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HIGHLIGHTS
  1. B.C. solicitor general aims to permit farm-gate cannabis sales
  2. On-site pot sales would increase LP revenue due to higher retail prices
  3. Farm-gate ambitions come as most small-scale producers remain unlicensed

Craft growers of cannabis in British Columbia are largely supportive of a government proposal to examine on-site retail sales, but say the province should first help more small producers transition into the legal system.

B.C. Solicitor General Mike Farnworth told reporters last week that farm-gate pot sales - or direct-to-consumer - are an option the province is considering as a way to support its cannabis industry after small-scale producers showed an interest in this avenue for growth.

But one year after legalization, only a handful of craft cultivators have received micro licences from Health Canada, and some local growers fear the already established licensed producers (LPs) will reap the benefits of any moves toward farm-gate sales in B.C.

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“One of the areas where we see farm gate sales being particularly useful and advantageous is around small-scale producers, comparable to what we’ve seen in the wine industry and my ministry has been working on policy in that area,” said Mr. Farnworth, adding the province would need to address related issues with the federal government to make this happen.

“This province has been at the forefront of provinces in terms of wanting to get small-scale production up and running, and to bring it into the legal system. I see farm gate as an important component of it. We’re not there yet but I fully expect that we will get to a point where you’ll be able to see farm-gate sales.”

Before legalization last year, B.C. had Canada’s most established illegal pot industry, comprised largely of small-scale growers and dispensaries, many of which have been slow to transition into the legal market. The province has granted 88 private retail licences and has seven government-run stores open, according to a B.C. government websites.

This compares with more than 300 retail licences issued in neighbouring Alberta, where this part of the industry was privatized.

Health Canada has granted cultivation licences to around 50 producers in the province. While this accounts for 20 per cent of the country’s cultivation and processing licences issued so far, just a handful are micro-cultivators.

For David Robinson, a director of the Craft Cannabis Association of BC as well as Pacific Northwest Garden Supply in Nelson, talking about cannabis farm-gate sales before so many micro-cultivators receive licences is to put “the cart before the horse.”

“What they need to focus on is creating programs that assist the transition of British Columbia’s original players to micro-production status,” Mr. Robinson said.

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“Before you talk about farm gate sales we actually need the right people in production. Otherwise, you’re just talking about giving additional advantages to the same corporations that you set up for success in the beginning.”

Micro madness: How B.C.’s craft cannabis industry is losing out on legalization

He estimated that B.C.’s Kootenay region has 70 micro-producers, but that fewer than five appear on track to get through the federal application process to receive licences.

“Talking about farm gate sales is great, but who’s going to do these farm gate sales. The banks won’t even give us bank accounts. The steps that need to be taken for the original players of British Columbia to participate in the industry are manifold,” Mr. Robinson said.

“What we are going to see here are big corporations, probably from the east, are going to bring their money into British Columbia. They’ll build out their facilities and try to employ everyone they can.”

Still, the potential for farm-gate pot sales theoretically means small growers could bypass middlemen with a portion of their sales by selling their product at retail prices on-site. Other significant factors would be the opportunity for growers to connect with consumers and build customer loyalty, as well as benefit from the tourism industry.

“This means the producers would have the opportunity for that face-to-face interaction you would get at a microbrewery or any of those cottage industries that are interwoven with tourism,” said George Antsey, senior consultant for Startup Consulting Canada in Victoria.

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“It’s another avenue for the industry that it desperately needs.”

Mr. Antsey estimated that just eight to twelve micro-licences have been issued across Canada but expects there could potentially be as many as 50 on Vancouver Island alone.

The opportunity for farm-gate sales brings expectations for facility tours and agri-tourism to the industry, though regulations would need to be amended to permit this.

In the Kootenays, where small-scale cannabis production has been a robust part of the rural region’s economy, farm-gate sales could “hypothetically” lead to cannabis tours, said Dianna Ducs, executive directly of Nelson and Kootenay Lake Tourism.

But the region will first need to decide if it wants to highlight this industry, which still holds a decades-old stigma.

“We’ve had a pretty dominant image regarding the Kootenay vibe. We don’t really want to capitalize on it and turn it into a tourism thing,” Ms. Ducs said, adding that Nelson and Kootenay Lake Tourism will first gauge interest from small licensed producers if farm tours become legalized.

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“For us to capitalize on cannabis, is not the image we want. We don’t want it to take over and have us be the main place people are coming for cannabis, at least right now.”

Though the possibility for small producers to sell product directly to customers at their facilities would mark an economic opportunity, the product is still connected to a stigma that causes room for pause.

“Economics is one thing but we’re not here to sell out,” Ms. Ducs said.

“We only market authentic products. Is cannabis authentic to us? I don’t know yet. We don’t want to be attached to that stigma.”

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