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CATARINA MUIA
TREENA HEIN
Grower
From the editor
By Catarina Muia
Looking to 2022 and beyond
As we are in the final months of 2021, it’s interesting to see how the cannabis industry is looking to evolve in 2022 and beyond.
In this issue, we have a heavy focus on both the successes and the challenges that were faced not only in 2021, but in the years since cannabis has been legalized. But one thing has been made clear, we still have a long way to go until it’s close to perfect.
A big part of this has to do with the realization from licensed producers (LPs) that consumer data is extremely important in ensuring the products they release are aligning with their consumers’ specific interests.
In her Year in Review feature article ‘A wild ride’ (found on page 24), Treena Hein spoke to Will Stewart, senior VP at Hill + Knowlton Strategies, who explained, “We’re now starting to get some stratification, particularly in retail store fronts, with real differentiation and targeting of various markets. It’s good for consumers to see themselves reflected in the market and it’s a positive for the industry. I think that we’ll see individual customers being loyal to a few brands, just like they are with other types of products.”
Gauging consumer interests and loyalty is just one side of the coin though, with some making note about the lack of eliminating the stigmatization around
cannabis, as well as lack of education for potential and current consumers. In the same article, George Smitherman, president and CFO of the Cannabis Council of Canada (C3), said that in his view, the government needs to step up when it comes to showing pride and support for the industry. “The stigmatization is really hanging in there. During the last few months, some of our members in Québec have had a major financial institution tell them they can’t be customers.”
Part of eliminating the stigma is recognizing how workers within the legal cannabis industry are committed to providing safe and reliable products to Canadian cannabis consumers.
Because of this, the illicit market is still able to thrive, which means educating consumers on obtaining safe and reliable products, is crucial. In his Vantage Point article, ‘Why We’re not Done Yet’ (found on page 28), Smitherman highlights the ‘Not Done Yet Report Card’, put together by C3. The report card focuses on what areas of the Canadian cannabis industry that still needs attention and development, including ‘Consumer Education and Awareness’, which received an ‘F’ grade on the report card. “We are a community of more than six million people,”
Smitherman said in the article. “It’s time to end the stigma and discrimination holding back legal cannabis, including medical cannabis and medical cannabis-related products.”
Part of eliminating the stigma is recognizing how workers within the legal cannabis industry are committed to providing safe and reliable products to Canadian cannabis consumers. This includes Grow Opportunity’s 2021 Canada’s Top Grower recipient, Albert Eppinga, founder and CEO of BC Cannabis Inc. With a history in the illicit market, Eppinga has come a long way in the legal cannabis industry, “I’m able to tell my parents more about what I do and they can be proud of me, so it was quite an uplifting and empowering process, to have legalization come into play and allow me to express what I’m good at.” Through his win, Eppinga looks to employ, educate, and empower Indigenous people in the cannabis industry. Read the full article on page 18.
Is there a topic you would like to learn more about, or would like to teach your community about? Feel free to send me an email at cmuia@annexbusinessmedia.com, I would love to hear your feedback and get to know the members of our community. I’m looking forward to meeting and learning from each of you!
With that, I leave you to read, learn, and enjoy this issue of Grow Opportunity magazine. Happy reading,
November/December 2021
Vol. 5, No. 6 growopportunity.ca
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Hexo undergoes ‘strategic reorganization’
Hexo Corp. has named Scott Cooper as the cannabis company’s new president and chief executive. Cooper is president and CEO of Truss Beverages, a joint venture between Hexo and MolsonCoors.
The appointment comes as Hexo completes a strategic reorganization that saw co-founder Sebastien St-Louis, who was also CEO, leave the company on Oct. 18. Hexo also announced the resignation of chief operating officer Donald Courtney on Oct. 18, though he is expected to remain until a replacement is found.
The company has made several acquisitions this year, including deals to buy cannabis producer Redecan, 48North Cannabis Corp. and Zenabis Global Inc.
- THE CANADIAN PRESS
Sundial Growers buys Alcanna Inc.
Calgary-based Sundial Growers Inc. announced that it has entered into an arrangement agreement to acquire alcohol retailer, Alcanna Inc.
The $346-million deal will give Sundial access to Alcanna’s 171 locations (predominantly in Alberta) under its three retail brands – Wine and Beyond, Liquor Depot and Ace Liquor. Sundial, and will also take over Alcanna’s strategic partnership with Nova Cannabis Inc., which operates 62 cannabis stores in Alberta, Saskatchewan and Ontario.
“This made-in-Alberta transaction allows Sundial to further its mission to own the customer relationship and deliver sustainable value to shareholders,” said CEO Zach George. “Alcanna’s value-focused model in liquor retailing has created market stability and we believe that the replication of this playbook in cannabis has strong potential to drive a similar result.”
MediPharm's new CEO
As of Nov. 15, the company hopes Bryan Howcroft will bring his 20 years of healthcare and manufacturing experience to MediPharm Labs, as the new chief executive and director.
Canopy Growth delays profitability target after $16.3 million loss
Canopy Growth Corp. pushed back its profitability target as it reported a $16.3 million loss in its second quarter.
The Smiths Falls, Ont. cannabis company previously predicted it would be profitable in the second half of its fiscal 2022, but said Nov. 5 that reaching that goal will take longer than expected because of market share challenges and a slower-than-expected U.S. launch of its BioSteel products.
Drake's new investment
Months after his partnership with Canopy Growth ended, Canadian rapper Drake has invested in Toronto cannabis company, Bullrider. Drake will take on a partner and strategic advisor role, and will help develop its strategy for the North American market. Bullrider is currently looking to open a farmgate cannabis store in Brampton, Ont.
But the company’s chief financial officer promised the target will still be reachable.
“Achieving profitability remains a top priority,” said Mike Lee in a statement. “We are focused on increasing market share in Canada, premiumizing our product mix and delivering on our cost savings commitment.”
Lee’s remarks came as the company has been on an acquisition spree meant to position Canopy for profitability and for taking on the U.S. market, if federal cannabis legalization occurs.
Over the course of the COVID-19 pandemic, Canopy
acquired Supreme Cannabis Co. Inc. and AV Cannabis Inc.
Its most recent purchase came in October, when it reached an agreement to buy Boulder, Colo.-based Wana Brands. The deal is contingent on the U.S. making tetrahydrocannabinol (THC), the main psychoactive component in cannabis, federally permissible.
While Canopy has made such deals and begun integrating those brands, it has also reported consistent losses and seen its revenues tumble.
The company said Nov. 5 that its revenue for the period ended Sept. 30 totalled $131.3 million, down from $135.2 million at the same period last year.
Its total net cannabis revenue reached $95 million in the quarter, a one per cent increase from a year earlier.
Excluding the impact from acquired businesses, Canopy said net revenue declined 13 per cent and cannabis revenue declined 14 per cent.
- TARA DESCHAMPS, THE CANADIAN PRESS
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The Green Organic Dutchman buys Galaxie Brands
The Green Organic Dutchman Holdings Ltd. (TGOD) is looking to make a strategic expansion.
The cannabis company announced that it is acquiring Galaxie Brands Corporation for $21 million. Galaxie Brands is a licensed producer focused on branding and manufacturing Cannabis 2.0 products, including flower and pre-roll manufacturing, extraction and formulation, edibles, vapes and oils.
