Last May, Canada’s Minister of Health, Alan Rock, announced that he was looking for a single grower of high quality pot, to be used in upcoming medical studies. Headlines like “Hey, pot growers, Rock wants supply,” splashed across papers around the country. Enthusiasm spread rapidly among Canadian growers, who thought they might make loads of cash doing what they loved best? and doing it legally. Although it cost $60 just to get a copy of the requirements to grow legal pot, the ministry received over 240 requests. But Canadian growers were in for a massive disappointment.
A number of delays and changes to the requirements virtually excluded expert basement growers from the med-pot contract game, clearing the way for corporate domination of the market. The requirements were stiff to begin with, and included having scientists with PHD’s on the payroll 24 hours a day, extensive security, marijuana testing facilities, and a complex corporate structure. On top of all this, applicants had to join Merx, the government’s electronic tendering contractor, which placed all applicants’ names on their web site to be viewed by all other members of Merx, including the news media and police agencies.
Despite difficulties, McGill University, the University of Guelph, Britain’s GW Pharmaceuticals, a Prince Edward Island grocery mushroom grower, a Nova Scotia Christmas tree farmer and the British Columbian Cannabis Research Institute (CRI) were among those still expressing serious interest.
Those not already intimidated out of the bidding process faced further challenges. Brian Taylor, one of the founders of BC’s CRI, headquartered in the city of Grand Forks, explains.
“When they first came out with the bid, they were asking for twenty-five percent of the base contract [of $4 million]as a guarantee against default on the contract,” said Taylor. “The guarantee would be held by an assurance company that would step in and operate if you defaulted.”
But the assurance companies weren’t interested. Then Health Canada came out with another option? an irrevocable letter of credit that could be issued by either a bank or a bonding institution.
“The bond people were out because they don’t want to be involved in the marijuana business at all,” continued Taylor. “When we went to the bank for the letter, they were reluctant unless we had a backer to put up a million dollars.”
So bidders without an extra million kicking around were left out. Bidding closed on June 28.
“The issue of the bond was never meant to cover the possibility of non performance, or mitigate risk,” asserts Taylor. “It was meant to eliminate the small marijuana grower who thought he could get into the business.”
They don’t have a million dollars, but Taylor believes that the CRI has a competitive edge that could still propel them into the contract.
“We didn’t meet the letter of their requirements through credit, but we gave them some options, including rolling the profits into a line of credit we would carry instead of taking them out of the business.
“We also gave them three other things. We gave them a tentative contract with Canada Post? we worked out a deal with them for mail delivery. We gave them a ruling by the excise and tax people, that marijuana is non-taxable. And another thing we have entered into our contract is cigarette rolling machinery. I don’t think anyone else has done that.”
Will ingenuity win out over a corporate control? Or will big business bogart another government contract? Let’s hope that the bureaucrats have a bit of smoke themselves? enough to see the wisdom of supporting local entrepreneurs.