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Shlomo Booklin holds a cannabis seedling at Tilray, a medical marijuana grow-op in Nanaimo, in August, 2014.

John Lehmann/The Globe and Mail

At a time when municipalities across Canada were fighting to restrict industrial-scale medical marijuana producers, Nanaimo did the opposite and has concluded in a new report the business has been good for both workers and city coffers.

The Vancouver Island city began courting U.S.-based cannabis conglomerate Privateer Holdings in early 2013 as its Canadian subsidiary, Tilray, was aspiring to win a licence under the system the Conservative federal government would roll out a year later. Tilray first started selling its product in April last year and its facility now grows cannabis at roughly 90 per cent of its full capacity, and says it is mailing to about 4,000 clients, more than a third of whom reside in Ontario.

Now, a report by the city's economic development corporation has found the venture is the city's sixth-biggest employer and has paid $130,000 in property taxes during the first nine months of operation.

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The report to be released Wednesday, commissioned by the city-owned Nanaimo Economic Development Corp. (NEDC), states that Tilray has 140 full-time workers. That is considerably less than cable company Shaw's 400 employees and a pair of sawmills that employ several hundred people, but only 14 employees fewer than the No. 4 employer, grocery chain Sobeys.

Tilray is now working with the city toward expanding its grow site in the Duke Point industrial area to almost five times its current size. Once running at full capacity, it would become one of Canada's biggest licensed production facilities. Sasha Angus, chief executive officer of the NEDC, said Tuesday that back in 2013 city officials were impressed during an initial meeting with the leadership team at Privateer, which owns the online marijuana information resource Leafly, nascent American medical marijuana producer Marley Natural and Tilray.

Mr. Angus said Nanaimo was "able to win their business on our merits" and beat out competing communities in Saskatchewan and Ontario. Those merits included close proximity to graduates from two universities, low industrial tax rates, cheap power, transportation logistics and cheaper housing than in the Lower Mainland, Mr. Angus said. He added that city council liked Tilray's prospective location, where "not a lot of people drive by their facility day in, day out," and agreed to expedite the rezoning of the industrial parcel of land to a different category of commercial activity.

"I know in other communities, sometimes zoning and those sorts of processes can be not very transparent and they can be long and arduous," Mr. Angus said.

Towns such as MacTier, Ont., have turned down licensed production facilities, while municipalities such as Delta, B.C., have fought to keep them on industrially zoned land and away from residential areas or the Agricultural Land Reserve. The Nanaimo facility will bring in $220,000 in property taxes this year, the NEDC report stated.

Greg Engel, Tilray's CEO, said the company hopes to sell 140 kilograms of marijuana to consumers in April. In February this year, Tilray and 16 other licensed producers sold 291 kilograms, according to the latest data available from Health Canada.

Mr. Angus said the median income of Tilray's 140 employees is "just over $30,000," which is slightly higher than the city's median income of $27,840, according to the 2010 census. The median salary is buoyed by the company's scientists, horticulturists and former police officers in charge of its security system, but many employees are paid lower wages for tasks on the production side, such as cutting leaves and preparing product for mailing.

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Medical marijuana patients are now in Federal Court fighting to grow their own at home, but Mr. Engel said the prospects for his sector look bright and his company will soon apply to greatly increase the number of plants they're licensed to produce.

"There's always going to be a percentage of the population that's going to look for medical cannabis that's been tested and gone through rigorous quality control procedures … and that's going to be critical to supply the market with that product, which we do," Mr. Engel said.

In the past, Health Canada has projected that the number of patients seeking medical marijuana will jump from the current amount of 17,046 to 400,000 in a decade.

Patrick Smith, a Simon Fraser University professor specializing in municipal issues, said Nanaimo might be at the forefront in B.C. of accruing benefits while managing the blowback of hosting a nascent industry that is still stigmatized in the eyes of some citizens.

"As we go through another recessionary period with more down- and offloading on to municipalities and less money for all kinds of things … there's lots of rationale for looking around to where you might find some extra sources of money," Prof. Smith said.

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