Part of the acquisition includes acquiring Galaxie’s 26,000 sq. ft. Ontario facility. This facility coupled with TGOD’s 166,000 sq. ft. facility in Ancaster, Ont. The company recently sold its 80,000 sq. ft. facility in Valleyfield, Que. to Cannara Biotech for $27 million.
Angus Footman, current CEO of Galaxie, will join the board of directors of TGOD as chairman of the board, while Olivier Dufourmantelle, president of Galaxie, will join the TGOD team as president of U.S. operations and as a director on the board.
“We are excited to continue to execute on our growth plans,” said Sean Bovingdon, CEO and interim CFO of TGOD. “The acquisition of Galaxie will allow TGOD to expand by increasing scale, innovation, and operating capabilities, with the addition of exciting brands in Canada.”
Aurora Q4 revenue down 45 per cent
Aurora Cannabis Inc. blamed COVID-19 lockdowns for a 45 per cent plunge in consumer sales that it experienced as it continued to restructure its operations in its fourth quarter.
The Edmonton-based cannabis company said the health crisis pushed its net revenue from consumer sales to $19.5 million for the three months ended June 30, down from $35.3 million in the fourth quarter of 2020.
But that didn’t appear to have the company’s executives worried.
“Canadian rec will come back and that timeline won’t impede our strategic or financial progress,” said Miguel Martin, Aurora’s chief executive, on a Sept. 27 call with analysts that had been rescheduled from the week prior.
“We’ve shown an incredible agility over the last two years and the final leg of our transformation is well underway.”
Aurora announced about eight per cent of its global workforce will be impacted by the forthcoming closure of its Aurora Polaris property in Edmonton. The transformation is meant to streamline its operations, align its product offerings with current and future demand levels and put the company on a path to profitability. But analysts feel those tasks won’t be easy.
Bill Kirk, an analyst and executive director with MKM Partners, said in a Sept. 17 note that Aurora has “limited prospects” to improve its position in the recreational cannabis market and is unlikely to beat profitability expectations.
He pointed out that in the 17 quarters Aurora has reported as a public company, it missed consensus EBITDA expectations 17 times and he felt the firm would barely generate $50 million in revenue.
Retail investors also questioned Aurora’s track record on EBITDA on an investors’ call on Sept. 27, asking Martin why they should believe Aurora is headed for profitability now, as they’ve heard those promises before.
Martin said he had confidence in the renewed forecasts because they are based on “aggressive cost” saving measures and not dependent on a need to grow revenue and increase margins.
On an adjusted basis, Aurora lost $19.3 million, compared with a loss of $33.3 million in the same quarter the year before. Included in the adjusted loss is $5.1 million in restructuring costs. Aurora says it has identified $60 to $80 million in annualized cash efficiencies as part of its restructurings.
Aurora expects to deliver $30 million to $40 million of annualized cash savings with the next year, and the remainder by the end of the second quarter of 2023.
- THE CANADIAN PRESS
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CanExec Summit 2021 recap
Executives search for the road to profitability
By Jean Ko Din
The Global Cannabis Executive Summit, or CanExec Summit, is an exclusive “By Invite Only” event for executives from some of the world’s leading cannabis producers. Its inaugural event took place on Nov. 2-3 at Sheraton Centre Toronto Hotel. Grow Opportunity is a media partner.
The road to profitability
If you want profitability, get out of cannabis, David Traylor joked.
Traylor is a senior managing director at cannabis investment bank, Golden Eagle Partners, in Centennial, Colo. He joined a panel of industry experts to discuss the current challenges to profitability in the North American cannabis market.
“What’s interesting is I’ve lived through this a lot with biotech, this funding cycle of up and down in the early ’90s was really problematic; I think the (cannabis) industry is going through that now,” said Traylor. “There was a bunch of money flying around in Canada and it’s not anymore. Now these companies need to talk about discipline.”
Rob Wilson, chief finance officer of Nutritional High International Inc. (to be renamed High Fusion), agreed that after entering the market and establishing their own footprint, companies are still burdened with many obstacles to profitability. High taxes and constantly changing regulations means making tough decisions for growth.
“I have six different banks that help me deal with a small company like ours, just to
do wires, which you should be able to do very quickly in a regular industry,” said Wilson. “There are many challenges that create extra management time and costs.”
Setting prices that have durable profit margins is key to profitability, said Chris Naprawa, board chairman of Khiron Life Sciences Corp. As the economy faces rising inflation rates, he said low margins could be “company killers” in today’s market.
Naprawa advised that early stage companies have to really examine the “real margin” of the business, accounting for other factors, such as regulatory banking or taxation. Then, companies must also take a very sharp look at the market and set prices that allow for durable margins, long-term.
Creating consistency
Testing, testing and testing is the best way to ensure consistency.
During the session, “Creating Consistent Products,” panelists agree that several rounds of testing and trials is important to
ensuring a positive consumer experience. Quinn Shiskin, director of products and innovation at The Valens Company, moderated a panel discussion exploring the different elements that contribute to a brand’s consistency in the eyes of the consumer.
Milka Subotic, marketing director of Bhang Inc., said consistency has to be examined as a whole picture – from product development, to packaging, to marketing, and to overall consumer experience. A strong brand identity will make for a loyal consumer base, even as a brand moves through the Canadian and U.S. markets.
Gregg Steinberg, chief executive of Belushi Farms, said that developing new genetics to a product line has to take the individual brand’s identity into account. Belushi Farms in Eagle Point, Ore. is a cannabis company founded in partnership with actor and comedian, Jim Belushi. The farm produces for three signature brands – The Blues Brothers, Captain Jack’s and Belushi’s Secret Stash.
Executives from across North America gathered for the inaugural Global Cannabis Executive Summit, where they discussed achieving profitability in the cannabis industry and producing consistent products.
“We work with a couple of breeders in Oregon and California to specifically help us determine our phenotypes for each of the individual brands,” he said. “And then as we branch out with different partners… maybe soon with an LP here in Canada, we figure out how we have consistency among those strains among each individual brand.”
From the manufacturing perspective, Aurora Cannabis general manager Chi-Hae Marcelo said consistent input materials are important in ensuring that quality is embedded in the process. Marcelo is general manager of two Aurora facilities, Aurora River in Bradford, Ont. and Aurora Ridge in Markham, Ont.
“You have to ensure the process you develop is repeatable,” she said. “When they’re repeatable, you’ll get consistent product, then that creates a product consumers will have that expected experience with, with
that same dose, every time they use their products.”
Designer seeds
For CanBreed co-founder and chief executive, Dr. Tal Sherman, consistency can be ensured starting from the seed.
At the event, he presented how his company uses CRISPR gene-editing methods to optimize a cannabis plant’s growing performance. CRISPR/Cas9 edits genes by precisely cutting DNA and then letting the natural DNA repair processes take over.
Sherman said that cloning from mother plants is an outdated method. A disadvantage to this method is that as the mother plant ages, it’s technical code changes which can create inconsistency in how cloned plants perform.
“A clone from a one-year-old mother will perform differently than a clone from a
two-year-old mother,” he said. “And eventually, the variation from performance requires changing mothers. When you change your mothers, by definition, you change the genetic makeup of that mother and you lose consistency and uniformity.”
Sherman presented the case that stable genetics through seed development could be the future of cannabis cultivation, beyond cloing from mother plants. He said CanBreed aims to supply stable genetics for the Canadian cannabis industry.
“If you know the gene that controls a trait (for disease resistance), you can edit that gene and get the desired effect without going through 10,000 plants. This allows for a more efficient and accurate breeding program,” he said. “Because we’re using CRISPR without concern for any fallen DNA into the plant, this would be considered as a non-GMO.”
