A Slocan Valley outdoor grow. Photo submitted

Kootenay pot producers stuck in the black market

Cost of buying into the legal business just too high, says one producer

A Slocan Valley man who sells cannabis seeds online says federal rules keep growers like him trapped in the black market.

“I’ve contacted the federal government many times and explained to them we really want to become legal,” says Jasper (not his real name). “We want to pay taxes and be part of this whole industry, but the only way to go about this is with money.

“It’s a rich man’s game.”

Jasper runs an online cannabis seed sales company out of his home. He’s got a Facebook page and website, accepts Paypal payments, and sells thousands of seeds a year.

“We just found a lot of the folks and friends that wanted to grow their own marijuana were not getting the right seeds,” he says. He began growing while dealing with his own health issues, and has a licence to grow cannabis for personal use.

“They were selling indoor strains, and not specific to outdoor environment,” he says. “So some of my family and myself said ‘Let’s see what we can do, grow some strains and offer them up to folks and see what happens from there.’”

After getting into the business “almost by mistake,” Jasper says it’s become a thriving operation, supplementing the disability pension and CPP he survives on.

But Jasper says last October’s legalization has done nothing for his business. It’s as illegal as it ever was.

He faces thousands of dollars in fines, and even years of jail time, for selling seeds at a tenth of the cost the province charges.

But he says the paperwork, security requirements, and financial burden that a legal grow operation requires are just too much for someone like him.

“To do it legally through the federal government will cost us upwards of $100,000. It just won’t work,” he says. “It’s impossible for us to come up with that kind of capital.”

Jasper says he hasn’t heard from authorities since legalization. But he’s he’s asking government to move a little to meet the needs of small producers like him.

“When we introduce our company the first thing I tell them is that we are illegal,” he says. “We really want to become legal, but the only way to do that is to get under the umbrella of an already-operating producer.

“We just at this point can’t do that, so we’re stuck in this black market still, helping folks out that way.”

‘Ignorant criminals’

But a man heading up a co-operative of outdoor cannabis producers has little sympathy for people like Jasper.

“They’re criminals, and what’s worse, they’re ignorant criminals,” says Todd Veri of the Kootenay Outdoor Producers co-op.

Veri has been wrangling with provincial, federal and regional inspectors and regulators for months to get an umbrella of Kootenay producers to have the ability to grow cannabis outdoors, and sell on the major market. That work is starting to come to fruition, with the first growing licences starting to come through. It’s taken a fair amount of money and a lot of patience to accomplish.

The little illegal guys are just spouting “bullshit,” he says.

“Their information is highly flawed. For this guy, going after a nursery licence, what kind of barrier does he think he has?” he asks. “He’s looking at opening a business that can probably produce a million dollars in sales every year. Does he think he should be able to just hang a shingle and have no rules and regulations or hoops to jump through?”

While he acknowledges there’s some paperwork, he says the licensing and application fees for nurseries aren’t onerous — about $3,200 for those two for a micro-nursery. And while indoor growers can face the big-ticket item of having to build new facilities, get security passes, and pay taxes, Veri says some of that is just the cost of doing business.

“It’s not as onerous as he thinks,” says Veri. “If he is completely incapable of the business aspect, then he needs a partner. Treat it like a restaurant. He’s the cook. He needs a front-of-restaurant person. Anyone who wants to open a restaurant without a front-of-house person is an idiot. You need that person. If you think you can do both, you can’t. They’re different skill sets.”

Veri says he can see guys like Jasper running illegal productions getting shut down by people trying to grow legitimately.

But another cannabis proponent, David Robinson, is a little more sympathetic to the plight of the the little guy in the valley. He says the micro-producer or grower can face bills of up to $1.5 million to build up to the scale required by various rules and regulations.

“Ultimately they tried to give this to the big corporations,” he says of legalization. “They made it accessible for huge corporations, the politicians. The big corporations will absorb our intellectual property, talent, and genetics. Then we don’t exist as a group and they masquerade as craft and try to fool the world with this kind of behaviour.”

Robinson’s more focused on indoor grow operations, rather than outdoor, so knows many small-time growers now facing a whole host of strict regulations and expensive controls from the federal to local level.

“There are 35 micro-applications in the communities, and 3,000 LP applications (larger scale producers), and not a single ‘market producer’ has been approved,” he says.

Robinson says a consortium of deep pockets has been formed to invest in small indoor craft producers of pot, to allow them to afford the big costs associated with going legit.

“We’re working really hard to do the practical work required to save our way of life in this community,” he says.

Like Veri, Robinson says people have to band together.

“He’s going to have to find an investor, partnerships, maybe six guys getting together can pull it off … but you can see how complex this can get,” he says.

‘Fear and paranoia’

Tracey Harvey is a doctoral student doing her PhD research on the transitioning of the Kootenay’s cannabis economy with legalization. And she agrees policy makers have fouled up the chance to help small growers become legitimate.

SEE: Pot legalization will bring big adjustments to Kootenay economy, society

“I think the policy is flawed. I think the policy that has been put forth is unfortunately designed so the small person doesn’t participate, and it is geared to market consolidation,” she says.

“It was inequitable to begin with for the small participants. Licensing didn’t even become available until legalization day, and it’s a one-to-two year process to get into the market after that. And to enter into it requres deep pockets, and that doesn’t create an even playing field for the small participant.”

She says policy is set up to fail small players like Jasper.

Harvey says she can see history repeating itself. Pot was a financial backstop for families in the Kootenays when the resource economy began failing in the 1980s. Now, she says, the rules and regulations may see a second collapse of the local economy.

“For most people it is too onerous, and it is ridiculous,” she says. “For the average farmer, you shouldn’t have to be $1 million to $2 million in debt to get a license. They shouldn’t have to get a lawyer or have a quality assurance person on standby. The regulations are written with fear and paranoia, and it is inequitable.”

‘Only for rich folks’

With spring around the corner, Jasper plans to continue to grow plants and sell seeds, at a tenth of the cost of a seed off the government website.

He says he — and dozens of other producers in the Slocan Valley — would welcome the chance to turn legitimate.

“We are not trying to hide our business, we want folks to come to us,” he says. “We’re not trying to make a bunch of money. We just want to get our foot in the door and become legal, and supplement our incomes the way we can.”

He says farmers like him want to be independent, and cannabis is just an added commodity that can add a little money to their incomes if the federal government will let them keep going.

“We just want to offer folks a decent product at decent prices, and be legal, and not have to worry about all these stresses of being illegal,” he says. “Because it’s not illegal anymore.

“At least, it’s legal for the rich folks.”

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Jasper shows off his outdoor crop in photos on his Facebook page. He says he can’t afford the price of going legitimate … and a researcher agrees.

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