OTTAWA — An agriculture startup is seeking an exemption from Ottawa to grow poppy plants in Canada after it rejected its application to commercialize the crop, despite the government already providing the company millions in funding to develop its technology.
API-Labs Inc., a company based in Lethbridge, Alta., is now struggling to pay off a $450,000 loan that it secured through Agriculture Canada in 2012. The firm’s application to commercially produce poppy seeds was rejected by the Office of Controlled Substances, an arm of Health Canada, in 2016, choking off the firm’s ability to generate revenues and pay back the loan.
Glen Metzler, the CEO of API, says Ottawa’s rejection presents a frustrating contradiction, and points to deeper problems with Canada’s ability to approve new products — an issue that has plagued early-stage companies.
“We’ve got the left hand and the right hand not coinciding,” Metzler said.
API was started in 2007 with the goal to create a commercial poppy market in Canada, giving farmers access to the $750 million global poppy-seed market.
The firm has secured $2 million in government loans and subsidies, and raised another $8 million through private firms, to research and develop a poppy plant that could be commercially developed in Canada.
But the company has met snags in receiving approval for the product. Poppy plants are commonly associated with the production of opium, and used by the pharmaceutical industry to develop drugs such as codeine.
In June 2016 the Office of Controlled Substances unveiled new regulations that explicitly rejected the commercialization of poppy seeds in Canada, saying it “primarily considered the risks to public health and safety” with its decision. It also cited “Canada’s obligations and commitments under international conventions and resolutions.”
Metzler, however, said his company has developed a low-grade form of opium plant that does not allow for the production of opiates. He appeared before the House agriculture committee earlier this week in a bid to sway parliamentarians in his favour.
He argues that API’s poppy seeds would be less harmful than the seeds Canada already imports from the U.K., Australia and elsewhere, typically used to bake pastries and other baked goods.
“There’s no reason we shouldn’t be able to grow a product we’re already importing,” he said.
He likens his struggles to those faced by producers of hemp, a product that was only recently approved for commercial production in Canada despite having a markedly lower THC level than regular marijuana plants.
In April, API applied to Ottawa for an exemption to grow its poppy crop under “limited” conditions on an eight-hectare plot of land, which it hopes to expand to 10,000 hectares by 2023. The government is currently reviewing the application.
Metzler said the crop would be useful to farmers who want to diversify their product base.
“It’s frustrating to be told I can’t grow this crop,” said Ryan Mercer, a farmer and board member of API.
The company received the $450,000 loan through Agriculture Canada’s Canadian Agricultural Adaptation Program (CAAP), designed to “help the agriculture, agri-food, and agri-based products sector seize opportunities” and “respond to emerging issues,” according to its website.
Observers say API’s struggles point to a broader challenge in supporting new technological development in the agriculture sector.
“It’s not fast enough, and often it’s a question of trying to catch up to our competitors in the U.S.,” says Rory McAlpine, the vice-president of government relations at Maple Leaf Foods Inc.
Large-scale food companies such as Maple Leaf often struggle to secure cutting-edge technologies from smaller firms in Canada, McAlpine said, due to Ottawa’s tardiness in approving new technologies, such as food-safety testing methods. Meanwhile, companies in the U.S. and Europe can often get new food and agriculture products swiftly approved.
Metzler argues Ottawa’s decision focused too heavily on risk, and disregarded the economic opportunities offered by poppy-seed production.
“If you look at a product based on risk, the answer is always ‘No,’” Metzler said.