In our first article published in March on the Medical Cannabis Industry titled SR&ED Eligibility Criteria and Possible Projects in the Medical Cannabis Industry, we continue on educating entrepreneurs and companies within the industry to take advantage of the SR&ED program.
Many entrepreneurs and business owners in the Cannabis Industry believe that the work they do is not eligible for Scientific Research & Experimental Development (SR&ED) funding. In their opinion, they only follow standard procedures and do neither basic research, applied research, nor experimental development. However, when an SR&ED consultant with experience in the field of Cannabis carefully examines the activities and processes, it is very likely he can determine eligible SR&ED projects.
As a whole, the Cannabis Industry is currently in its infancy in Canada and around the world, therefore open source information related to the field is scarce and sometimes contradictory. Therefore, SR&ED (gaining new information about technology via systematic investigation) can be found in almost every area of the company’s operations, making the company eligible for cash refunds for expenses on salaries, consumed materials, and subcontractors, including testing labs.
Below are some examples of such projects.
1. Equipment customization and automation
A reoccurring issue with equipment vendors is the promise that the product will work within your companies given specs. How many times after the purchase of the product does your company have to customize the product for any reason – reprogram, rebuild, code, develop algorithms, etc.? If the problem is not solved on the first trial but requires an iterative approach – most likely all this work is SR&ED eligible.
2. Growing plants
There are many SR&ED project types that can be found in growth rooms. A common but sometimes overlooked example is when you try to bridge relationships between any growing condition (light, soil, humidity, nutrients, and so on) and the resulting product quality (yield, potency, terpenes profile). Of course, the eligible work is not limited to this.
The plants have several growth stages and there are many different breeds and lines of plants with various properties. Each growth stage, each genetic variation, require somewhat different growth conditions. When you try to apply conditions, which work well for one plant type to another plant type – most likely plant properties will not be exactly the same. If you try to optimize growth methods, to customize them, it is very likely there is SR&ED to claim.
In different locations across Canada, the content of minerals in water is different, the pH may vary from place to place, the water purification systems are not similar, etc. Therefore, the nutrients composition, which is considered optimal in one place or setting, may not work as good or at all in another. If you try to find the optimal composition of nutrients, to improve the feeding method for higher yield and potency, and apply analytical methods to learn about plants’ condition, you are conducting SR&ED.
3. Cannabis products
Since the field is still in its infancy, but the public interest is very high, there is a demand for Cannabis products, which preparation requires new methods and processes to be developed. The most common examples across the industry of such processes are decarboxylation, winterization, oil extraction with supercritical carbon dioxide, its distillation, topical and edible products preparation, and many more. All of them are novel, and most likely when you try to develop such novel products or methods you do SR&ED eligible work. There is also SR&ED eligibility in non-high-tech experiments and development. Sometimes even simple trimming, grinding, drying, and packing the plants and the buds can be improved. One has to be creative to optimize the process and to avoid losses. Such activities can be considered SR&ED eligible.
Braithwaite can assist you in obtaining tax credits for research and development activities. Whether your work involves basic research, applied research, or experimental development, Braithwaite can take the uncertainty out of the filing process and get you the credit you deserve for your innovation. In some cases, other government grants and incentives might be available; our searchable database allows us to offer a one-stop solution for your innovation funding needs.
For further information on the Medical Cannabis Industry, please contact us today.
Senior Science Advisor
Mobile: +1 647.972.6285
900-2235 Sheppard Ave E
Toronto, ON M2J 5B5
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