OPINION: A matter of survival: Federal changes needed to allow Canada’s craft cannabis industry to grow

By Barinder Rasode, Grow Tech Labs for The GrowthOp

With a federal election looming, the Liberal government’s historic move to legalize recreational cannabis will rightly be a feather in Justin Trudeau’s cap come voting time. The Prime Minister followed through on a progressive and courageous policy promise, albeit later than originally planned, and Canadians should reward that leadership.

Unfortunately, this major initiative is in danger of being overshadowed by some glaring policy gaps if they are not addressed quickly. In addition to immediately failing to fulfill consumer demand for edible products, CBD, cannabis derivatives and topicals—Ottawa has said these cannabis products will be permitted for legal sale no later than Oct. 17, 2019—the federal government’s regulatory regime has left small cannabis producers and processors behind.

Apparently, size does matter

It was not supposed to happen this way. The federal government’s Task Force on Cannabis Legalization and Regulation, released in late 2016, did a great job of consulting a variety of cannabis sector stakeholders, including small producers who have formed the backbone of Canada’s successful medical cannabis program since 2001. Citing the advantages of encouraging market diversity, the report recommended production controls that would create space for craft cannabis production and prevent the development of monopolies or large conglomerates.

Despite Health Canada and most everyone else agreeing with the finding, the opposite has happened.

Last year, Health Canada launched the micro-cultivation and processing cannabis licences to facilitate the participation of small producers and processors in the legal industry. The department noted that for legalization to be effective, the regime must be able to support viable small businesses.

One year later, only one of Canada’s many small-scale medical cannabis producers has been approved; as of May, less than 300 have even bothered to apply. Facing a mountain of redtape, production caps, virtually no access to capital and a well-financed corporate cannabis conglomerate, Canadian craft cannabis producers are in a David v. Goliath struggle for survival.

Intended balance now off-kilter

While most understood there was an initial need for regulations to err on the side of caution and be conservative, the intended balance has not materialized. Despite the current obstacles, it’s not all gloom and doom. There is some hope that the underdog may have a fighting chance to enter the legal marketplace. Growing awareness in rural Canadian communities of the potential economic development and job creation opportunities associated with a thriving local craft cannabis industry, as was witnessed with craft beer and boutique wineries, could serve as a welcome driver.

Likely feeling ignored by government, small producers and processors are taking matters into their own hands. While some are feeling pressure to stay in the illicit market, many more are expressing an interest to “go legal”.

Governments can help support transition

Federal, provincial and municipal governments need to meet them halfway, embracing and advancing this willingness to transition. Governments should develop partnerships that provide these innovators with an equal opportunity to apply their valuable skills, network and experience in the post-prohibition marketplace.

In British Columbia, efforts are underway to establish a provincial cannabis co-op so that small producers can pool their resources and market influence. Saskatchewan is doing the same. New Brunswick has established a provincial sector association and others are following suit.

A just-released discussion paper on the establishment of the B.C. craft cannabis co-op includes a series of recommendations for Ottawa to consider over the coming weeks and months to unlock the full potential of Canada’s craft cannabis sector.

Federal leadership is needed to create a sustainable craft cannabis industry and a diverse marketplace that will support the economies of rural communities. Tens of thousands of jobs and billions of dollars of economic impact are at stake if the current course is not corrected.

Barinder Rasode is CEO and co-founder of Grow Tech Labs Inc., which strives to bring together a new generation of diverse cannabis sector innovators from across Canada and around the globe.