Facing high regulatory barriers, Kootenay cannabis producers gather for support

Symposium on barriers facing legalization attended by hundreds

It sounded just like a conservative business conference: there was talk of over-reaching and confusing government regulation, impediments to trade, falling commodity prices, and lack of support for small entrepreneurs.

But the people complaining weren’t balding old capitalists. They were, for the most part, Kootenay farmers trying to eke out a living growing and selling cannabis.

Hundreds of cannabis growers, processors, retailers, government officials and experts gathered in Nelson last Thursday to talk about how to ensure the industry can thrive in the Kootenays.

The Kootenay United Cannabis Association says it’s going to take its findings to government to help keep its members in business.

Confusing regulation

Six months after the end of prohibition, delegates said their livelihood was more in jeopardy than ever.

While consumers may enjoy cannabis legally now, there were no shortage of complaints about the way legalization has rolled out for the people growing the product.

At one of the 25 tables in the Prestige Inn conference room, a half-dozen people told their stories of trying to move from growing pot illegally to the legal market — and the unexpected barriers they faced doing so.

“You need to have a bricks and mortar facility before you submit your application to be a grower,” said one delegate. “Or they kind of expect you will build as your application goes along. That’s crazy.”

Others noted even getting a design approved by one agency is no guarantee it will pass another. That means small producers have to spend thousands of dollars up front with no guarantee of return.

Others said barriers are created by employment regulations.

“They want you to submit your employees for a security clearance as part of the application. But you won’t be able to have them working for maybe a year,or two years down the road. What’s that person supposed to be doing for that time?” said another. “Maybe in a bigger city you can get away with that, but in a small town, we’re all competing for labour.”

Others noted banks didn’t seem to know what the rules were, or how to go about processing applications for small cannabis businesses.

“I went to the Bank of Montreal for a loan and said I wanted to get in the business, as I already have a micro-grower licence,” said a delegate. “The bank said, ‘give us $4,500 to look into your application’ — but there was no guarantee they’ll give me an account.

“I said ‘don’t you want my business?’” the man recalled. “The manager said ‘then my office will smell like weed.’

“I said ‘No, it will smell like money.’ And I walked out on him.”

The complaints weren’t only from producers. Retailers had issues too, especially with cumbersome and restrictive packaging rules.

“They’ve taken the most anal rules from alcohol, tobacco, and gambling regulations, and applied it to cannabis,” said one woman, who’s trying to create value-added products like soaps from cannabis oils.

‘Unfathomable’

One speaker at the symposium told the audience the illegal cannabis trade supported people living in rural areas after the collapse of the logging industry in the 1980s.

PhD student Tracey Harvey said cannabis acted like a “safety net” for rural residents.

“This industry has picked up this economy in these communities,” she said. “Now the rug has been pulled out from under people’s feet, and they don’t have that safety net anymore. So the outcome of not transitioning is unfathomable. We are talking about unemployment, homes and businesses for sale, empty storefronts … let’s prevent that population out-migration.”

Strategies include diversification, said Harvey, and the need for producing quality over quantity.

“If we go for the same model as we were during prohibition, producing beautiful high-quality flower and exporting it, we’re not going to be able to compete with the Auroras and Tilrays and other large producers,” she said.

She said the Kootenays can compete with its strengths — community knowledge, collaborative decision making, purity of water and land, and moving away from mass production to value-added products that turn money around in the community several times.

She said a comparable model may be how the wine industry in California lifted itself up by its bootstraps and became a premier growing region 40 years ago.

“We have to change our way of working together and of thinking,” she told delegates. “We have to be patient. Let’s work together and recognize our strengths and work on proven strategies.”

‘No moms and pops’

Not everyone sees a role for the smaller producers in the long term.

Andrew Lauchlan is a partner in a Nelson cannabis shop, and a licensed grower. He’s facing all the problems other growers face, trying to scale up into the larger market.

While he believes in ethical, organic, high-quality over quantity, he says the Kootenay experience may end because of larger market forces. He says not only have big-money companies railroaded the process in Canada, but international growers — from Venezuela to Botswana — are getting into the business, and there’s no way for this country to compete.

“You can sit and cry and whine about it, but it’s business, it’s always been like that,” he says. “So now deregulation means big players are going to come in, and with that [comes] the commoditization of the product. Canada is not going to be able to compete with their products.”

But he still sees some hope in the strategy raised at the forum.

“Cutting down your costs to operate, growing a beautiful product, making it organic, all that’s great. But to be able to do that and stay alive in about four years’ time will be the challenge, to provide this beautiful and high-end product we are renowned for.

“We have a chance for marketing a superior product. There may be no moms and pops [growers] anymore, but to be able to put your blood, sweat and tears into a product will speak for itself in volumes and that will be the cream that rises.”

Landmark event

But the meeting wasn’t so much about the problems facing producers, as finding solutions to them.

Organizers called it a landmark event, and hoped that just by getting together in a forum like this, the industry can grow stronger.

“You get together like this, you start finding solutions,” said organizer Damon Chouinard. “You start finding the person who can resolve a problem. You learn a little from someone else, you build connections. So you are building capacity.”

Chouinard said the presence of government officials — representatives from Health Canada’s licensing branch and a policy advisor for the provincial attorney general — was a good sign.

“They’re here to listen, but I think it’s going to take a little more pressure to get them to actually do things. So that’s part of it.”

Chouinard said he hoped a basic message would come out of the meeting.

“We need the British Columbia government to really step up and put some pressure on the feds to make some changes so our communities will survive. If they’re really concerned about jobs and finances of our small communities, they need to start to make changes to address this issue.”

‘Left behind’

Delegates came up with several possible solutions to help small producers transition to the legal market. Those included rationalizing the multiple layers of licensing, standardizing licensing costs or removing the fees while licences are being processed, to liberalizing marketing regulations and providing government advisers who can support small growers who have an application in the process.

Despite a “sense of impending failure,” with the size of the task, and the predicted collapse in marijuana prices, presenters tried to encourage people not to give up, saying their only chance was for Kootenay growers to work together.

“The system that’s been set up is so lop-sided, we have been left behind,” said Kelly Dunn from Pure Collective. “The system isn’t here for us, it’s not set up for us to be successful. So we have to work together to create a voice.”

The Kootenay United Cannabis Association says it will summarize the hundreds of ideas presented to the forum and present them to federal, provincial and local officials in the weeks and months to come.

 

The KUCA says its mission is to “unite, protect, and advocate for the cannabis industry within the Kootenay region of British Columbia” by supporting the right to a fair and reasonable transition into the legal market.

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