Licensed marijuana growers say demand off to hot start

Police found 187 marijuana plants, 4.5 kilograms of processed marijuana and almost $23,000 in cash when they searched a Hamilton home after a tip from the utility about its electricity use. (CBC)

Less than a month after the federal government began handing out licenses to producers of medical marijuana, there are early signs from some companies that business is growing faster than expected in the fledgling industry.

Smiths Falls, Ont., based Tweed Inc. announced last week it would not be registering new customers until it was sure it had sufficient supply to meet the demand.

The company also announced it was accelerating its expected production by the end of 2014 from 1.5 million grams to 6 million grams per year. The company said it had upgraded its forecast demand based on higher-than-expected registration and application information.

"We're accelerating our construction program, bringing much of the construction we thought would be next year into this year," said Tweed chair Bruce Linton.

Philippe Lucas, an executive with Nanaimo, B.C., based Tilray, said his company has just completed construction on a $10 million, 60,000 sq ft state of the art growing facility.

"Literally every day we're bringing people on board," said Lucas. "This has been a rapid rise in what really is the dawn of a new biotech industry."

Tilray began shipping its first product this week, and Tweed was expected to also begin shipping this week.

When the federal government announced the first licensed producers of medical marijuana, there were five companies. Health Canada's website now lists 13 authorized companies.

Michael Mulvey, an assistant professor of marketing at the University of Ottawa's Telfer School of Management, believes the fast-growing business is sustainable.

"I think a lot of people are probably looking at it as an investment opportunity. And I think it's partly because it's very disruptive. It's looking at the current status quo and presenting an opportunity to rethink how we think about health," said Mulvey.

Mulvey thinks as the market grows international competitors will likely enter the field and said he expects to see some consolidation as the industry matures.

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