B.C. pushes for illicit cannabis market to go legal, faces criticism from craft growers

The British Columbia government has convinced many illegal cannabis growers to begin selling legally in an effort to squeeze out illicit marijuana from the marketplace, but the efforts have faced criticism from the craft growing industry.

It has been three years since recreational marijuana was legalized in Canada, with the provinces managing retail sales while Health Canada is responsible for production licences.

In B.C., the effort to turn illicit market growers toward the legal retail market has focused on the Central Kootenay region through a pilot project and business supports.

This includes helping aspiring producers navigate the federal licensing process as well as assisting growers with marketing development and security licensing, the province says.

Solicitor General Mike Farnworth said in an interview that regulations could be less restrictive to encourage growth in the sector.

"It's still very much a work in progress three years in," he said.

"There's still some challenges for the craft side and producers."

Farnworth said he's heard from industry members who have expressed frustration over the regulations surrounding getting cannabis to market as well as from retailers who dislike the security measures, such as frosted glass for their storefronts.

Farnworth said he sees "a lot of potential" in the sector and the loosening of regulations would help marijuana farmers in the future.

Monthly retail sales have risen substantially every year, from $1.2 million in December 2018 to about $18 million in December 2019 and to $48 million in December 2020, he said.

He said the province's farm-gate program, which would allow cannabis growers to operate a retail outlet on their property or deliver directly to a retail store, would help craft growers as well as encourage those operating illegally to make the switch.

Farnworth said he expects the program to come into effect in the spring.

"We're trying to work with the industry (and) identify some of the challenges we can deal with."

Abra Brynne of the Kootenay Cannabis Economic Development Council was part of the team that helped illicit market growers transition to the legal model.

Brynne said the council was created to help a region with a long history of marijuana production take advantage of legalization.

There were an estimated 2,500 small-scale cannabis producers in the region at the time of marijuana legalization, the province said in a news release.

The project in the Central Kootenay area helped 53 businesses receive help navigating the federal licensing process, with 13 organizations receiving licences.

The provincial government said 62 jobs were created or moved from the illegal market to the legal one by the time the program ended in July.

Brynne said the program saw some successes but there's "a heck of a long way for things to go."

She said high insurance costs are prohibitive for small growers starting out and more work needs to be done to convince people not to buy illegal marijuana.

The province was supportive of the pilot project but persuading illegal operators to make the switch proved to be a challenge, Brynne said.

"We still have this weird culture of prohibition," she said.

Red tape hindering some producers

The government's decision to launch a pilot project aimed at illicit market producers has been criticized by one group of legal growers.

Todd Veri, president of the Kootenay Outdoor Producer Co-Op, said despite the government's claims of success, he knows of many legal, small-scale growers who have struggled to cut through the bureaucracy to launch their businesses.

Veri said he has struggled to get approval for his business project, in part due to its status as an outdoor marijuana producer, which needs more paperwork than indoor greenhouse farms, as well as its status as a co-operative.

Part of the issue, Veri said, is the amount of time it takes to grow marijuana outdoors combined with more stringent regulations from Health Canada about storage and cultivation.

"The time it took, the costs were to be expected, but the cost of delays has killed us," he said in an interview.

Health Canada said in a statement it is committed to encouraging a diverse market of cannabis cultivators and processors, including through micro- and nursery-class licences. It added that craft growers make up roughly 40 per cent of all active marijuana licences.

Veri said it has taken five years to get licensed and he sold his first batch of marijuana in early December.

The provincial government has paid too much attention to illicit market operators instead of working more closely with legal ones, he said.

He said he and his group did not partner with illegal growers, wanting to work closely with the government. Instead, he said his group and others like it have been neglected in favour of producers who operated illegally and now want to switch to the legal side.

"There was no help for people actually looking to employ people in this province ... because B.C. decided to get behind the black market producers and I think they backed the wrong horse," he said.

Veri said the government could improve life for craft growers by allowing them to sell directly to retailers, which would encourage more people to operate legally, and create a classification similar to B.C.'s Vintner's Quality Assurance used in the wine industry.