Cultivation
Dr. Mohyuddin Mirza and Gagandeep Singh Bhatoa
Mohyuddin Mirza, PhD, is an industry consultant in Edmonton, Alta. He can be reached at drmirzaconsultants@gmail.com.
Gagandeep Singh Bhatoa is a scientific writer in Regina, Sask. Email him at gaganagrico@gmail.com
Pythium: A fungal devastation to avoid
The fungus, Pythium has been described as a ‘hidden’ terror and ‘bully’ for cannabis growers. It is hidden because it is in the root zone, which are out of sight. Unlike foliage and buds which we see and check daily, roots are hidden, and that’s why growers should be familiar with the telltale signs of this fungus, which one can see in the upper parts of plants.
Getting to know the fungus
Root rot, damping off, Pythium wilt, Pythium blight, and basal stem rot are various descriptive names of this fungus. Pythium, is a ‘water mold’ fungus, meaning that it needs water to flourish. It produces spores, which can swim in water, and can thus move in the root zone freely and spread to different areas. Under less than ideal conditions, the fungus can produce tough spores, sporangia, which can stay dormant for a longer period of time. This also provides clues to the fact that water management is crucial in controlling this disease.
Root rot in cannabis can be inflicted by many different species of the fungus Pythium, both at cooler and warmer temperatures. Two Pythium species have specifically been reported by Punja and Rodriguez in 2018. They are Pythium dissotocum Drechsler and Pythium myriotylum Drechsler. Other Pythium species may also be present based on root zone temperature. Pythium ultimum can be more predominant under cold conditions, while Pythium aphanodermatum is more common
under warmer temperatures. Pythium is stealthy and can attack any stage of the cannabis lifecycle.
Where can the fungus Pythium come from?
The fungus is widely present in field soil, dirt and dust, and water. The researchers have seen it detected from pond and dugout water supplies, especially this year when the water levels dropped and growers were pumping water from the bottom. It may also be present in many growing media. Seed contamination have also been documented. The fungus derived its food source from the root secretions (exudates) to grow and multiply. Pythium can spread very fast in recirculating systems and additionally, the fungus gnats which can grow on algae, can carry Pythium spores and mycelium from one area to the other.
Recognize the symptoms
As seen in Figure 1, this is the start of root rot in a hydroponic system. The roots, which are in stagnant water at the bottom, are turning brown. Oxygen level in that water was less than 3 parts per million (ppm).
In Figure 2, seedlings late in the vegetative state, start to show the first signs of wilted leaves. This grower is using field soil in cups with no drainage, causing water logged conditions and depleted oxygen levels.
Figure 3 displays mature crop close to bud harvest, which show leaf necrosis symptoms due to fungus Pythium. The fungus attacks root hair and
thus water absorption is reduced. In this particular case, there were pH issues as well, which caused iron toxicity.
When looking to identify the Pythium symptoms, look for younger leaves turning small in size and a bluish tinge being developed, which is an indication of reduced water uptake. One other sign to look for is that plants wilt during the lighted period and recover during the dark period. A sharp eye and training of staff is required. Brown roots come later, once the fungus is well established and damage is done.
A simple test to confirm that the major factor in root rot is the fungus Pythium, is to take the brown root and hold it between your two fingers. Gently move the finger and the skin will come off, allowing one to see the inside root strand. The authors call is ‘slough off’ confirmation.
There are molecular diagnostic tests available where pathogen specific DNA can be detected. These tests are useful to check if there are other fungi like Fusarium, also present. Water and growing media can also be tested for this fungus.
Factors that favour Pythium development
Pythium root rot is also referred
to as water mold fungus. Prolonged exposure to overwatered conditions or lack of oxygen encourages the development of this fungus. Pythium thrives in warm (22 C or higher), wet conditions, particularly if the amount of dissolved oxygen (DO) is depleted.
Due to warm weather, the hydroponic system's water temperature increases, resulting in the nutrient solution holding less oxygen. The warm nutrient solution can cause slowed root growth, eventually affecting the whole plant. DO concentration decreases also create a breeding ground for the development of this fungus.
In previous research studies, it has been well documented that DO levels below 4 ppm are the starting point for this fungus to grow and produce spores. At 2 ppm, the roots would turn brown and black.
PHOTOS:
Figure 1
Figure 2
Figure 3
Managing the disease
To effectively manage the Pythium rot in indoor or outdoor cannabis crops, it’s crucial to implement a holistic approach. Points to keep in mind, include:
• Know where the fungus can come from
• Recognize the symptoms as early as possible.
• Clean, disinfect and sanitize the greenhouse equipment in-between cropping cycles.
• Start with good, rooted clones which don’t show any signs of brown roots or stressed-out roots. If you buy rooted clones, examine them very thoroughly and don’t use clones which are weak, stressed, and spindly.
• Proper watering at the right times is an important aspect of managing this root rot. Growers can master the art of irrigation. When using a growing medium, know about its porosity, water holding capacities, and air retention timings in between irrigation cycles. Check the oxygen levels in your irrigation water to start with, and then in leach water. A good DO meter is a wise investment.
• Pay attention to root zone temperature. Oxygen at cooler temperatures is better than at warmer temperatures.
• Pest control is also a helpful
way to prevent Pythium invasions. Some pests (the fungus gnat and shore flies) carry the fungus with them, so it’s important to keep them at bay and keep your plants safe from contact with fungi.
• Don't let dead leaves or plant debris get into the hydroponic reservoir; they serve as a refuge for Pythium to grow. Growers should use approved bio fungicides as preventive measures before the problem arises. As per different research studies, biological agents including bacteria ( Enterobacter cloacae and Pseudomonas sp.), Rhizobacteria, and fungus (Trichoderma sp.) have been very effective in
managing Pythium rot of cannabis. Such organisms will develop healthy symbiotic relationships with a plant’s roots, helping them absorb more nutrients to fuel faster and healthier growth, while also protecting them from pathogens.
References
Zamir K. Punja & Gina Rodriguez (2018) "Fusarium and Pythium species infecting roots of hydroponically grown marijuana ( Cannabissativa L. ) plants," Canadian Journal of Plant Pathology, 40:4, 498-513, DOI:10.1080/07060661.2018.1 535466. (https://doi.org/10.108 0/07060661.2018.153546)
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Micromanagement
By David Brown
Making macro profit in the micro world
As the Canadian cannabis market grows and matures, the need to become more competitive is increasing. Wholesale prices on cannabis are moving towards commodity-level models and many growers are trying to determine how to keep the lights on while looking at per gram prices of a few dollars.
With nearly 800 federal licence holders as of the end of October, the cannabis market is becoming increasingly saturated with cannabis products, especially dried flower, which is having a ripple effect on the market.
A higher volume of dried flower-seeking processors drives the price down and gives leverage to processors. The sheer volume of product is forcing provincial distributors and retailers of all kinds to select from only a small portion of available products. Some provinces continue to implement limits on how many new producers they will even entertain product offerings from, giving even more leverage to those processors with an established foothold in the market.
On top of that, additional bottlenecks exist at the provincial level, focusing on high THC strains and away from outdoor cannabis. This can make it difficult for outdoor growers or small batch indoor growers with more unique, exotic cultivators that happen to be under the current 20 per cent THC threshold, to find a buyer.
