Health Canada has overhauled its cannabis licensing process in a bid to cut waiting times and alleviate supply shortages across the country.

The regulator will now require new applicants for cultivation licenses to have fully built and operational ready sites before they will be considered. This is designed to reduce the bottleneck that has seen hopefuls struggle to gain the necessary licenses in a timely fashion and triggered supply shortages.

There is great pent-up demand for recreational cannabis that cannot be met by the nascent legal industry and the black market continues to thrive. Health Canada hopes to overcome this considerable obstacle by making the changes.

It brings the cannabis industry in line with other regulator sectors, such as pharmaceuticals, and several producers have welcomed the move. It is likely to favour those companies that have access to capital and the ability to comply with regulations, ultimately benefiting consumers and retailers across Canada.

Health Canada revealed that more than 70% of the applicants that have passed its initial paper-based review in the past three years do not have a built facility that meets regulatory requirements.

“A significant amount of resources are being used to review applications from entities that are not ready to begin operations, contributing to wait times for more mature applications and an inefficient allocation of resources,” it said in its statement.

Existing applications will be subject to a high-level review and they will be treated with priority based on the original application date.

Health Canada first improved its application process in May 2017 in anticipation of recreational cannabis sales being legalized the following year. Since then it has licensed 130 new sites, almost triple the amount it approved in the previous four years.

It estimates that there are now more than 600,000 square metres of space under active cultivation, which should be enough to yield around a million kilos of cannabis flower and meet demand for total cannabis consumption in Canada.

There will be no changes to the regulatory requirements, and inspections will remain equally rigorous, but the hope is that serious operators that are ready to release products quickly will take precedence now. It will require new applicants to raise capital sooner in the process, but it may deter some hopefuls and dent competition.