I think it’s an attractive business model.”
About 450 companies have applied for similar licenses, Health Canada said, and eight companies have so far been approved. The organization does not comment on potential licensees until they are approved, and could not talk about Creative Edge’s application.
Buying rules change April 1
Canadian law has allowed for the use of medical marijuana for more than a decade, Health Canada said. Under the current law — which expires March 31 — users who have a medical marijuana license may grow their own supply or purchase from a caregiver. Licensed caregivers can supply up to four patients at a time, and the amount both patient and caregiver can carry varies.
Users also can buy directly from Health Canada for $5 a gram; Health Canada got its supply from Saskatoon, Saskatchewan-based Prairie Plant Systems.
After April 1, those rules change. Users have to buy their supply commercially from the eight or more growers that will have been licensed by Health Canada. Prairie Plant Systems will continue to sell, but under a different name and not through Health Canada.
“Health Canada, in implementing the new regulations, is responding to concerns expressed by law enforcement agencies and other levels of government about the health and safety hazards associated with growing marijuana in homes, such as public safety concerns, mold, unsafe electrical wiring and illegal operation and selling of marijuana under the guise of the Health Canada program,” Health Canada said in an email.
Chaaban said he expects to be licensed and produce his first batch of marijuana six to seven months from now. The company plans to raise 25-50 different strains, and eventually could build up to three facilities on the site, for a total of 100,000 square feet.
Creative Edge will produce its marijuana in a hydroponic indoor facility with marijuana-growing technology produced by Madison Heights-based RXNB Inc. The two companies entered into an agreement to work together last month.
The parcel of land sits among farms, and Chaaban said it’s a relief to be growing in a country with much more relaxed laws than in the U.S.
“You don’t have to worry about the long arm of the law,” he said.
ACLU: Gray area in pot law
Michigan approved the use of medical marijuana by licensed patients in 2008. Patients can carry up to 2.5 ounces at a time, and caregivers can supply up to five patients and grow up to 12 plants.
But there’s a gray area in the law when it comes to medical marijuana dispensaries, according to Dan Korobkin, deputy legal director at the American Civil Liberties Union of Michigan, which advocates for marijuana legislation change.
Michigan law has no provision for the commercial production and sale of medical marijuana, but some dispensaries — and there are dozens in Metro Detroit alone — get around that by having multiple caregivers team up to sell out of one location.
Korobkin says there’s been talk of changing laws to allow for clearer sales rules, but nothing is imminent.
“You have tens of thousands of medical marijuana patients, so there’s a need for that large-scale production in Michigan,” he said.
The ACLU recently won a case in which the Michigan Supreme Court ruled that individual cities or towns can’t ban medical marijuana use even by citing federal law, which prohibits it. By passing the 2008 law, the court ruled, voters made medical marijuana legal throughout the state. The federal government could enforce its prohibition, but doesn’t.
“We’re at a really interesting time in American history,” MPP’s Lindsey said. “We’re seeing a shift from ‘everyone’s illegal all the time’ to ‘some people are legal some of the time,’ and boy, that’s a tough place to be. We do believe laws are going to change soon.”
That belief in eventual U.S.-wide legalization drove Chaaban’s decision to apply for a license in Canada, he said.
“I think it’s very exciting times,” Chaaban said. “Once the U.S. does pass the laws, we’ll be here waiting.”