The market for micros is building out extensively, as well. As of the end of October, there were nearly 260 micro licence holders in Can-
Managing a medical sales platform can mean more revenue, but it can also mean more upfront costs and ongoing operational expenses.
a
ada. There are 188 stand-alone micro cultivation licences, 35 stand-alone micro-processors, and 39 micro cultivation and micro processing licence holders.
This increase in producers and supply means a significant downward trend on prices for growers. Those just entering or looking to enter the market need to be aware that this landscape may only continue to saturate. Wholesale prices on even high-quality outdoor cannabis can be around—or even under—$1 per gram for some, and even for indoor prices can hover around $2 on average. While these numbers can be higher for an exceptionally high-quality crop, these are increasingly becoming the ‘unicorns’ of the market.
Having realistic expectations for these kinds of prices can help inform long term business planning. How much is it worth to build a new facility or secure a plot of land to grow outdoors, if your revenue stream is $1 to $2 per gram? How can you keep your operating costs as low as possible to ensure your business can survive?
Control the supply chain
One approach some licence holders take to realize more profit on their product, is controlling more of the supply chain by acquiring a processing and sales licence for their product. This can mean more upfront costs in terms of licensing fees, infrastructure and operating costs, and more logistical issues such as paying the federal excise tax and provincial recall insurance. But it can also potentially mean another $1 or $2 per gram in profits after these factors are accounted for.
But as more provinces start lim-
iting the amount of product they order and the number of producers they approve of doing business with, even these licences are not necessarily a guarantee to a direct entry point to these retail markets. Ensuring you understand the realities of the provincial landscapes you want to sell in beforehand, and the realities of processing, can help guide these decisions.
Medical sales
A medical sales licence can also provide the ability to enter another consumer market other than through provinces. With the appropriate federal licences in place such as processing, there can be more control over the supply chain.
While the non-medical distribution system is provincially managed, the medical system is regulated at the federal level and allows for online and mail order sales across the country.
Managing a medical sales platform can mean more revenue but it can also mean more upfront costs and ongoing operational expenses—like the processing sales licences on the recreational side— you’ll be paying for the excise stamps and recall insurance, as well as having to manage sales, customer service, and shipments yourself.
Farmgate and direct sales
Farmgate sales licences that allow producers to operate an on-site retail store is another option some provinces are slowly allowing. Ontario began issuing these types of licences earlier this year, and New Brunswick has just begun its process. British Columbia has said it plans to begin such a program sometime in 2022.
Farmgate sales can be seen as an opportunity for micro licence holders to control more of the supply chain. However, it also means the additional costs of building and
David Brown is the founder of StratCann, a cannabis industry publication with
special focus on micros and nurseries. Prior to StratCann, David was a senior policy advisor to Health Canada’s cannabis branch from 2018 to 2020.
The number of federal licence holders, as of October 2021. This has made the cannabis market increasingly saturated with cannabis produts, and in particular, dried flower. This is having a ripple effect on the market.
operating a retail store. Developing a plan for on-site retail could be built around more long-term special event planning than daily sales, especially for more remote, rural locations.
Direct sales are also being discussed in more provinces allowing for producers, micro or otherwise, to sell more directly onto provincial retail systems. Options may include bypassing the provincial distribution system, as B.C. has said it is looking at in 2022, or giving retailers a wider array of choices to purchase, than those currently stocked in provincial warehouses, as Ontario is currently developing.
Such direct sales models can also offer opportunities for micros to find a pathway into an otherwise crowded market, potentially getting around barriers from
some provincial buyers. This can allow micros to build relationships with retailers who, because of micros’ often more limited supply, could end up bringing a unique product offering for a small group
of retailers. Giving retailers something to differentiate themselves from their competitors can be a mutually beneficial arrangement. But provincial markups, even on these kinds of sales, will likely continue. Such direct delivery programs could end up placing more logistical responsibilities on micros and their partners to get product into the hands of retailers.
For all of these potential solutions, there are pros and cons. Additional expenses in infrastructure, paperwork and operating costs are balanced against slightly higher profit margins. Micros should carefully weigh those options with what it takes to simply run a small, streamlined cultivation licence that can outsource these costs to others, while still operating at a profitable level.
Legal Matters
By Matt Maurer
Outlawing non-compete clauses
Non-competition clauses have been utilized by employers in employment agreements for a long time. Generally speaking, these clauses limit an employee’s right to go and work for a competitor after leaving their employment.
The rationale behind a non-competition clause from an employer’s perspective is relatively straight forward. Employers would prefer that their employees not leave them to go and assist their competitors, and certainly not by using all of the knowledge they have gained of their current employer’s operations, during the term of their employment.
From an employee’s perspective, these types of clauses have long been problematic. Many employees, if not most, tend to stay within their existing fields when they change jobs as the skills they have learned at their current employer, can make them particularly attractive to a new employer in the same industry. A non-competition clause can therefore mean that when an employee decides to move on from their current employment, they either have to accept a position in an unrelated field, accept a position in a different geographical jurisdiction, seek a waiver from their soonto-be past employer, or accept the position at the competitor and risk getting sued (a risk shared by the new employer who takes them on, as well).
The historical treatment of non-compete clauses
Fortunately for employees, the general rule in Canadian courts have historically held that non-competition clauses in employment
agreements are presumed to be void as they constitute an unreasonable restraint on (the employee’s) trade. Generally speaking, non-competition clauses in employment agreements will only be enforced in exceptional circumstances and in particular, only where they are “reasonable between the parties and with refence to the public interest”.
The Supreme Court of Canada ruled in 1978 that in determining whether a restrictive covenant is reasonable, the court should consider:
(a) Is there a proprietary interest entitled to protection?
(b) Are the temporal or spatial features of the clause too broad?
(c) Is the covenant unenforceable as being against competition generally and not limited to proscribing solicitation of clients of the former employer?
Additionally, if the clause in
question is ambiguous as to time, activity or geography, it is assumed to be unreasonable and unenforceable.
For these reasons, prudent employers have been utilizing non-competition clauses that are narrow both with respect to how long they last after the employment is over, as well as the geographical range to which the restriction will apply.
However, despite the fact that the majority of non-competition clauses will be found to be unenforceable if the matter ends up in court, most matters do not end up in court, and the fact that employers insert these clauses into employment agreements generally can cause issues for employees. I would wager that the majority of employees do not know that non-competition clauses in their employment contracts are likely unenforceable and when leaving a job, will simply assume
Matt Maurer is a partner and co-chair of the Cannabis Law Group at Torkin Manes LLP in Toronto.
that they are bound to follow the clause. It is a rare occurrence that an employee retains a lawyer just to inquire about the enforceability of their non-competition clause, unless it is in the context of the lawyer also being retained to deal with a broader wrongful dismissal claim.
Ontario's
legislation to ban non-competition
agreements
In late October 2021, the Government of Ontario tabled legislation which would prohibit employers from using non-competition clauses, except in limited circumstances. Bill 27, 2001, which will be known as the Working for Workers Act, 2021, was introduced for a first reading on October 25, 2021 by the Honourable M. McNaughton, minister of Labour, Training and Skills Development. If and once passed, the legislation would amend the Employment Standards Act, 2000 to, among other things, insert new sections in the legislation to prohibit the use of non-competition clauses.
Specifically, once passed, the Employment Standards Act, 2000 will prohibit an employer from entering “into an employment contract or other agreement with an employee that is, or that includes a non-compete agreement.”
