Distribution Fairness For Craft Cannabis Producers and Retailers (2018)
BC has a mature and sophisticated cannabis industry which creates over $2 Billion in revenue for BC each year. At the low estimate, this makes cannabis by far the largest agricultural cash crop in BC, and 3 to 4 times bigger than beer or wine.
Progressive and successful legalization programs in US States with mature cannabis industries (i.e. Colorado, Oregon, and California) have endorsed a widespread transition of existing cannabis businesses. Of note, the state of Washington did not provide a transition opportunity, and now struggles with an entrenched and strong unregulated cannabis market.
While we see the Province of BC creating a transition opportunity for retailers, the Federal government, has elected to control production, and been slow to create a transition process for existing small cannabis cultivators and processors, of which BC has several thousand. Micro licenses (craft growers) are currently in the works at Health Canada, but big business - primarily Ontario based, has a multi-year head start in the regulated cannabis industry.
As an additional disadvantage to the BC small business cannabis industry, the proposed rules for micro licenses require them to first sell to a Federal Licensed Producer, with no direct access to distribution branches or retailers. This is analogous to Nelson Brewery being required to first sell to Molson before accessing the market.
This chart demonstrates a projection using the information available and conservative estimates for regulated supply chain markups. If maintaining retail cannabis pricing that is competitive to the current unregulated market is the goal, this will create downward pressure on the viability of existing small business cannabis industry participants.
Fair regulations for the transition of the BC Cannabis industry are critical to the success of cannabis legalization for BC, and also for regional economies throughout the province.
THE CHAMBER RECOMMENDS
That the Provincial Government:
- Take measures to protect the interests of BC cannabis businesses by providing enhanced market access to micro license applicants;
- Create a mechanism for craft producers to sell direct to private cannabis retailers;
- Create a private distribution licence. This will relieve the Liquor Distribution Branch of the task of accomodating potentially thousands of small producers who will be regulated under the micro licence categories, and help these small producers gain access to the market. This allows for increased small business activity in the industry; and
- Engage with all relevant stakeholders including the Canadian Association of Medical Cannabis Dispensaries.