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British Columbia is tired of waiting for Ottawa to transition its “legendary” underground cannabis industry into the new legal regime, so the provincial government is taking on the job for itself.

“The federal government said ‘we’ll take care of [cannabis] economic development’, and we just disagreed with them on that, and we continue to disagree with them on that,” Premier John Horgan told reporters outside the B.C. legislature in Victoria on Nov. 28. “We have in B.C. a legendary quality product, and that’s not making its way to the legal market.”

Last month, the province gave Community Futures Central Kootenay $675,000 to hire a team of cannabis business transition advisers to launch the Cannabis Business Transition Initiative. The advisers are expected to help more than 100 grey market cannabis growers navigate the Health Canada license application process over the next two years.

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The program is undeniably small – the Kootenay region is home to some 2,500 small-scale cannabis growers, according to a government news release, meaning just a handful of local growers will actually receive help – but it is the first of its kind in Canada. The government minister responsible for administering the program also expects it to be the first of many.

“What we are hoping and what we expect is that we will have the ability to scale up if [the Kootenay Cannabis Business Transition Initiative] proves to be successful,” Mike Farnworth, B.C.’s Minister of Public Safety, said in an interview Thursday. “And from what we’ve seen so far, there seems to be a lot of interest and a lot of excitement around that program.”

He declined to say how much additional funding the province is considering for any potential expansions, nor would he comment on when or where such expansions might take place.

“What we are wanting to do, particularly in British Columbia, because we have had such an entrenched market for decades now, we want to make sure that economic development in the legal cannabis market doesn’t hurt our province and that we are positioned to take advantage of those economic opportunities and to be able to see that the illegal industry that has underpinned regional economies in many parts of this province is able to do that,” Mr. Farnworth said.

“We have a skill and knowledge and in fact a long history of cultivation that we want to be able to bring out of the grey area [and] get them producing legitimately.”

Helping prohibition-era cannabis entrepreneurs transition into the new regime has long been criticized as a missing critical element to the government’s legalization plan.

A marijuana plant grows in the Genetics room at Habitat Craft Cannabis in Chase B.C. on Thursday September 26, 2019. Habitat uses a highly-sustainable method of growing craft cannabis and coho salmon. Harnessing a proprietary closed-loop water management system called aquaponics, which ties together fish farming (aquaculture) and plant cultivation without the use of soil . Habitat is the first aquaponic cannabis cultivators to use coho salmon. Jeff Bassett/ The Globe and Mail

Jeff Bassett/The Globe and Mail

“The barriers to entry make it incredibly hard for the expertise that exists today to enter the market,” Rudi Schiebel, chief executive of Habitat Craft Cannabis Ltd., a recently-licenced micro-cultivator in Chase, B.C., told Cannabis Professional in September. His company uses aquaponics to farm both cannabis and salmon.

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“Instead of empowering our competitive advantage in Canada, the government has systematically treated both the growers and the users looking for quality cannabis as a nuisance,” Mr. Schiebel said.

For regions that have, oven the course of decades, grown increasingly reliant on their underground cannabis economy, "the outcomes of not transitioning [into the legal market] are unfathomable,” Tracey Harvey, an instructor at Selkirk College and a University of Guelph PhD candidate researching the impact of legalization on rural B.C., said in early April during a presentation to the Kootenay Cannabis Symposium in Nelson.

“We're talking about unemployment, homes and businesses for sale, empty storefronts.”

“Cannabis legalization... wasn’t properly addressed by our provincial government who knew very well about the thriving underground cannabis industry, but did nothing to aid a transition. Now our province is scrambling, as they realize what a mess this is creating, particularly in the peripheral areas,” Ms. Harvey said.

Barely one month after her presentation, on May 13, Health Canada changed the requirements for those wishing to apply for a cannabis micro-cultivation licence. Micro licenses – designed at least in part for legacy growers transitioning into the new legal market – would now require a fully-built facility before an application could even be submitted.

The change meant applicants would have to bear several hundred thousand additional dollars in startup costs. As of Oct. 31, only nine “micro” licenses have been issued by Health Canada.

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“The new regulations further enhance an uneven playing field that is already favouring the development of large conglomerates at the expense of small growers,” a group of six B.C. craft cannabis organizations said in a joint statement released a few hours after the May 13 Health Canada announcement.

“Without a significant change in approach by the federal government, B.C.’s globally recognized craft cannabis sector is not likely to survive legalization.”

The Kootenay Cannabis Business Transition Initiative, Mr. Farnworth said, is the first of several government efforts to help the B.C. craft cannabis sector avoid extinction.

“B.C. bud is a very well-known brand,” he said. “I don’t think anyone has ever heard of Saskatchewan Bud, so it is an opportunity for this province and it is an important one, there are a lot of workers in this industry.”

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