A “non-compete agreement” is defined in the legislation to mean: “an agreement, or any part of an agreement, between an employer and an employee that prohibits the employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer’s business after the employment relationship between the employer and the employee ends.”
If an employer contravenes the legislation and enters into a non-compete arrangement with an employee, the legislation will deem the agreement to be void.
Not applicable with respect to sale of a business
It is important to note that Canadian courts have treated non-competition clauses differently when they arise in the context of a sale of a business. When someone buys a business from someone else, the courts have held that it is entirely reasonable for a purchaser to expect that the vendor will not go out and immediately compete with the purchaser who just acquired the business. This exception will be recognized in the amended legislation as follows:
“If there is a sale of a business or a part of a business and, as a part of the sale, the purchaser and seller enter into an agreement that prohibits the seller from engaging in any business, work, occupation, profession, project or other activity that is in competition with the purchaser’s business after the sale and, immediately following the sale, the seller becomes an employee of the purchaser, subsection (1) does not apply with respect to that agreement.”
Takeaways for employers
The cannabis industry is one where employees are more likely to move from one business to a competitor, rather than move into a new industry entirely. This is likely due to the specialized skills that employees develop during their employment, especially with respect to cultivation, extraction, and processing. Just because employers in Ontario will soon be prohibited from utilizing non-competition clauses in employment agreements, it does not mean that they need to be completely exposed to having their employees rush off to competitors and divulge all the employer’s trade secrets. Steps such as the following can be taken by the employer to try to continue to protect its legitimate business interests:
The cannabis industry is one where employees are more likely to move from one business sto a competitor, rather than move into a new industry entirely.
Continue to employ non-solicitation clauses and confidentiality clauses: Just because employers will not be permitted to prevent employees from working for their competitors does not mean that employers cannot continue to contractually prohibit employees from soliciting former colleagues, customers, and suppliers to come with them to their new employment. Similarly, employers will still be fully permitted to contractually restrict the use that can be made of confidential information that is acquired during the term of the employee’s employment.
Be more judicious in what information is given to employees:
Knowing that employees will soon be permitted to work for competitors if they so desire, employers should be conscious about only disclosing information to employees that is necessary for them to carry out their job responsibilities. If an employee does not need access to customer or supplier lists, or to the employer’s ‘secret sauce’, that information should not be made available to them.
Top Grower
A HIGHER GOAL
2021 Canada's Top Grower, Albert Eppinga, looks to employ, educate, and empower the Indigenous communities across Canada. By
Catarina Muia
Islept on cardboard boxes as a teenager. I realize what I’ve done and I realize I’ve come a long way, but you just don’t see the big picture until you sit down and realize you’ve received an award like this.”
Albert Eppinga, founder, master grower, and RPIC of BC Cannabis Inc. has always had a love for growing, and in 2017, sold everything he had to pursue his dream of growing cannabis, legally.
Learning the legacy way
Eppinga’s cannabis-growing experience goes back more than 20 years before he founded BC Cannabis Inc. in 2018. “As a kid, I loved growing bonsai plants, but I knew people who grew cannabis, and was intrigued by the plant.” Eppinga was fascinated by the texture, the colours, the smells, “I wondered what it would take to create that; how do I grow it?” But curiosity wasn’t his only reason for wanting to learn how to grow; 20 years ago, finding a high-quality
and consistent product was a rare feat.
Determined to learn, Eppinga apprenticed for legacy growers who first had him trimming the plants, until he eagerly asked to be taught the industry secrets of how to grow and produce a quality product. “I had knowledge passed down to me by the expert growers who today, would have more than 40 years of growing experience, and they were my friends’ parents!” he revealed. “That’s my truth, and that’s how a lot of people got their start in the industry.”
Establishing BC Cannabis Inc.
In 2017, when news began to spread that cannabis would likely be legalized, Eppinga almost left the trade. He thought that legalization meant the legacy market would come to an end. But he had spent years honing his skills and perfecting the techniques.
“I was impressed with Albert’s approach to adopting modern cultivation techniques for cannabis and his focus on craft produc-
tion,” said Mohyuddin Mirza, PhD, and an industry consultant in Edmonton, Alberta (Alta.). As one of the judges of this year’s Grow Opportunity 2021 Canada's Top Grower award, Mirza was “also impressed with his knowledge of cannabis plants and how to produce a high-quality, craft product.”
After gaining all this knowledge and dedicating the time to continuously learn and perfect his skills, the thought of not taking a crack at the legal market and the regret to follow didn’t sit well with Eppinga. Instead of pushing him away from the industry, legalization has allowed Eppinga to speak openly about cannabis and what he does, giving him a great sense of pride. “I’m able to tell my parents more about what I do and they can be proud of me,” Eppinga continued, “so it was quite an uplifting and empowering process, to have legalization come into play and allow me to express what I’m good at.”
The dream was too big to pass up, plus, Eppinga realized that he was in a prime location. “I thought to myself, ‘Where are
Albert Eppinga looks back on the road to establishing BC Cannabis Inc. and reflects on what this win means for Indigenous communities.
Top Grower
we? We’re in British Columbia!’ Where’s the best weed grown? In B.C.!” Eppinga exclaimed. “People all around the world know about B.C.’s cannabis.”
With a great support system of friends and family encouraging him every step of the way, Eppinga sold everything he owned and put the money toward establishing the company. “I put everything I had and we still needed more, obviously. I have some really close people on our side that helped us along the way, so you know, it all worked out.”
Although construction of the facility was impacted by the COVID-19 pandemic, on April 9, 2021, almost three years after cannabis was legalized in Canada, BC Cannabis Inc. received its first micro-cultivation licence from Health Canada, with letters of readiness for two more micro-cultivation licences. Currently, the company is looking to build two more facilities beside the up-andrunning facility, with one dedicated to cannabis plant genetics.
After taking a virtual tour of the facility, all three of Grow Opportunity's 2021 Canada's Top Grower judges were impressed by the facility itself, but also with Eppinga’s knowledge and dedication, his team, and cultivation techniques.
Legacy techniques in a modern facility
As a legacy grower, Eppinga has continued to use the techniques he had learned 20 plus years ago, but also understands the importance of embracing innovation and incorporating new technologies in his facility to achieve efficiency, sustainability, and consistency. Taking this approach, BC Cannabis Inc.’s current strains, including its Mandarin Cookies strain, which has tested at 29.6 per cent THC and 3.1 terpenes.
“When Albert founded BC Cannabis Inc., he envisioned growing with tried-and-true techniques from the legacy market, combined with highly-efficient cultivation and equipment,” explained Tom Nguyen, head of security at BC Cannabis Inc. and who has been with the company since the beginning. As a legacy grower, Eppinga had more experience growing cannabis in soil, but chose to grow using the hydroponics method. “This change was risky, but has proven to be an effective timeand cost-saver, as our plants don’t need to be manually watered,” Nguyen continued. “The growth medium we use here is rockwool, which is an insulation material that’s light and non-toxic. Albert also had no experience growing with rockwool but chose to do so, because rockwool combined with hydroponics uses less water than the traditional soil system.”
The switch from soil to hydroponics allowed BC Cannabis Inc.’s operations to be much more scalable. The facility’s irrigation system is fully automated and runs at
pre-scheduled events, allowing Eppinga, the master grower, to look after multiple rooms and multiple facilities. Additionally, Nguyen pointed out that the automated system allows for consistency in the plants, and eliminates risks of under- and overwatering due to human error.
