Race is on for commercial medical pot business under new rules

We are going to witness over the next year or so the emergence of a potentially big and lucrative new commercial industry — medical marijuana.

At the same time it's been growling about illicit drug use and sales, the Conservative government has been moving to clamp down on legally sanctioned medical marijuana production.

The old system of allowing home grow-ops for those licensed to use medical pot, along with some commercial production, is being replaced with a system where only licensed, regulated commercial operations will be allowed.

Health Canada statistics as of the end of last year revealed 28,115 people were authorized to possess dried marijuana, with roughly 18,000 licensed to produce it for personal use. About 5,300 received seeds from Health Canada.

The current system was open to abuse, with some licensees caught growing way more pot than the amount authorized for personal medical use.

Some grow-ops also drew complaints from neighbours because of the stench and there have been concerns about fire safety and home invasions.

[ Related: Smelly medical marijuana grow-op a major headache for Nova Scotia woman ]

Transition to the new regulations began in March and come next April 1, medical pot users will only be able to get their drugs from one of these licensed producers.

Sam Mellace wants to get in on the ground floor. The Abbotsford, B.C., medical pot user and activist told The Canadian Press he's putting in the licence application to Health Canada this week for his company, New Age Medical Solutions.

His competition will include Prairie Plant Systems Inc. of Saskatoon, which CP said has been the only company producing legal pot and seeds on contract to Health Canada. It submitted its applications earlier this month.

"Up to this point we've been the only ones working with the rules," company CEO Brent Zettl told CP.

The new rules, Zettl said, will end what he considered unfair competition from amateur grow-ops that had no requirements for quality control. The playing field now will be levelled.

Mellace, who's been producing pot for himself to deal with chronic pain from an auto accident, as well as for three other medical users, doesn't consider himself an amateur. His compound is protected by security cameras and dogs and he carefully monitors the plants.

"Our main objective is to help as many people as we can and give them the best product possible," he told CP.

But Mellace admitted he sometimes pushes the envelope a little. He processes his pot into a form of butter that he uses to make things like cookies and even spaghetti sauce, as well as an arthritis cream.

[ Related: Criminal networks exploiting Canada's medical marijuana program: RCMP ]

But he conceded that sometimes he processes more than the legally allowed amount.

"We follow, pretty much, the rule of law," he said. "I would say it's a grey area."

The move to commercial-only sales could also come with a price increase. Health Canada said in a statement it would be increasing the price of medical pot it furnishes — currently $5 a gram — to match the price of the first established licensed producer under the new regime.

"Our interest is creating a viable competitive market place," Jeannine Ritchot, Health Canada's director of medical marijuana regulatory reform, told CP.