Cannabis industry says politicians are to blame for B.C.’s sagging sales, while municipalities still wait for revenue sharing plan

July 5, 2019
By Shannon Waters

B.C. never expected cannabis legalization to generate a “green rush” — even if the province’s reputation for cannabis connoisseurship made it seem like the perfect place for a legal weed industry to grow and blossom.

From his first days as public safety minister and solicitor general, Mike Farnworth said the costs of enacting and enforcing a brand-new licensing and regulatory regime would outweigh any revenues generated by legal cannabissales.

But almost nine months after cannabis was legalized in Canada, B.C. is pulling in less cannabis-related revenue than any other province save P.E.I.

Finance Minister Carole James has said current revenues are slightly below even the reduced revenues her ministry built into Budget 2019, which dropped to less $17 million from $50 million in the prior year’s budget.

According to the finance minister, the province has not even “reached a point to be able to have revenue to share” with local governments.

Union of B.C. Municipalities (UBCM) president Arjun Singh says he’s not worried, citing confidence in the province’s “principle-based commitment” to share revenues with municipalities.

How the revenues will be divided is a work in progress. Local governments have been asked to provide the finance ministry with data about the cannabis-related costs they are incurring in order to inform the final formula.

“It would be nice to have this work done as soon as the province feels comfortable with the information in front of them,” Singh said.

“I don’t think it’s a surprise that this thing has moved a bit slowly,” Singh told BCToday of slow sales so far. “It’s a brand new issue area.”

B.C. has delegated a lot of authority to local governments when it comes to cannabis sales. Municipalities can decide what kinds of cannabis retail they want in their community as well determine how many stores can open and where they can set up shop.

Singh said UBCM’s municipal members like the autonomy the process allows them — which includes veto powers.

Asked about the licensing process, which has been criticized as overly bureaucratic and burdensome, Singh noted there has been an “uptick” in approvals for cannabis retail outlets in recent months.

Barinder Rasode, a former Surrey city councillor turned cannabis business advocate, says without more political will the province’s cannabis industry will continue to sag.

“B.C. bud is renowned the world over — it really saddens me at a personal level to see Alberta and Ontario becoming cannabis capitals of the world,” said Rasode told BC Today. “B.C. is getting so far behind. I worry we’ll lose our position completely and not be even qualifying anymore as one of the top.”

Rasode, who is a founder of the National Institute for Cannabis Health and Education (NICHE) and co-founder and CEO of Grow Tech Labs, sees a lack of confidence on the part of many B.C. politicians at all levels to be proactive about cannabis policy. That, combined with a lack of education about how to handle cannabis retail, has dragged down the burgeoning legal industry in B.C.

Rasode says the Liquor and Cannabis Regulation Branch’s current retail licensing process is so onerous and invasive that is has also been causing delays for liquor permit applicants because there is “no separate line for cannabis applications” and liquor permit applications.

Despite that, Rasode said the B.C. Cannabis Secretariat has an “open door policy” with industry.

“We understand that it’s taking longer than is desirable to process cannabisretail licence applications, and steps are being taken to improve the approval process — addressing both timeliness as well as providing information to applicants,” Minister Farnworth’s office told BC Today in a statement.

The province has long said its priority is to “ensure illegal activity does not arise in the legal cannabis market.”

“That’s why we’ve developed a robust application process that includes stringent security screening and financial integrity checks in the interest of due diligence, which sometimes requires additional time to complete,” the minister’sstatement reads.

Even if the licensing process speeds up, Rasode sees another challenge to the current legal cannabis regime, one that is rooted in B.C.’s legendary bud.

“There are a lot of [B.C.] cannabis consumers who are still going to their pre-legalization supply because … the [licensed producer product] is of a different quality than they’re used to. It’s not at the level they need it to be,” she told BCToday.

In other words, large-scale licensed producers (LPs) are not yet growing cannabis of the quality B.C. cannabis users have become accustomed to.

Licensing just a small percentage of the province’s so-called “grey market” growers could go a long way to boosting B.C.’s cannabis revenue. According toan analysis by Grow Tech Labs, if 15 per cent of the estimated 6,000 small-scale cannabis cultivation operations in B.C. became licensed, they could generate $3 billion in cannabis sales in just two years.

But so far, the B.C. government has not done much to smooth the way for these experienced mini-producers to enter the legal market. Neither has Ottawa: just one application for a micro-production licence has been approved in the entire country.

To Rasode, that’s a shame. She say British Columbians — even those who have not previously used cannabis — want to be able to buy high-quality cannabis products.

“There is a change in culture — government just needs to be a part of [it],” she said. “Right now they’re hiding from it.”