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British Columbia for decades produced the majority of cannabis in Canada. Thousands of growers crafted potent strains, and the province’s weed became a brand: BC Bud.

But legalization has brought upheaval. The market share of BC Bud is in sharp decline, eroded by competition. Large companies are moving in, and the small players who built the industry are fighting to stay in business. Locals see B.C. falling behind: More than half of Canada’s 133 licensed producers are based in Ontario; B.C. is a distant second, home to about a fifth of the total.

In the summer, Courtland Sandover-Sly, a financial consultant for illicit market operators who are looking to enter the legal market, voiced his concern on Twitter: “B.C. should be very upset, as it is having its second-largest industry stolen from under its nose.”

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As Mr. Sandover-Sly and others in B.C. despair at the weakening of a once-dominant industry, they also see opportunity as upstarts emerge. His clients comprise a group of growers who want to revive the reputation of BC Bud amid a legal landscape where a lot of the product will be grown on an industrial scale.

A medical marijuana user rolls a joint of BC Bud in Vancouver on Nov. 8, 2012.

John Lehmann

Among the new names in the province is Tantalus Labs Ltd., which built a specially designed greenhouse for high-end cannabis east of Vancouver. The volume will be modest – some 7,000 kilograms a year, a fraction of the expected national market – but founder Dan Sutton believes Canadians, who already know cannabis well, will seek out the best product.

“They aren’t going to be stupid about weed quality,” Mr. Sutton said. “They’re going to see mass production and know it’s less exciting than craft. Market share isn’t earned by default.”

Cannabis in B.C. took root in the late 1960s and early 1970s as U.S. draft dodgers fleeing the Vietnam War came north and settled in rural regions such as the Gulf Islands and the West Kootenays. They brought marijuana seeds with them.

B.C. was at the fore of the fight against the long prohibition of the drug. In 1971, a large rally for legalization in Vancouver turned violent when the police cracked down, an event known as the Gastown riot. The first 420 celebration of cannabis – held each year on April 20 – in Vancouver was in 1985; for the past decade, the party has included the open sale of cannabis as police stand by. In the early 2000s, estimates suggest there were some 20,000 grow-ops in the province.

Getting busted wasn’t a big risk; half of those convicted received no jail time. Vancouver was given the nickname Vansterdam.

The illicit market is still thriving in B.C. The provincial government has sold less from its online store than other provinces as it competes “with a highly developed and discerning illicit market,” government spokeswoman Kate Bilney said.

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The era of BC Bud, according to Statistics Canada, peaked in 2005. Total production, mostly illicit and some medical, was valued at $2.93-billion – about 56 per cent of the national market of $5.27-billion. In 2010, B.C.’s market share slipped under 50 per cent, and in 2013, it began to slide. By 2017, the value of B.C. cannabis was down to $1.85-billion. The province still held a slim lead, with 36 per cent of the national market. Quebec ranked second with 34 per cent. And Ontario, in third place, cracked 20 per cent that year for the first time, doubling its market share in six years.

Much of that change is attributable to licensed producers: In early 2014, Ontario had eight and B.C. had six; today, there are 69 in Ontario and 30 in B.C.

While BC Bud may exist more in myth and memory, its legacy and reputation have motivated forays into the province by publicly traded companies. Aphria Inc. of Leamington, Ont., paid $230-million in January for Broken Coast Cannabis Ltd., based in Ladysmith on Vancouver Island, an area where cannabis has long been grown. The companies cited “B.C.’s iconic cannabis brand and culture.” Nearby Nanaimo was chosen for the headquarters of Tilray Inc. by the Seattle private equity firm Privateer Holdings Inc. over locations in Saskatchewan and Ontario.

Canopy Growth Corp. has made the biggest move. In deals last fall and this spring, it bought three million square feet of greenhouse space at two locations in the Vancouver suburbs. The greenhouses will be the world’s two largest legal grow-ops and had been owned by the local Krahn family, which grew bell peppers for several decades. Canopy paid with new shares, today worth about $580-million, that account for roughly 4 per cent of its market capitalization, and declared it had arrived in “the infamous British Columbia cannabis market.”

“There’s something special about British Columbia. There’s a cultural aspect to the place of cannabis there,” said Mark Zekulin, president of Canopy. “BC Bud is known.”

But growing cannabis in greenhouses that were built to grow vegetables has been a challenge. In late September, Canopy said it had to destroy “a number of plants” after infrastructure and regulatory problems. The company also shipped 10,000 kilograms of cannabis to its headquarters in Smiths Falls, Ont., for processing.

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Critics in B.C. say such struggles are no surprise.

“Cannabis is incredibly difficult to grow at scale,” said Ian Dawkins of Althing Consulting, which works with small players.

Mr. Dawkins’s group sees opportunity “in the name of BC Bud” for small growers, but he and others question how the legal cannabis landscape has evolved. They feel the rules have favoured large companies and argue the B.C. government has done little to help the provincial industry.

Last winter, a group called the Ethical Cannabis Producers Alliance met with B.C. Public Safety Minister Mike Farnworth and lobbied the province to support small growers “if B.C. is going to retain the historic advantage of the BC Bud brand.”

Small growers now look to microcultivation licences, a process that opened on Oct. 17, the same day as legalization. But they have already ceded a long head start to the corporate licensed producers and are limited to 200 square metres.

Despite the challenges, Mr. Dawkins sees success in the long term, based on quality. He likened it to Oregon’s reputation for craft beer.

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A startup on Vancouver Island is trying to explicitly tap the province’s reputation. Bill Marshall, a real estate agent, helped growers of medical marijuana in the early 2000s find locations. In 2014, he applied to the federal government to become a licensed producer. He incorporated Aaron’s BCBUD Inc. in February and hopes to be licensed by next spring, producing some 5,000 kilograms a year.

“The sophisticated consumer will recognize right away and say, ‘I want to try it,’” Mr. Marshall said.

The company’s master grower, Danny – who did not want his last name used because of a past in the illicit market – first grew cannabis in his teens, then for a friend with a medical licence who had been diagnosed with kidney failure.

“If you’re talking about BC Bud, there’s an expectation of quality,” said Danny, 31. “We’re trying to grow quality, which is a lot different than what they’re ever going to get from a greenhouse. We really cater to each plant.”

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