You smell “the show” before you see it – 200 cannabis plants, tucked inside a 120-year-old barn on a sloping acreage overlooking central British Columbia’s Slocan Valley. In one room, 40 plants are nearing maturity. The pungent flowers will be harvested in two weeks, hung to dry and sold for between $1,500 and $1,800 a pound to distributors moving B.C. bud to illegal dispensaries across Canada.
The process of getting a licence became even more daunting last Wednesday, when Health Canada changed its rules to require new licence applicants have a “fully built site” before they can submit an application. Few illicit producers expect the unregulated market to remain viable over the long term; legal product will eventually glut the market and police are shutting down illegal sales channels. Still, legal cannabis companies, most of whom are fragile start-ups despite the amount of money they’ve raised, face protracted and financially damaging competition if the legal marijuana market cannot integrate large parts of the illegal system.
On a Thursday in early April, around 150 black and grey market cannabis growers gathered in the Prestige Hotel in Nelson, a picturesque mountain town on the western arm of Kootenay Lake, with a population of around 10,000. The idea behind the Kootenay Cannabis Symposium was to bring together growers from across British Columbia and representatives from all levels of government, in the hope of tracing a path forward for the micro program.
"In local government, many of us knew that legalization was coming... but everybody had their mind around dispensaries,” said Susan Chapelle, a former city councillor for Squamish, who now heads government relations for Pasha Brands Ltd, a Nanaimo-based cannabis company. “We didn't think about cultivation.”
People lucky enough to have properly zoned land in a municipality amenable to cannabis still face significant hurdles. Micro cultivation sites are capped at 2,000-square-feet of growing space and have lower security and infrastructure requirements than traditional LPs. Still, between regulatory consultants, compliant building materials, and security infrastructure, the upfront cost to start a micro cultivation facility is typically estimated to be between $1-million and $2-million.
There is a sense of extreme frustration among incumbent growers, who believe legalization was designed to sideline the existing industry. Instead of benefiting industry pioneers, so far the spoils of legalization have gone to a handful of licensed producers who got their start between 2013 and 2015, after the federal Conservative government introduced a commercial growing regime for medical cannabis.
David Robinson, who runs the Nelson branch of Pacific Northwest Garden Supply, one of B.C.’s largest hydroponic store chains, shares that view. He estimates that small and mid-sized growers in the Kootenays produce around 25,000 kilograms of cannabis a year, which he says is equivalent to around 60 to 70 micro cultivation facilities.
Luckily for growers, 2001 also saw the introduction of Canada’s Marihuana Medical Access Regulations, following a successful Charter challenge. The MMAR allowed patients to grow their own cannabis or designate other people to grow on their behalf. Cannabis entrepreneurs scrambled to lock up designated growing licences, and dispensaries popped up to take advantage of the legal grey area created by ongoing Charter challenges.
In return for the first right of refusal to buy cannabis grown by its micro partners, BC Craft Supply is sharing licensing costs and helping line up financing for craft growers. The company has already signed up several dozen growers, said CEO Patrick Brauckmann.
In which the globe and mail quote a bunch of people who have never even attempted to participate in the legal market about how they are being 'kept out' of the industry. It's almost as if it's easier and more lucrative to keep breaking the law while pretending you are kept out.