Canada is ushering in what it projects to be a $1.3 billion medical marijuana free market this week, as it replaces small and homegrown pot production with quality-controlled marijuana produced by large farms. The market could eventually serve up to 450,000 Canadians, according to government estimates.

As Toronto's Globe and Mail explains, a transition phase began Monday that will allow more price fluctuation and phase out home and small-scale production.

"In its place, large indoor marijuana farms certified by the [Royal Canadian Mounted Police] and health inspectors will produce, package and distribute a range of standardized weed, all of it sold for whatever price the market will bear," the newspaper reports. "The first sales are expected in the next few weeks, delivered directly by secure courier."

Large-scale growers have begun applying for licenses to produce marijuana; one Ontario company hopes to grow cannabis in an old Hershey chocolate plant, Reuters reported last week. At least two large growers have already received their licenses.

The free market will likely establish a price of around $7.60 per gram of dried marijuana bud, according to "Marihuana for Medical Purposes Regulations" posted by Canada's health department. (And if you're wondering about that spelling, it follows a precedent set in Canada's controlled substances law.)

The health agency projects that the legal marijuana supply industry "could grow to more than $1.3 billion per year in annual sales" within 10 years. Officials say the illegal cannabis market "represents a multibillion dollar per year industry."

The Canadian government says the new plan will also reduce its own costs, on a website explaining some of the changes.

"The current program costs Canadian taxpayers millions of dollars each year because the $5/gram charged to program participants who choose to purchase from Health Canada is heavily subsidized," Health Canada says.

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