10/18/2013 11:53 EDT | Updated 01/23/2014 06:58 EST

Medical marijuana spinoff firms look to cash in on new rules

A range of spinoff companies, many of them located in the United States, are angling to cash in on the Canadian medical marijuana market as the federal government brings in new rules for the industry.

Producers of homegrown marijuana will be abolished under the new system and replaced with industrial facilities overseen by the RCMP and federal health inspectors.

More than 37,000 people in Canada currently use medical marijuana, up from a less than 500 in 2002. That number is expected to reach 450,000 by 2024, according to Health Canada.

The department has said there’s no limit on the number of producers that will be certified under the new regime, and that the price of the drug will be determined by the market.

To date, at least 171 firms have applied to Health Canada to become certified producers. But Don Schultz, who runs a medical marijuana education firm called Greenline Academy, estimates the market could eventually sustain 1,000 “cultivators” from coast to coast.

Schultz’ firm is one of many companies that have grown up around the production and sale of medical marijuana in Canada — an industry that’s been growing steadily and is expected to be worth $1.3 billion in a decade.

Greeenline is holding a two-day seminar in Toronto next weekend to train attendees on how to navigate Health Canada’s rigorous application process if they want to become a certified as a producer.

“You’ll have about an inch-thick piece of paperwork that needs to go in to Health Canada if you want to be accepted by the new program. There’s security to worry about, production practices, quality assurance, setting up the facility the proper way, all those things to do with the rules, regulations and bylaws of different cities and towns,” he said. “There’s quite a bit of knowledge that a person has to know to put it all together.”

Nearly 200 people are expected to attend the event, Schultz said, each paying more than $1,600 for a ticket.

Interest south of the border

Shultz said he’s seen “quite an influx” of interest from American firms looking to gain a foothold in the Canadian market, as the federal government transitions to the new rules in the months ahead.

Companies certified as producers will have to be run by a Canadian resident. But investors and companies that offer a range of support services in the 20 or so states where medical marijuana is legal are looking to drum up business north of the border.

MedBox, a California-based firm, announced this week that it will be setting up marijuana vending machines on Canadian soil. The company said in a news release it’s partnering with a company that has been licensed under the new Health Canada system, and that the machines will have security features that will act as a “medicine vault.”

Michael Mayes, the CEO of Colorado-based “cannabis consulting and technology consulting firm” Quantum 9, said about half of his business now comes from north of the border.

“A lot of them are coming for architectural advice, as far as grow-room optimization, where the plants should be located, what media they should be growing in, what assets they should be using as lights,” Mayes said. “The demand is increasing incredibly.”