“Albert’s ability to bridge ‘legacy’ methods of production with innovative technologies to align with industry best practices was on-point,” said Jayson Goodale, a 2021 Canada's Top Grower judge and senior lead - risk advisory at Cannabis Compliance Inc.- (CCI-) Deloitte. “From the testing of nutrients to the monitoring of the sophisticated environmental controls of the operation. He also identifies with the importance of quality over quantity at any scale and how no matter what, the ‘craft approach’ is what today’s consumers are looking for.”
Wanting to ensure he’s providing only the best for his team and operations to produce a high-quality product, Eppinga also equipped his facility with double-ended Gavita lighting, HVAC and dehumidification systems, with all components integrated and centralized. “Our facilities can be monitored and run from a smartphone. Environmental data are tracked and collected 24/7, and it’s all saved to the cloud,” said Nguyen. “Albert didn’t spare any expenses on the cultivation equipment at BC Cannabis Inc. They’re modern and energy efficient,” Nguyen continued, “They use much less electricity and have much lower environmental impact compared to other, much cheaper alternatives.”
While it’s important to ensure the facility contains the most efficient technologies and systems, Eppinga knows
As a legacy grower, Eppinga has combined legacy growing techniques with the industry's newest technologies, to produce a high-quality and consistent product at BC Cannabis Inc.
Top Grower
that a big part of achieving success is surrounding yourself with the right people.
A team effort
During harvesting, BC Cannabis’ rooms could have up to 20 people in the span of four to five days who are trimming, hang drying, and processing the cannabis. While the facility is located in Sooke on Vancouver Island, Eppinga had originally come from the mainland of B.C., which meant he left behind most of his legacy market network, and needed to build relationships with the communities and companies around Sooke.
“Over the past four months we’ve built a roster of people and slowly, we’ve involved more key people,” said Eppinga. “Now we have a really good team that comes in to trim.” While about half of the team have plenty of experience with the harvest and post-harvest process, the other half are a
little less experienced, but are being shown the ropes by Eppinga and the rest of the group. Up until recently though, Eppinga’s permanent cultivation team consisted of only five employees. “We’ve just welcomed two new workers from the Indigenous community whom we’re currently training.”
As a status member from the Eagle Clan, located on the Haida Gwaii (an archipelago on the West Coast of B.C.), and someone whose mother is a residential school survivor, finding ways to employ, educate, and empower the Indigenous communities across Canada, is the main goal Eppinga has been looking to achieve since the inception of BC Cannabis Inc.
Employing, educating and empowering
Today, BC Cannabis Inc. is still part of only a 2 to 4 percentage of companies that
have Indigenous owners or stakeholders. When Eppinga had first looked to establish the brand in 2018, BC Cannabis Inc., which is now part of the BC Liquor Distribution Branch's Indigenous Shelf Space program, was one of the only Indigenous-owned companies in the province that was utilizing the Indigenous Navigator Services with Health Canada. “The program was a huge help because it guided us through almost the entire process, not just through the application process,” Eppinga explained.
Known as White Eagle, which is his name in Haida, Eppinga’s goal is to establish new ventures on First Nation land, giving BC Cannabis Inc. the ability to work with more Indigenous people. “That’s our main goal here at BC Cannabis, that’s the reason we’re doing it. We want to employ, educate, and empower Indigenous peoples in the canna-
bis industry.”
By ensuring his Indigenous identity and culture were a main focus when establishing BC Cannabis Inc., Eppinga has looked to inspire his communities, showing that if he can do it, they can too. “Our company logo is Indigenous; we have the helping hands on there, showing we want to help Indigenous people and representing all of us working together in the cannabis industry,” he detailed. “My hope and goal is to empower and enable these communities to be self-sufficient. I want to be able to build a facility in the middle of nowhere, and create revenue for bands that have mold on their walls, and are without running water.”
To kick-start this goal, BC Cannabis Inc. is now looking to build a farmgate facility in Chilliwack, B.C., on top of the two facilities currently being built beside its Sooke facility. “To me, it’s so important that we let
the entire nation know we are Indigenous, we are BC Cannabis Inc., and show that if we can do it as an Indigenous company, anyone else in the Indigenous community who has the passion, can do it too,” Eppinga emphasised. “That’s just what I really want to do. I really want to help my people and allow them to understand this is a good
thing. It’s something that can benefit their communities and employ our people.”
The road ahead to achieve this goal won’t be easy or happen overnight, but looking back at the road to establishing BC Cannabis, that wasn’t easy either. “Us Eppingas just don’t know when to give up. This is my passion and I never wanted to give up my passion. The challenges involved made me a better and stronger person,” Eppinga smiled.
“I would like to personally congratulate this year’s winner, Albert Eppinga, a grower that displays the experience of the legacy market, blending with new technology and the passion of a true cannabis producer,” said David Kjolberg, judge of the 2021 Canada's Top Grower award, and master grower and cannabis consultant. “I can only imagine what the future has in store for Albert and BC Cannabis Inc.”
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Growing cannabis is Eppinga's passion, and he hopes to use his passion to employ, educate and empower Indigenous people across B.C. and in the Canadian cannabis industry.
A wild ride
Looking at the developments in Canada’s legalized cannabis industry that have transformed the sector
By Treena Hein
It has been a blistering first three years of life for Canada’s legal cannabis industry. Much of the activity was expected – some wild rides on the stock exchange, some sector consolidation, and the launch of secondary products, for example – but other aspects, perhaps chief among them, the resiliency of the illegal market, were not. To reflect on the many changes (and what hasn’t changed but needs to), let’s dive into some viewpoints from across the sector.
Ready to reflect
“A rollercoaster would be the first word that comes to mind,” for Rob Cherry, in describing the last three years. Cherry is VP and general merchandise manager at Fire & Flower, one of the largest cannabis retailers in Canada. “Since the start of legalization, it’s been constant pivoting.”
Cherry explains that on the regulatory side, there have been changing definitions (and interpretation of definitions) for cannabis products to adapt to. He remembers, for example, finding out that accessories, such as flavoured rolling papers, were okay to sell in Ontario-based cannabis stores, but simultaneously, were not permitted in other provinces. He adds that “from an overall market dynamics perspective, there have been changes in supply and demand, which means pricing changes to keep up with.”
There have also been rapid changes in customer preferences for things like
different format sizes of various product types. Additionally, “there were few cannabis stores in some provinces, such as Ontario, at the start of legalization,” Cherry says, “and now it’s exploded, which has meant adapting to new competition.”
The entire industry, in his view, “has also been in constant uncertainty about the industry's future. The biggest question has been if or when the provincial and federal governments will provide the support the industry needs to grow and grow profitably, especially the producers.”
Ready to talk
A time of pent-up enthusiasm to talk about opportunities. That’s the way George Smitherman, president and CEO of the Cannabis Council of Canada, characterizes the last three years.
“Everyone knew we would be in a very static regulatory environment until the Cannabis Act review took place three years in, and now everyone is hungry to talk about change,” he explains. “We’ve had the time, as an industry, to see what has worked and what’s not working.”
In terms of what has gone well, Smitherman points to the creation of an ‘amazing’ consumer experience. “The competitive pricing, the types of products, the presentation of products, and the consumer experience has been a remarkable achievement,” he says. “There has been a lot of innovation.”
