By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canada, a pioneer in the use of medical marijuana, will take legal production out of private homes next year as it seeks to address more than a decade of neighborhood spats and criminal activity.

Health Canada will also snuff out its own production, which has been another legal source of the drug, and leave supplies solely to licensed growers in the private sector.

More than 30,000 people in Canada are legally authorized to use marijuana, up from around 500 in 2001 when Canada became the first country to allow terminally ill patients to grow and smoke their own marijuana.

Canada's marijuana medical access program also included a state-managed grow-op in a disused zinc mine in Flin Flon, Manitoba, although users complained the quality did not match that from private suppliers.

"There's far too much potential and actual abuse within the current scheme," said Staff Inspector Randy Franks of the Toronto Police Service drug squad, adding that police do not have access to addresses of approved sites in private homes.

"These home-grown operations are able to produce far more than they need and they have to do something with it, so they sell it mainstream."

The new regulations took effect on Monday, but the old rules will run concurrently until March 31, 2014, to allow time for Ottawa to license new growers, said Jeannine Ritchot, director of medical marijuana regulatory reform for Health Canada.

The changes will place growing sites under greater scrutiny, through inspections, security measures and accounting of production volumes.

"While the courts have said that there must be reasonable access to a legal source of marihuana for medical purposes, we believe that this must be done in a controlled fashion in order to protect public safety," said Health Minister Leona Aglukkaq.

Marijuana use remains illegal in Canada, with the exception of medical marijuana, which is used to manage chronic pain and for conditions that include multiple sclerosis and arthritis.

But critics argue that marijuana can be a "gateway drug" to abuse of other illegal substances.

"I'm quite worried about my future," said Vancouver resident Heidi Hideg, who treats pain from a car accident that paralyzed her with marijuana supplied by the B.C. Compassion Club Society. "I don't want to go back on prescription medication, but with changes to the (regulations), it's really up in the air."

Compassion clubs buy marijuana at relatively low prices from growers, and re-sell it illegally to users, with police often turning a blind eye. Their role is unclear under the new rules because the clubs tend to buy from growers who do not want their addresses known, said Jamie Shaw, from the B.C. club.

Fonda Betts, a designated grower of marijuana for two patients, gave the changes a mixed review.

Betts, who is also the chief executive officer of the Greenleaf Medical Clinic in Abbotsford, British Columbia, said some patients will have to pay more and may find it hard to find the marijuana strain that is right for them to ingest or smoke.

Franks, the Toronto police officer, said home-based production can also be a scourge for neighbors, particularly in apartment blocks, who put up with the chemicals and mold from growing hundreds of plants.

Medical marijuana is also legal in 19 U.S. states and in the District of Columbia.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Janet Guttsman and Marguerita Choy)