While the market size (and consequent overproduction) has caused some consolidation, Smitherman notes that “there have also been some successful ventures into the U.S. and overseas, and also some retreat from investment. Over-
all, what we can now see clearly is that the global cannabinoid market will be huge, and individual Canadian companies are well-poised. They’ve staked out different global approaches, and ensured that there will be an enduring Canadian presence in the sector.”
For his part, MNP’s Cannabis Niche leader, Glenn Fraser, notes that “globalization may present opportunities for some Canadian cannabis companies and it’s not something that these companies should completely ignore, but the reality is that they don’t have profit in their own backyard. A number of these companies are struggling to build profitable operations domestically, so it’s hard to think
Noteable industry changes in the last two years
Industry layoffs/ facility closures
• March 2021:
- Canopy Growth laid-off staff in North America, and at its Denmark facility.
• March 2021:
- 48North laid-off workers and closed its outdoor grow facility (Good Farm) in Ontario.
• Sept. 2021:
- Aurora Cannabis closed its Edmonton facility.
Consolidation
• May 2021:
- Hexo Corp. acquired 48North.
• June 2021: - Hexo purchased Zenabis Global. - Cannara Biotech bought a TGOD indoor facility.
that going global is the solution to their challenges.”
Here at home, Smitherman explains that over the last three years, the Canadian public has seen that on a basic level, a legalized industry works. “There were predictions about what legalization would bring to our society and these haven't come true. But there hasn’t been much progress with eliminating the illegal market.”
During the last 36 months, it’s been able to thrive, he says, because it can access online payment systems like Interac. “And at the same time, some of our members can’t get an operating account with a Canadian bank,” Smitherman reports. “The stigmatization is really hanging
• Aug. 2021: - Valens acquired craft LP, Citizen Stash.
• Sept. 2021:
- Tilray closed its Nanaimo, B.C. facility months after a merger with Aphria.
– CannTrust has its licences suspended for illegal cultivation.
• December 2020: - Re-entered legal market and started dealing with litigation.
• July 2021:
- Three former executives faced charges.
A Year in Review
in there. I couldn’t get a major Canadian bank to agree to let this association have a small bank account for operation, to handle membership fees and so on. During the last few months, some of our members in Quebec have had a major financial institution tell them they can’t be customers.”
This is in part, he says, because the government hasn’t done enough to show support for and pride in this legal industry. In his view, the industry would be better treated if, by now, the government had expunged all criminal records related to cannabis possession; given the economic development support to legal cannabis, which other similar industries enjoy; and put in place proactive programs to encourage the inclusion of Indigenous people and other groups.
As a result of illegal organizations still taking a big share of industry profits, legal product prices are lower than expected and the excise tax is putting a much larger strain on licensed producers (LPs) than was ever intended. “It needs to change quickly or I think there may be more facility shutdowns,” Smitherman says. “We can handle this by lowering the tax, taking the illicit market, and through economic development support. Furthermore, allowing the export of CBD products would provide a lot of jobs, profit, and industry stability.”
In terms of how much the industry has unified over these common concerns during the last three years, Smitherman notes that it takes any new industry some time for the many interests to align, “but the excise tax has a unifying call, because it doesn’t matter if you are the biggest or the smallest, it still hits you and your customers with a similar wallop.” He believes the months ahead to review the Cannabis Act are going to be critical to show more alignment. He’s
“Everyone knew we would be in a very static regulatory environment until the Cannabis Act review took place three years in, and now everyone is hungry to talk about change.”
also hoping that an annual event in Ottawa, which he is creating, will help; the event will be one “that rallies the whole sector to draw attention to our contribution and our needs.”
Three stages, and beyond
Will Stewart, senior VP at Hill+Knowlton Strategies, divides the first three years of Canada’s legal cannabis industry into three phases. At first, he says everyone wanted to be the first to market, and “the rush to scale wasn’t the best strategy. Some product was substandard, which affected customer perception of the industry. Some companies couldn’t scale.”
The second phase began a year in, during November 2019. It was about starting out smaller and using what had been learned by the entire sector, says Stewart, but this phase was cut short by the start of the pandemic, in March 2020.
The pandemic affected access to physical stores, he notes, but some provinces, such as Ontario, allowed stores to start doing deliveries and/or ‘click and collect’ sales (online orders picked-up curbside). This helped stunt the growth of the illicit market to some extent, says Stewart, and these sales avenues will
With the industry evolving and pivoting, Fire & Flower Cannabis Co. looks to adapt to new competition and appeal to customers, recently re-designing its Spadina St., Toronto location.
likely stay in Ontario, but still, the illicit market has grown, especially online. He thinks more consumer education about the differences between legal and illegal products, would be a good idea.
Now that the pandemic is receding, phase three has begun, with the kinks worked out of supply chains and the release of many more new and interesting products.
“We’re now starting to get some stratification, particularly in retail store fronts, with real differentiation and targeting of various markets, such as lower-priced products and products for women,” says Stewart. “It’s good for consumers to see themselves reflected in the market and it’s a positive for the industry. I think that we’ll see individual customers being loyal to a few brands, just like they are with other types of products.”
MNP’s Fraser believes that “if you’re looking to differentiate your retail pres-
ence from the other stores, you’ll have to think about carrying a unique or highly-curated product selection or create a shopping experience that attracts the type of consumer that you want to walk through the door,” he says. “All stores may be carrying the same products, but the experience you provide can really be your differentiator and be your driver for long-term survival in the marketplace.”
In Stewart’s view, the opportunities for more health and wellness products have not been realized during the last three years. It’s still not easy to access potential customers in this market.
“There are a lot of barriers to get the high-end customers interested in wellness, to come into a store to see what’s available when they’ve never been in a cannabis store before,” he says. “Canada is also behind on the legislation of CBD products, including allowing the marketing of their health and wellness attributes.”
While Canadian society slowly loses the negaitve stigma surrounding cannabis, more can be done to educate consumers on industry products and ensure they can see themselves reflected in the market.
Vantage Point
By George Smitherman
Why ‘We’re Not Done Yet’
Tension (or anticipation) is certainly rising across the Canadian cannabis community. The third anniversary of the legalization of recreational cannabis has passed. The new Trudeau Cabinet has been sworn in. The green flag for the formal launch of the Statutory Review of the Cannabis Act will soon follow. The time has come for the cannabis community to come together and secure the changes needed to fulfill the social and economic promise of legal cannabis.
The Cannabis Council of Canada (C3) used the third anniversary of the adult recreational legalization to develop the ‘Not Done Yet Report Card’ (available online) on the success of Canada’s legalization initiative. Building on the report card the C3 issued at the second anniversary, this year, C3 worked with the cannabis community to tell its story. C3 received a lot of valuable input and feedback from across the community, including from NORML, Cannabis Amnesty, and Medicinal Cannabis Canada (MCC).
In the ‘Not Done Yet Report Card’, C3 provided adult-use cannabis legalization with an overall grade of ‘D’. The ‘D’ grade was validated with 11 subgrades and was provided a rationale for each. While acknowledging the act of political leadership behind legalization, C3 concluded that one of its key objectives - keeping
C3 evaluated Canada's adult-use cannabis legalization initiative on a range of subjects, and gave grades for each with supported explanations of the rationale.
C3 hopes this will be an effective way of sharing perspectives with Canadians on the accomplishments and unrealized opportunities of cannabis legalization.
the profits of cannabis out of the pockets of organized criminals – has not been achieved. The fact remains that at least 50 per cent of the cannabis consumed by Canadians, is coming from illicit sources.
The work at hand for our industry, sector and community is large, because the agenda of change that we seek to influence is large. Putting an end to the current practice whereby the cannabis industry is funneled off to Health Canada, only to be told that Health Canada doesn’t have an economic mandate, is a major strategic priority for our sector. I emphasize at every turn that it is the
responsibility of a regulated sector to establish an open dialogue with those who do the regulating and the law making.
Building on the ‘Not Done Yet Report Card’, C3 will focus on four policy thrusts:
1. Nanny state regulation and administrative overkill
2. Social progress for patients, pardons, and diversity and inclusion
3. Excise tax, government program access, and financial viability
4. Reduce public risks from illicit products and prevent tax diversion
C3 will use these policy thrusts to engage with its membership and the canna -
bis community and to underpin its conversations with governments. While the formal Statutory Review conducted by Health Canada may be limited to the Cannabis Act, C3’s agenda for change will not be governed by this boundary. After all, cannabis generates more than $15 billion in gross domestic product (GDP) annually, and employs tens of thousands of Canadians in regions, cities, and towns from coast to coast to coast.
Our community’s geographic footprint is a source of untapped strength. Cannabis is relevant and impactful in each and every riding (338 of them) across Canada. In 2022, our sector will be called to Ottawa to speak with MPs in an event I like to call ‘Cannabis on the Hill’ – part of a larger ‘tour de force’ of the cannabis community. It’s critical that we build awareness with MPs of all parties about the nature of our sector, the opportunities that we have created, and the hopes and plans we have for the future. So, if you haven’t already built it into your standard operating procedure (SOP) then it’s time to establish relationships with your local politicians. The adage that ‘all politics are local’ couldn’t be truer.
We are a community of more than six million people. It’s time to end the stigma and discrimination holding back legal cannabis, including medical cannabis and medical cannabis-related products. As the ‘Statutory Review’
George Smitherman is the president and CEO of the Cannabis Council of Canada, the national organization for licensed cannabis producers. His memoir, Unconventional Candour, published by Dundurn, highlights the ups and downs of his life in politics.
green flag waves, I recommend you buckle up and join the ride as we strive to fulfill the unmet social and economic promise of cannabis legalization, because ‘We’re Not Done Yet’.
AN ADDITIONAL ANNOUNCEMENT
As the newly appointed ministers settle into their roles and begin the arduous task of onboarding new information (often described as drinking from the fire hose), one thing should be abundantly clear if it isn’t already; Canada finds itself with a depth of experience and intellectual capacity with Health Minister, JeanYves Duclos and Associate Health Minister, Carolyn Bennett.
Duclos is an acclaimed economist, elected since 2015 from the Québec City area riding of Québec. Noteworthy is his past departmental experience as the president of the Treasury Board, blending operational realities with a broad knowledge of the whole operation of the Government of Canada.
Bennett is a respected family physician who participated in thousands of births during her practice. The new associate health minister is a long serving MP, first elected in 1997 from the Toronto riding of St. Paul’s. As Ontario health minister during the Martin government, I had a first-hand experience working with Bennett. As the then min-
ister of State for Public Health, she was instrumental in establishing the Public Health Agency of Canada (PHAC) and contributed to the important work leading up to the Kelowna Health Accord. She comes to Health Canada following six years of public service in support of reconciliation with Indigenous peoples.
Elsewhere, the shuffle produced a new minister of public safety in former prosecutor, Marco Mendocino. Mendocino takes the helm at a place where he can help expedite pardons for simple cannabis possession and bring more focus to the illicit cannabis industry and its unfettered access to Canadians. Ministers in key economic portfolios remain unchanged, with Mary Ng at International Trade, Export Promotion, Small Business and Economic Development, François-Philippe Champagne at Industry, Science and Innovation, and
Marie-Claude Bibeau at Agriculture. A network of regionally-focused ministers has emerged to support seven Regional Economic Development Agencies across Canada. Deputy Prime Minister Chrystia Freeland retains her role as minister of finance, retaining her oversight of matters critical to the overall viability of the industry, especially given the excessive level of the excise tax on cannabis. Her vast reach makes her a key catalyst for progress on issues such as providing capital to encourage more black, Indigenous, and people of colour (BIPOC) community participation across the cannabis sector. So, while the Statutory Review may be the domain of the Department of Health, the broader agenda of the cannabis industry includes the important objective of being recognized by what is often called the ‘official Ottawa’, described above.
Suppliers
Fohse’s strongest grow light
Fohse has developed its strongest power output lighting system.
The A3i luminaries system is said to require fewer fixtures to produce similar or better light levels as a similarly-sized HPS or LED system. At 46.5 inches by 47.25 inches, it has an input power of 1,200 W. The photosynthetic photon flux output measures at 4,200 µmol/s.
The control interface is a wall-mounted OLED panel that can be programmed for automated lighting schedules, brightness and spectrum. A user can control up to 100 fixtures per controller, or more with signal repeaters. “My team is blown away by results of our first crop under our Fohse A3i system compared to our history with 1,000W DE HPS,” said Mike Howard, director of cultivation at The Grove. “Using 16 per cent less energy, it generated 27 per cent more light and increased yields by 65 per cent.” www.fohse.com
Iluminar’s new far-red spectrum lighting
Iluminar introduces its latest LED with built-in UV and far-red lighting system, the iLogic8 LED lighting series.
Research has shown that plants can harness far-red radiation for photosynthesis when supplied in addition to full spectrum light. Additional UV helps strengthen plants and helps boost production of terpenes and essential oils.
The iLogic8 LED family is designed to deliver deep, penetrating light intensity along with industry-leading uniformity over a four square metres footprint. The iLogic8 is made to be optimized for demanding floriculture appications and can easily scale up as operations grow.
iLogic8 boasts 630W, ePAR of 1,800 µmol/s, an ePAR efficacy of 2.85 µmol/J, and a colour temperature scale of 3350k. www.iluminarlighting.com
Canapa’s high performance pre-roll work station
JuanaOne is engineered to weigh, fill and compact up to 500 joints per hour with one operator and less than five square feet of floor space.
Canapa presents its latest addition to its family of pre-roll machines with a compact work station that doesn’t compromise on productivity. Using this packaging machine can help users accurately and efficiently weigh pre-rolls without giving away margin product that are filled by hand.
Its 10-inch colour PC touch screen controller can be programmed with 20 recipes. It provides on-screen production statistics and requires three password-protected access levels. The machine itself is made of 304 stainless steel contact parts for easy cleaning and maintenance. www.juana1.com
The iLogic8 LED series
Labstat expands cannabis testing capabilities
Labstat International Inc. has opened a new laboratory in Ontario, as it aims to become the first laboratory to offer full-breadth regulatory testing, Canada-wide.
The company operations are capable of testing all cannbinoid-based products including dried flower, extracts, isolates, edibles, and even cannabis health products.
It also validates and verifies methodologies that have proven to be highly proficient in obtaining consistently accurate results for microbiology, cannabinoid potency, heavy metals, pesticides, solvents, loss on drying (moisture), foreign matter, terpene profiles and nutrition panels.
Labstat will continue to offer their clients with comprehensive emissions testing for all vape, heat-not-burn, and combustible products.
“Since obtaining a licence to conduct analytical testing for cannabis in 2019, we’ve remained committed to advancing our scientific capabilities and are well positioned to offer these services to our customers coast-to-coast. I’m excited for our future and the additional value this brings to our clients and the growing cannabis industry,” said Michael Bond, president of Labstat.
www.labstat.com
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